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He said he had been in his hotel room, "in his underwear", when he was called back for "hours of
wrangling" to stop a deal being blocked.
More transparency
"The whole accord was in danger of being overturned by some countries, including Sudan and
Venezuela.
"I was told that actually the deal looked like it might be just blocked. The Sudanese delegate in particular
had compared the deal to the holocaust and was trying to whip up anger against it.
"Luckily we found a way round the issue, but it highlights the complexity of a deal when it needs
unanimity," he said.
He said some developing countries, such as China, did not want targets to be under international legally-
binding obligations.
"They have doubts about whether we should, as a world,
commit to a kind of bigger target, to say, for example - as It is not even an agreement. The
parties rejected it as being a consensus
the scientists say - we should cut our carbon emissions by
decision
50% by 2050."
But he said talks had not been "a waste of time" because it Tom Picken, Friends of the Earth
was the first time both developed and developing countries wanted to tackle the problem.
There was also "importantly, finance in the deal", he said.
The agreement outlined a goal of providing $100bn a year by 2020 to help poorer countries and also
promised to deliver $30bn (£18.5bn) of aid for developing nations over the next three years.
Mr Miliband said there would be more transparency in about six weeks, when countries had agreed to
put forward their targets.
He said he had "absolutely not given up hope, but it was important to move forward urgently" and a legal
agreement "was still necessary".
Developed countries also needed to raise their ambition in terms of targets, he said.
'Complete disaster'
Liberal Democrat energy spokesman Simon Hughes said the declaration was "desperately disappointing"
when the world needed a deal.
He said: "I can't remember an occasion when more people of power and influence came together on a
more important issue and went away with so little to show for it."
Shadow climate change secretary Greg Clark said talks must go on in the months ahead until a proper
deal is struck.
He said: "I made it clear in Copenhagen that, if negotiations continue beyond the general election and
Conservatives were in government, there would be no let up in our determination to secure a rigorous
global deal."
Green Party leader Caroline Lucas said the outcome after years of waiting was "a complete disaster".
She said: "What have we got? An empty accord with no legally binding framework, no targets, and no
money guaranteed to be over and above existing aid budgets. It's deeply, deeply disappointing."
Friends of the Earth campaigner Tom Picken said the UK government had said it would fight for a
"strong and fair agreement" but the accord was neither.
"It is not even an agreement," he said.
"The parties rejected it as being a consensus decision."
He accused the US of "arm twisting" some countries into a deal, and said the rich countries had acted
against the spirit of the past two years of negotiations.
Q&A: Redd - preserving forests to tackle climate change
One concrete agreement expected from the Copenhagen climate change conference is a deal on
finance for a programme to preserve the world's forests - Redd. The BBC's James Painter explains
how it works.
What does Redd stand for?
Redd stands for Reducing Emissions from Deforestation and Forest Degradation in Developing Countries.
What is it?
Essentially, it is a way of paying developing countries or communities within them to preserve their forests.
Redd schemes are seen as a critical way of reducing the amount of CO2 emissions that come from
deforestation around the world and cause global warming. In the last few years Redd has become a key part
of the negotiations over a new climate deal.
Why does deforestation lead to CO2 emissions?
Vast quantities of carbon are stored in the trees and soils of tropical forests. When the trees are burnt down
to clear land to grow crops, this is converted into carbon dioxide which is one of the greenhouse gases
accelerating climate change. The main causes of tropical deforestation are clearing for cattle ranching and
commercial agriculture (eg soya or palm oil plantations), logging, colonisation and subsequent subsistence
agriculture, and the building of roads.
Why is REDD so important?
Estimates for the percentage of annual global greenhouse gas (GHG) emissions that come from
deforestation range between 12 and 20%. Most experts agree the figure is roughly comparable to the
emissions of the whole of the European Union, and is higher than the total of emissions generated by the
global transport sector (all the cars, trucks, planes, ships and trains worldwide).
Over and above the emissions associated with deforestation, the destruction of forests reduces the planet's
ability to absorb CO2 from the atmosphere. Tropical forests are estimated to absorb about 15% of the CO2
we release.
How important is Redd?
