Emissions trading has been ramping up in Britain, Denmark, Japan and the European Union as companies that curb emissions of heat-trapping carbon try to cash in. A trading scheme typically establishes a pollution limit, then allows companies that cut emissions to sell credits to firms unable to meet required reductions.

Carbon dioxide, generated by power plants and automobiles, is widely considered the worst of the pollutants linked to heat-trapping gases.

The United States, which emits about one-third of the developed world's man-made greenhouse gases, has so far rejected a national emissions trading scheme for carbon dioxide.

Ken Newcombe, manager of carbon finance at the World Bank, said the carbon trading market is rapidly growing and will more than triple this year to about 67 million tonnes. It should expand to a "multi-billion dollar" market within seven years, he said.

An estimated $500 million worth of carbon emissions - representing roughly 200 million tonnes - have changed hands since trading began in 1996, Newcombe told reporters.

The bank has launched a special carbon fund to encourage public and private investment in carbon reduction projects in developing nations in preparation for the Kyoto Treaty. The Kyoto pact requires developed nations to cut emissions by about 5 percent from 1990 levels by 2012.

UP TO $16 A TONNE

The fund invests in cleaner technologies in the Third World to reduce greenhouse gas emissions. The certified reductions or credits can be used by companies that invested in the World Bank fund for meeting their Kyoto Treaty requirements or for trading.

So far, the bank has participated in 26 projects with emission reduction purchases averaging $3 to $4 per tonne, Newcombe siad. Projects include a wind farm in Costa Rica, a hydroelectric project in Chile and reforestation of worn-out farmland in Romania.

"A major challenge is to encourage private companies to invest more heavily in developing countries for greenhouse gas reductions, especially through projects that benefit the developing world's poorer communities," Newcombe said.

Rich Rosenweig, a carbon specialist with Natsource, said prices for carbon trading in the open market have been as high as $16 per tonne in recent weeks.

While the market is growing, Rosenweig said most U.S. companies have remained on the sidelines. "Until Congress looks at this, you won't see a significant U.S. market," he said.

However, a new California law requiring automakers to cut emissions in vehicles sold within the state could trigger interest in carbon trading, Rosenweig said.

The Bush administration, which rejected the Kyoto treaty to curb emissions as too costly to the economy, is fighting the California law. The White House instead endorsed a voluntary plan to slow the growth of some global warming gases but not carbon dioxide.

U.S. environmental groups have criticized the administration's approach, saying mandatory carbon reductions are needed to slow global warming.

Some of the companies already trading carbon emissions include Britain's BP Plc, Canada's TransAlta Corp., Norway's Statoil ASA, Japan's Mitsubishi Corp. and DuPont Co.