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Although it would seem a more natural fit for an eco-conscious country like Norway, whose government pledged to be carbon-neutral by 2050, the world's first carbon-free city will actually be built in Abu Dhabi, the oil-rich Gulf emirate.

By 2009, Abu Dhabi hopes to complete construction of Masdar, a 3.7 mile enclosed city devoid of cars and carbon. To produce energy, Masdar will rely on a combination of wind, solar power and geothermal energy. The city—whose name means “source” in Arabic—is slated to be the centerpiece of The Masdar Initiative, which, according to their website, is “a global cooperative platform for open engagement in the search for solutions to some of mankind's most pressing issues: energy security, climate change and truly sustainable human development.”

According to this, some of Masdar’s main investors are automobile manufacturers and oil companies. British Petroleum, Fiat, and Mitsubishi are all involved. Why? Masdar is guaranteed to produce an excess of carbon credits traded on international markets either for profit or for the right to produce more emissions during other activities, such as oil production or auto manufacturing.

While their intentions might not be completely altruistic, the fact that oil and car companies are investing heavily in a project whose very mission is to consume no oil and use no cars means that carbon trading schemes might be having their desired effect. That is, incentivizing investments in carbon-reducing initiatives. Although, not everyone is playing by the rules. There is some evidence that Chinese companies are actually polluting more in order to make a buck (or about 7.5 Renminbi) off carbon credits.