Some observers, including Lord Nicholas Stern, argue that Redd schemes offer the single largest
opportunity for cost-effective and immediate reductions in GHG emissions. They say other, more
technologically sophisticated, options like carbon capture and storage could take several years to come into
large-scale operation and are more expensive.
Which countries are key for Redd?
According the World Resources Institute (WRI), in the 1990s Indonesia and Brazil were responsible for
about a half of the global emissions from deforestation. The WRI places them in third and fourth place in
the world ranking of global emitters (after China and the USA), if GHG emissions from deforestation are
included. The Democratic Republic of Congo is also a major emitter. Many forest countries are grouped in
the Coalition of Rainforest Nations, which has a strong voice in the Redd negotiations (particularly Papua
New Guinea).
Do Redd programmes already exist?
Yes, many pilot programmes are already operating around the world.
• Indonesia has more than 10 schemes, including the Ulu Masen project in Aceh province, which is
part-funded by the US bank Merrill Lynch
• Brazil also has a number of projects, including the Juma programme in the state of Amazonas
• The Norwegian government recently announced it would pay Guyana US$250m to preserve its
rainforest
The World Bank is working to set in motion Redd projects in 35 countries.
How do they work?
In different ways. In the Ulu Masen project in Indonesia, the idea is that you start by calculating how much
carbon is saved from entering the earth's atmosphere by not cutting down the forest. These savings are
converted into what are known as carbon-offset credits, which are then sold to rich governments or
companies prepared to pay others to reduce their GHG emissions on their behalf. The money generated by
the sale of these credits is invested into protecting the local forest and improving the lives of local
communities living near or in the forest. The aim is that this would give local people enough of an incentive
not to cut down trees.
In Brazil, families in the Juma reserve are given a debit card, and if regular inspections show that the trees
are still standing, they get about US$30 a month credited to their accounts. Coca-Cola, the Marriott hotel
chain and a Brazilian private bank have been involved in part-funding the project.
How might Redd work in the future?
There are many different proposals regarding how Redd might work and how it might be funded. But
broadly they fall into three categories:
• Market mechanisms: countries that reduce deforestation would gain credits for reducing their
carbon emissions, which would then be sold on international carbon markets
• Government funds: a large pot of international funding would be set up and play a similar role to
the official development aid that flows from rich to poor countries. An example of this is Brazil's
Amazon Fund to which Norway has pledged US$1bn
• A combination of the two
There is also a big debate as to whether Redd projects should be managed and funded at a national or sub-
national level.
What sort of sums of money are we talking about?
The 2006 Stern Report spoke of at least US$5bn a year needed initially for the eight countries responsible
for 70% of the GHG emissions from deforestation. The Eliasch report (commissioned by UK Prime
Minister Gordon Brown) suggested that between US$18bn and US$26bn would be required annually to
halve emissions from deforestation by 2020.
Is that possible?
The UN estimates that the various schemes could raise up to US$30bn a year for developing countries. The
outcome of the proposed legislation being discussed in the US Congress is critical to raising money for
Redd schemes via carbon markets. The current proposed cap-and-trade scheme includes a stipulation that
companies and other entities could offset a percentage of their carbon emissions via domestic and
international Redd schemes.
There are various carbon markets around the world either already operating (the EU) or being proposed
(USA, Australia, New Zealand, Japan, South Korea) but harmonising them will be difficult.
What are the main problems with Redd?
The main ones are:
Market mechanisms - Critics say carbon-offset schemes give companies or governments in the rich world
a chance to meet international obligations without cutting their own emissions. Several countries like Brazil,
China and Bolivia have stated that Redd should not be used as a way of big CO2 emitters being able to
avoid their obligations to meet emission cuts domestically.
Greenpeace argues that allowing a forestry credit scheme would flood the market with cheap offsets, lower
the carbon price and reduce incentives for industrial countries and companies to cut their emissions.
Monitoring compliance - How can you measure whether a country is really reducing deforestation?
Halting it one area might drive loggers or farmers into another (known as "leakage").
Measuring carbon - How do you know how much carbon is stored in a forest, and so much carbon
emissions are being avoided by preserving it?
