EU Member States must not be allowed to meet their carbon reduction goals by buying reductions from other countries.
The Kyoto Protocol, which came into force in 2005, bound parties to a 'cap and trade' system for the 6 major greenhouse gases. Emitters must buy emission 'credits' to cover their emissions and the total amount of credits cannot exceed the cap. Credits can be bought from those who pollute less which provides an incentive for emissions reductions. The largest emissions trading scheme is the EU ETS. It has been argued this approach is better than a carbon tax or direct regulation.
You can also add to the debate by leaving your comment at the end of the page.
It will lead to cheating
Putting a monetary value on emissions permits means that there will be an incentive for cheating. Enforcement will be difficult to achieve. There has been evidence of strategic bargaining in the Kyoto Protocol negotiations, as countries such as Japan and Canada pushed for the inclusion of carbon ‘sinks’. Also, the "grandfathering" of emission credits means that credits are given to existing emitters. Thereby emitters are given free allowances by governments instead of having to pay for them.
There is little point in saying it will lead to cheating when the whole premise behind global warming and carbon credits is founded on a fabrication of scientific facts.
Since CO2 does not appear to cause global warming (as Vostok and Taylor Dome ice core data shows) then the EU should not encourage the scam of buying and selling carbon credits at all.
A carbon tax would be more efficient
Putting a carbon tax on energy which emits greenhouse gases would be more economically efficient. Some economists favour this method because it puts a tax on a negative externality as proposed by Arthur Pigou. It would be an indirect tax, which would be at a flat rate independent of income, as opposed to taxing a "good" such as income. Thus it would be economically efficient. Several Scandinavian countries, Sweden, Finland and Norway, have introduced a carbon tax.
Increasing taxes may drive businesses out of national economies if they are having to pay the burden, most likely to countries where they will not be charged for their pollution. Multi-national corporations are able to hide proportions of their incomes through price transfers and hidden cash flows, and as such may also be able to hide their energy usage. Whose sovereign borders would the energy used in transnational business come under?
Some industries benefit more than others
The EU ETS was launched in 2005 but the First Phase ran into problems as the price of allowances fell in 2006 due to a lack of scarcity. Governments were accused of giving their industries caps that were too generous, under industry pressure, which undermined the system. This inequality combined with the emissions purchasing means that some businesses have an unfair advantage which is not compatible with freemarket capitalism.
At least it works!
The IPCC reports and the annual Conference of Parties (COP) reports show the EU is the only party to the Kyoto Protocol likely to achieve its emissions targets. The trading that is taking place on a national level is obviously allowing the EU as a whole to meet targets, and so for the greater good it must be allowed to continue!
It worked for acid rain
Emissions trading worked in the US in the 1990’s, when the Environmental Protection Agency’s (EPA) Acid Rain Program for sulphur dioxide led to full compliance. A nationwide cap on sulphur dioxide emissions was set under the 1990 Clean Air Act. It was widely heralded as a success and the EPA stated that costs were far below that of a "command-and-control" regulatory means.
The Acid Rain Program for sulphur dioxide led to windfall profits for many companies. The system then had to be accompanied by a tax, which made it effective.
It is politically acceptable.
Emissions trading is more politically acceptable than a ‘carbon tax’. Businesses have come out in support of emissions trading and it will be necessary to keep the business community on side to deal with climate change effectively.
Appeasing business could lead to a neo-corporate agenda: take the example of America, who could not ratify the Kyoto Protocol on the grounds of economic damages. Putting business first may mean having to put the environment last, which is precisely the problem that these endeavours are trying to solve…
It is cost-effective
Emissions trading is a market-based mechanism that will be more efficient, because the emissions reductions will occur where they are cheapest. Emissions permits are given to emitters, and the total amount of emissions they are allowed to produce is capped. Firms can trade excess emissions credits. Firms will be able to choose the least costly way to comply with the pollution regulation. It is market-driven because it uses the principles of supply and demand.
Can we afford to marketise all our problems? Spending money on emissions credits may be an effective short-term solution, but the research budgets into clean fuels for the biggest polluters are ludicrously small. Rather than accepting a culture of marketisation in order to reduce pollution at the lowest possible cost, shouldn’t citizens encourage governments to look for real cutbacks in their own countries instead of spending on cutbacks abroad?
This buying reductions from countries such as Scotland with large open areas (for generation of power) will help boost their economy.
Scotland are looking forward to being a supplier of this sort of service. With proper restriction on minimum amounts of carbon reduction "in house", this will allow for a steeper progression toward being carbon neutral (modifying a country's infrastructure to gear toward lower emissions can take a long time).
What do you think?