CAP AND TRADE or BAIT AND SWITCH?
Kyoto Protocol was signed in 1997 by 160 different countries around the world. In 2005, it was ratified by 175 countries. At the same time, UNFCCC (United Nations Framework Convention on Climate Change) was founded in 1992 in order to decrease the industrial greenhouse gases emissions (GHG).
Greenhouse gases are uniformly mixed pollutants, i.e. one ton of greenhouse gas emitted anywhere on earth has the same effect as one ton emitted somewhere else on earth. In abatement strategies, this wants to mean that does not matter where reductions in GHG emissions take place. What matters is whether we are able to reduce the emissions effectively on a global scale (Zhang, 1998).
Source: Greenretreat.org
Thus, according to UNFCCC, emissions trading as set out in Article 17 of the Kyoto Protocol, allows countries that have emissions units to spare to sell this excess capacity to countries that are over their targets.
In this point, we are talking about Cap and Trade System. Cap and Trade or Emissions Trading System (ETS) is a powerful policy instrument for managing industrial greenhouse gas emissions. This system is a market mechanism established by the European Emissions Trading Directive to encourage CO2 emission reduction at the lowest cost in certain production sectors (electricity generation, steel mills, cement industry, tile industry, etc.).
The operation of the “cap-and-trade” scheme is based on two key concepts: (a) setting a cap on emissions without penalty to each Member State of the European Union, and (b) the transfer of allowances between agents.
Source: own elaboration and "Energía y Sociedad" (2013)
Some companies will find it easy to reduce their pollution to match their number of permits; others may find it more difficult. However, trading lets companies buy and sell allowances, leading to more cost-effective pollution cuts, and incentive to invest in cleaner technology. Furthermore, companies could turn pollution cuts into revenue; this provides a powerful incentive for creativity, energy conservation and investment (EDF, 2013). Also, the option to buy allowances gives companies flexibility and while companies may exchange allowances with each other, the same amount of pollution cuts are achieved.
On the other hand, there are some criticism points of view for cape and trade. First of all, Annie Leonard provided a critical view on carbon emissions trading in 2009, in a documentary called The Story of Cap and Trade (Story of Stuff, 2006).
She emphasized three mainly factors: unfair financial advantages to major polluters resulting from free permits, an ineffectiveness of the system caused by cheating in connection with carbon offsets and a distraction form the search for other solutions. Also, recent criticism comes from the American Trucking Association (ATA), which told a Congressional Committee that a “cap and trade program” could result in significantly higher costs in the trucking industry for American consumers.
As a conclusion, I think that we should take care about the situation with a long-term mentality. Therefore, the emissions markets should mature and grow, to evolve and provide wide GHG coverage all the sectors and areas around the world. Besides we need to create a good regulation to support this market and to ensure the transparency of each transaction. Finally, in my opinion, “cap and trade system” is a powerful environmental protection tool and if we use it with another ones that we have, and in a correct way, we could achieve some important goals to allow future generations enjoy our world.
Source: www.ieta.org/emissions-trading
“A true conservationist is a man who knows that the world is not given by his fathers, but borrowed from his children.”
John James Audubon (1800).
BIBLIOGRAPHY
- Energía y Sociedad. “El esquema cap-and-trade y los incentivos a reducir emisiones” http://www.energiaysociedad.es/documentos/E2_Esquema_cap_and_trade.pdf (en línea) Última modificación: 30/05/2013
- Xiang Zhang, Z. (1998) “Greenhouse gas emissions trading and the world trading system” University of Groningen, Netherlands.
- Ellerman, D. (2009) “The EU´s Emissions Trading Scheme: Prototype Global System?” MIT Joint Program on the Science and Policy of Global Change.
- Environmental Defense Fund (EDF), (2013) “How Cap and Trade Works”.
- Parker, L. (2010) “Climate Change and the EU Emissions Trading Scheme (ETS): Looking to 2020” Congressional Research Service, CRS Report for Congress.
- Verdonk, M. Corjan, B. Vollebergh, H. and Roelfsema, M. (2013) “Evaluation of policy options to reform the EU Emissions Trading System. Effects on carbon price, emissions and the economy” PBL Netherlands Environmental Assessment Agency.
- http://storyofstuff.org
- http://www.ieta.org/emissions-trading
- http://www.environmentalleader.com/2009/06/11/criticism-ramps-up-against-cap-and-trade-systems/?graph=full&id=1
Comments Off on CAP AND TRADE or BAIT AND SWITCH? /
10 Dec 2013
por
guillermojoselatorre
IMSD /
.png)
].gif)
.png){kind=logo}
].png)
].png)
].png)
].png)
.png){kind=logo}
].png)
.png){kind=logo}