Embezzlement - Some forest countries are also some of the most corrupt in the world. How can you be
sure the money gets to the communities who depend on the forests, rather than agribusiness companies or
local politicians? Many indigenous forest communities are worried they will not see the benefits.
Land tenure - Putting a value on forests may cause land-grabs, particularly when property rights in many
parts of the world are poorly-defined and hotly-contested.
So why bother?
Redd supporters say it won't be easy but these problems can eventually be overcome or mitigated. Brazil for
example already has a sophisticated satellite monitoring system of deforestation and is keen to share it. The
Norwegian government, which is a major provider of Redd funds, says that only when a country puts in
place robust anti-corruption measures will it be eligible for payments.
Will anything be agreed at Copenhagen?
The current Kyoto Protocol does not allow developing countries to sell offsets from avoided deforestation
schemes. Planting new trees did qualify, but refraining from cutting down existing trees in forests did not.
An outline agreement which changes this and recognises the importance of Redd is likely to emerge, but
several issues are still being negotiated. They include how forest communities will benefit, how to
safeguard against forests being turned into plantations, and whether "carbon enhancement" schemes such as
protecting biodiversity (known as Redd-plus) will be incorporated.
Why did Copenhagen fail to deliver a climate deal?
The end of the meeting saw leaders of the US and the BASIC group of countries (Brazil, South
Africa, India and China) hammering out a last-minute deal in a back room as though the nine
months of talks leading up to this summit, and the Bali Action Plan to which they had all
committed two years previously, did not exist. THE COPENHAGEN ACCORD
Just about every other country involved in the UN talks has a single chain of command; when the
president or prime minister speaks, he or she is able to make commitments for the entire
government.
Not so the US. The president is not able to pledge anything that Congress will not support, and
his inability to step up the US offer in Copenhagen was probably the single biggest impediment
to other parties improving theirs.
Viewed internationally, the US effectively has two governments, each with power of veto over
the other.
Doubtless the founding fathers had their reasons. But it makes the US a nation apart in these
processes, often unable to state what its position is or to move that position - a nightmare for
other countries' negotiators.
3. BAD TIMING
Although "climate sceptical" issues made hardly a stir in the plenary sessions, any delegate
wavering as to the scientific credibility of the "climate threat" would hardly have been convinced
by the freezing weather and - on the last few days - the snow that blanketed routes from city
centre to Bella Center.
Reporting that the "noughties" had been the warmest decade since instrumental records began,
the World Meteorological Organization (WMO) noted "except in parts of North America".
If the US public had experienced the searing heat and prolonged droughts and seriously perturbed
rainfall patterns seen in other corners of the globe, would they have pressed their senators harder
on climate action over the past few years?
6. 24-HOUR NEWS CULTURE
journalists travelling with the president. With due respect, they are not as well equipped to ask
critical questions as the environment specialists who had spent the previous two weeks at the
Bella Center.
After the event, of course, journalists pored over the details. But the agenda had already been set;
by the time those articles emerged, anyone who was not particularly interested in the issue would
have come to believe that a deal on climate change had been done, with the US providing
leadership to the global community.
The 24-hour live news culture did not make the Copenhagen Accord. But its existence offered the
White House a way to keep the accord's chief architect away from all meaningful scrutiny while
telling the world of his triumph.
7. EU POLITICS
An incredible amount of messaging and consultation went on behind the scenes in the run-up to
this meeting, as vast numbers of campaign groups from all over the planet strived to co-ordinate
their "messaging" in order to maximise the chances of achieving their desired outcome.
The messaging had been - in its broadest terms - to praise China, India, Brazil and the other major
developing countries that pledged to constrain the growth in their emissions; to go easy on
Barack Obama; and to lambast the countries (Canada, Russia, the EU) that campaigners felt could
and should do more.
Now, post-mortems are being held, and all those positions are up for review. US groups are still
giving Mr Obama more brickbats than bouquets, for fear of wrecking Congressional legislation -
but a change of stance is possible.
Having seen the deal emerge that the real leaders of China, India and the other large developing
countries evidently wanted, how will those countries now be treated?
