GETM

Emissions Trading

With the Kyoto protocol established and in place with several industrialized countries ratifying it, global scale emissions trading is in focus.

A very Happy New Year with wishes of global prosperity and success. This being the first editorial of GETM, and of the year 2006, it is a joyous occasion and we start the year with a discussion on emissions trading.

With the Kyoto protocol established and in place with several industrialized countries ratifying it, global scale emissions trading is in focus. What is emissions trading? Simply put, those countries that emit greenhouse gases lower than the maximum allowed (5% below baseline 1990 levels during 2008-2012) can put their ‘credited’ emission amounts up for bid. Countries exceeding maximum levels can buy these ‘credits’.

Criticism on the emissions trading allowance include opinions that, in lieu of being penalized for exceeding maximum allowable concentrations of greenhouse gas emissions, countries may purchase their way out of compliance. The United States of America, a major emitter, has not yet ratified the agreement; the influence on other undecided developing or developed countries is not ignorable. India and China have signed on as developing countries, thus emissions limits do not apply to them yet.

With most developing countries adapting an accelerated industrialized development approach, the ratification of the protocol by these countries would be a far off possibility but for emissions trading allowance following a cap (limit) and trade principle. The European Union has already set an example by implementing the largest emissions trading scheme, second phase of which lasts from 2008-2012, the first commitment period of the Kyoto Protocol. In fact, the USA started practicing emissions trading way back in the 1970s and follows cap and trade in several of its states.

If administered correctly, emissions trading would result in a net reduction in greenhouse gases. The trading may be controlled by limiting of the number of credits available for trade and the imposing of a buying power ceiling, beyond which stricter controls and fines may be levied. Precedence conditions may well be included on how the funds (obtained from sale of credits) will be utilized, for example towards cleaner industrial projects, expansions or pollution control systems. Administration and enforcement is key to the thriving of emissions trading under the Kyoto Protocol.

Wishing you all the very best in the New Year,
Sincerely,
Chitra Gowda, Editor

Posted by Moderator on January 2nd, 2006 filed in editorial Discuss now »