Kyoto Inspired Emissions Trading Doing Well
Listen to this commentary in MP3 format or through Podcast
The Toxic Texan has arrived at the G-8 meeting, where he has been stating that Kyoto does not work, and that limits on emissions would destroy America's economy - which are nonsense. First and foremost, many of Kyoto's difficulties are due to President Bush's intransigence in not signing the treaty. It is fair, just and equitable that rich countries limit emissions before poor countries. Kyoto was not meant to be the end all of international climate policy. While Kyoto's existing emission cuts are inadequate to stop climate change, it sets important precedents – particularly in the realm of carbon trading and project-based schemes.
The European emissions-trading system has become the leading innovator, with the only officially sanctioned emissions trading system in place. EU emissions trading started in January of 2005, to help members meet commitments to the Kyoto Protocol. Emission trading is market based, and has demonstrated an economically efficient means of providing incentives to cut pollution. It does so by incorporating external costs of fossil fuel use into costs of production. The price of a one-ton carbon dioxide emission allowance started around at about $9 in January and has since surged to $34 on July 4th.
The emissions trading market is not perfect. It needs to expand to include all countries including the United States. European companies are at a disadvantage, and their governments are taking a risk with their economies in order to address what is a global problem. But despite US obstructionism, the market is growing and companies are taking it seriously, and carbon is becoming an expense that is factored into their business decisions.
Implementation of carbon taxes – which further reflect the damage done by carbon to the global environment – has been slower to develop, but would complement emissions trading by sending strong market signals. This need not raise taxes overall, as taxes such as the capital gains and/or income taxes – on something that we want – could be dropped in order to tax carbon, something of which we want less. The ClimateArk has made one such carbon tax proposal called the "Lincoln Plan" at http://www.climateark.org/lincoln_plan/ .
Trading is also slowly picking up in emissions reduction certificates - allowances for emissions related to projects in developing countries - issued by the United Nations under its Kyoto Clean Development Mechanism. The Russian power grid monopoly Unified Energy Systems recently signed Russia’s first projects under the Kyoto Protocol’s investment rules with the Danish government, hoping to raise cash for the country’s aging electricity sector.
The sooner these systems, which assign a cost to carbon ,are made global and are fully up and running, the more chance the Earth's climatic system can be stabilized without dire consequences to economies, societies and ecosystems. The G8 meeting is unlikely to get us there, so our climate change movement must continue to work to establish "political will to make countries around the world develop basic building blocks in parallel so that in future there is enough commonality to converge."