How do you campaign in China - or in Saudi Arabia, another influential country that emerged
with a favourable outcome?
The situation is especially demanding for those organisations that have traditionally supported the
developing world on a range of issues against what they see as the west's damaging dominance.
After Copenhagen, there is no "developing world" - there are several. Responding to this new
world order is a challenge for campaign groups, as it will be for politicians in the old centres of
world power.
Why do you think Copenhagen failed to deliver a deal? You can send us your views using
the form below:
A selection of your comments may be published, displaying your name and location unless you
state otherwise in the box below.
Your comments:
Western leaders don't have any mandate from voters for implementing the radical policies
required to limit atmospheric C02. And the Chinese leadership won't implement any measures
that might ferment popular opposition. So how could this conference have ever "succeeded"?
David, Wallasey, UK
The Copenhagen summit on climate change failed for only a simple reason: the lack of political
will to understand, recognise and accept the scientific evidence and the worldwide daily havoc
that is testimony of the reality of climate change.
Gervais Marcel, Valetta, Malta
It failed to deliver because tackling climate change is contrary to the infinite economic growth
theory that underpins capitalist economics and western consumerism. However, as we live on a
finite planet, something will have to give.
Mr R Higgins, Northumberland, UK
Copenhagen failed to deliver a deal because humans have forgotten humanity.
Shyam Godar, Belgium
I would add the following reasons: 1 Climate control enthusiasts "avant la lettre" are inclined to
overstate their own opinion as being the right one. 2 The motivation from many countries'
governments to participate in climate control talks is money. 3 Congresses do not make decisions.
4 Many individual parties had made statements to the public in advance what kind of deal should
be realised, and therefore they were imprisoned by their own premature positions.
Gert Eussen, Oostende, Belgium
The very premise that the conference is based on is faulty. Man-made global warming driven by
CO2 is bunk.
David Guy, Rehovot, Israel
The more political an issue gets, the more perverted it gets. Climate change is a political hoax and
scientific fraud. The whole thing stinks, any binding agreements on cuts in CO2 emissions would
only have led to oppression and misery.
Anders Ericsson, Mariestad, Sweden
Mr Black makes very insightful observations on eight points. But he has overlooked a ninth
point, one which was completely and inexplicably overlooked at Copenhagen. If the participants
had invoked the spectre of Peak Oil, the delegates would have had a second imperative to action.
The peaking of global oil production, declining export capacity, declining net energy and the lack
of viable substitutes for petroleum - these four issues are additional reasons why we need urgent
and cooperative action to begin the transition.
Rick Munroe, Howe Island, Ontario, Canada
Suggest additions
Glossary in full
SF6 is 23,000 times more potent, weight for weight, than CO2, whereas CF4 endures
in the atmosphere for about 50,000 years.
SF6 is primarily used in the electrical industry, while CF4 is related to electronics and
aluminium manufacture.
Yet according to the Intergovernmental Panel on Climate Change (IPCC), these
industrial gases contribute only about 1% of the man-made greenhouse effect.
Professor Weiss's research - and that from other groups - suggests their contribution
may have been underestimated.
In almost every case, atmospheric concentrations are higher than suggested from
emissions data, which suggests there is a pattern of under-reporting, he said.
Most of the instruments monitoring the air are based in isolated regions in order that
measurements accurately reflect the global background level rather than local sources.
But regional monitoring is starting to locate problem areas, Professor Weiss related.
"There are [scientific] papers submitted for publication measuring HFC23, a byproduct
of making a number of other gases including refrigerants," he said.
"People have modified their factories to burn the gases rather than release them; we're
making measurements of HFC23 in Asian areas and we're seeing results that are
inconsistent with people burning as much as they say they're burning."
Money for that burning is channelled through the Kyoto Protocol's Clean Development
Mechanism (CDM).
This is intended to provide western companies with a cheap way of reducing emissions
by paying for it to happen in the developing world.
This should result in money being channelled into poorer countries, assisting their
development.
However, most of the money so far has gone to China, where companies have the
resources to make the most of the system.
Lex de Jonge, chairman of the CDM's Executive Board, told BBC News he "had no
doubt" that CDM projects were creating the reductions they were designed to.
"I can assure you that the reductions under the CDM are real, because they are checked
and cross-checked and monitored," he said.
"But another issue is whether there are other sources of HFC23 that are putting this
material into the atmosphere."
hina unveils emissions targets ahead of Copenhagen
The Copenhagen UN summit - between 7-18 December - aims to draw up a treaty to succeed the
1997 Kyoto Protocol, although observers say this is unlikely.
ANALYSIS
Beijing also said on Thursday that Chinese Prime
Richard Black, BBC News
Minister Wen Jiabao would attend the talks.
environment
That confirmation came a day after US President
correspondent
Barack Obama said he would go to the summit.
The US - the second largest polluter after China - The 40-45% target for cutting carbon intensity is
said President Obama would offer to cut US ambitious - more ambitious than many observers
emissions by 17% from 2005 levels by 2020. had expected.
But the offer was less than hoped for by the EU, But it doesn't mean China's emissions will fall -
Japan and UN scientists - most other countries' in fact they are still likely to rise, with the rate at
targets are given in comparison with 1990 figures. which economic growth rises outstripping the
rate at which carbon intensity falls.
BBC environment correspondent Richard Black says
This is exactly the kind of plan that major
that on that basis the US figure amounts to just a few
developing countries were supposed to take to
percentage points, as its emissions have risen by
the Copenhagen summit.
about 15% since 1990.
Coming on the heels of President Obama's
This is much less than the EU's pledge of a 20% cut
decision to put numbers on the table for cutting
over the same period, or a 30% cut if there is a This is definitely a very
US emissions, it is likely to make discussions in
positive step China is taking, but
global deal; and much less than the 25-40% figure Copenhagen a lot more straightforward.
we think China can do more
that developing countries are demanding. But whether developing countries are impressed
President Obama's offer reflects figures in a bill by the size of the US commitment is another
narrowly passed by the House of Representatives in matter.
Yang Ailun
June, but yet to be confirmed by the Senate. Earth Watch China
Greenpeace
Carbon intensity - A unit of measure. The amount of carbon emitted by a country per unit of Gross Domestic
Product.
Suggest additions
Glossary in full
Copenhagen deal causes EU carbon price fall
By Rob Young
Business reporter, BBC World Service
The Copenhagen climate summit's search for a deal to curb the world's greenhouse gas
emissions won't succeed unless there is agreement on another thing too - money.
Many of the countries which are most at risk from climate change are poor.
They say they can't afford to switch to cleaner energy generation or to defend their
populations from problems such as drought and the rising sea level without help from rich
countries.
Industrialised countries - which are historically responsible for emitting greenhouse gases -
agreed to help such nations when they signed up to the UN climate change convention
(UNFCCC).
But no binding deal which includes specific amounts of money has yet been agreed.
Copenhagen could be where this changes.
'Significant money'
The amounts developing countries need are vast, far beyond what they can afford to pay
themselves.
For example, the government of Liberia on the west coast of Africa says it would have to
spend half of its entire national budget to build sea defences for its main coastal cities.
CLIMATE CHANGE GLOSSARY
Select a term from the dropdown:
Mitigation
Mitigation - Action that will reduce man-made climate change. This includes action to reduce greenhouse
gas emissions or absorb greenhouse gases in the atmosphere.
Suggest additions
Glossary in full
"The financing is absolutely critical," says Yvo de Boer, the executive secretary of the
UNFCCC. "We need to see significant money on the table in Copenhagen."
The cash would be spent in two broad areas - in the jargon they're called adaptation and
mitigation. The first is coping with a changing climate. The second is not making climate
change worse by emitting even more pollutants.
Various studies have been undertaken to work out the size of the bill comes to - with results
ranging from tens of billions of dollars to more than a trillion dollars per year.
Three of the most authoritative estimates fall between these extremes.
• The British economist Lord Nicholas Stern reckons poor nations
will need $100 billion a year by the year 2020 - with that amount
doubling in the following decade
• The UN calculates developing countries would need more than
$500 billion a year
• The European Commission has suggested developing countries
will need $147 billion (100 billion euros) a year by 2020
In a document published earlier this year, the European Commission suggested 20-40% of
this money could come from the developing countries themselves. Another 40% could come
from carbon markets, it said, and the rest - 22bn to 50bn euros, or $32bn to $74bn - from
industrialised-country governments.
The United States has not suggested a figure,
but US chief climate negotiator, Todd Stern, ADAPTING TO SEA-LEVEL RISE
has said the US does "absolutely recognise
our historic role in putting emissions in the
Fast start
At present, the UN estimates a total of $21bn
is transferred from rich to poor countries - in
government aid, money from carbon markets
and cash from private sources.
The offices of London's carbon trading companies are a little quieter than usual.
The firms - many based in the City - buy and sell one of the world's newest
commodities: carbon dioxide.
The trade in such permits allows polluters to pay for emissions reductions made
elsewhere.
The market could be huge, but its future is now uncertain. It depends on how
governments decide to tackle climate change beyond 2012.
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The trade was first created by the Kyoto protocol in 1997.
Abyd Karmali was then an energy and climate change officer with the United Nations
Environment Programme.
He now heads up the Carbon Markets & Investors Association, and is the global head
of carbon markets at Bank of America Merrill Lynch.
"The thinking was that a market mechanism was likely to lead to lower overall cost for
entities that had obligations [to reduce their emissions]," he explains.
The scheme was nicknamed "cap and trade".
The idea is that emissions - initially in developed countries - are first capped at a
quantity equal to or below their historical levels.
Polluters in capped industries are then given credits for each tonne of carbon dioxide
they emit.
For example, a coal power company may receive credits under the European Trading
System for around 80% of its emissions.
But how does it deal with the shortfall?
One way would be to reduce its emissions.
'Offset' credits
Alternatively a polluter could simply buy
You don't see US businesses cutting
more emissions. They can come from
carbon just yet... they are probably spending
other firms within the scheme or,
more of their time on lobbying
The power of the wind and waves is ever-present in the Danish winter.
The Copenhagen climate change talks will discuss how to capture the energy from such
"renewable" sources.
The UK plans to get 15% of all its energy
that way within just 10 years.
Some experts believe it could provide for
all our needs.
But the government's adviser is sceptical
of just how far we can go.
More than just our homes
Professor David MacKay is the author of
a book on sustainable energy. Optimists say the powers of nature alone could
provide enough energy
He calculates that even if we covered every available plot, offshore location and tidal
estuary with wind, wave and tidal power we may not meet all our current energy needs.
Total UK energy output is equivalent to 2.7 million GWhours of electricity or 310 GW
of capacity.
The market value of all energy consumed in the UK is £130bn ($216bn) a year with the
amount spent on energy by final users at about £75bn.
Only about a third of the energy we use comes in the form of electricity.
Transport and heating are also key.
The wind doesn't always blow
Renewable energy is often unreliable.
The externality associated with the non-rival and non-excludable costs of the release of carbon dioxide
into the atmosphere is inherently difficult to internalise. Emissions trading has emerged as a popular
method of achieving socially optimal emissions reduction. The following analysis discusses the flaws in
emissions trading – particularly in light of its use in the European Union – and puts forward
suggestions regarding policy initiatives that may help overcome these problems.
The recent use of emissions trading has created a Coasian market for ‘polluting property rights’, which
has allowed for increased information sharing, preference revelation and signalling compared with
approaches based on strict government intervention (DEFRA, 2003). The so called ‘cap and trade’
system has been used to limit total greenhouse gas emissions and grant allowances to companies
giving them the right to pollute. Firms wishing to exceed their allowance must purchase credits from
those polluting below their allocation or face heavy penalties.
Both emissions trading and conventional Pigovian taxation provide incentives for individuals and firms
to reduce their greenhouse gas emissions to a socially optimal level. Pigovian taxes involve the
government increasing the cost per unit of ‘carbon inputs’ while the market determines the efficient
quantity. By contrast, ‘cap and trade’ emissions trading schemes involve a government set quantity
with a market determined price of carbon based on the reallocation of polluting permits (Gittins,
2007). Controlling either variable theoretically yields the same emissions reduction; however the
advantage of emissions trading is that polluting rights are allocated through a market to those who
can make the most efficient use of them. Companies that can affordably reduce their emissions will do
so in order to sell their credits while firms that generate the highest valued output per unit of input
will choose to buy polluting rights (DEFRA, 2003).
To further illustrate this point, if two firms were to face a tax, the emissions target (which would
equate to the socially efficient level ‘Q*’ where MB = MSC if perfect information were to exist) would
be achieved since neither firm will produce when it is no longer profitable to do so. If tradeable
permits were used, the firm for which emissions reductions are more costly could buy permits from
the other firm, and ‘Q*’ could be reached without sacrificing as much output. Emissions trading
schemes arguably have lower administrative costs due to the incentive for firms to negotiate amongst
themselves in order to achieve a ‘least cost’ reduction (Pindyck & Rubinfeld, 2005). It also succeeds in
promoting the development of innovative ways to reduce the original externality.
Limited knowledge of climate science creates uncertainty surrounding the probability and magnitude
of future consequences, making it impossible to measure the size of the externality and determine the
socially optimal level of emissions. This presents a problem for any reduction mechanism, and
provides a breeding ground for lobbyists to push their own agenda without the scrutiny that might
exist if more accurate information was available. This uncertainty is arguably one of the reasons why
Australia is yet to establish an effective emissions trading scheme. Given the possible irreversibility of
damage to the Earth’s climate, Wills (2006 p. 350) argues that policy makers ought to follow the
maximum decision rule and choose a cautious approach which ‘maximises the minimum outcome’.
While the use of markets appears to succeed in making emissions reductions occur at minimal cost,
critics argue that trading schemes can provide a short term incentive to over pollute. Harvey (2007)
describes how firms that have already reduced their emissions in the past may ‘lose out’ under such a
system. This is because many such schemes allocate polluting permits based on the past emissions of
each firm. Companies often have an incentive to increase polluting behaviour prior to a scheme’s
implementation in order to inflate past emissions data and receive a higher allocation. Michaelowa and
Butzengeiger (2005) describe how this process – coined ‘grandfathering’ – may also result in blatant
over-allocation, leading to a market with low liquidity and a low permit prices. Policies that provide
allocations on the basis of average industry sector emissions rather than those of individual firms
could be adopted in order to virtually eliminate the incentives for individual firms to over-pollute as a
means of enhancing their entitlements. The use of reputation could also further encourage voluntary
compliance, as many consumers arguably place significant existence value on a healthy atmosphere
and would be inclined to support like minded corporations.
The European Union Emissions Trading Scheme (EU ETS)
The European Union Emissions Trading Scheme (EU ETS) was the world’s first large scale trading
system for carbon dioxide. Ellerman and Buchner (2007) outline the process of allowance allocation in
the EU ETS, and argue that a lack of ‘installation-level’ data has had considerable consequences for
the cost of enforcing the scheme. The absence of any existing legal authority to collect the data within
the desired time frame meant that planners required extensive industry cooperation. While few
examples of fraudulent data submissions exist – likely due to incentives for firms to divulge
information in order to receive allocations – the voluntary nature of industry participation highlights
the potential costliness in monitoring and enforcing any emissions trading scheme on a large scale.
The establishment of concise legal guidelines for firms to submit their emissions data is essential for
the future enforcement of emissions trading.
Restricting emissions to reflect past levels formed the basis of Kyoto protocol, which used 1990 as its
base year. It was therefore desirable for the EU ETS to base allocations on historical levels, so that
participating countries could automatically meet their Kyoto targets. Ellerman and Buchner (2007)
found that this was not feasible, again due to fact that ‘installation-level’ data from 1990 was
impractical and too costly to obtain. Furthermore, significant growth in certain countries and industry
sectors since 1990 makes such a historic base year inappropriate. Future international agreements
ought to adopt reduction targets based on a portion of current emissions. Collaboration between local
policy makers and those involved in formulating international agreements is essential in ensuring that
the cost of gathering the information required to implement global emission reduction targets is
minimised.
Beauman (2007) discusses other significant hurdles to any emissions trading scheme in the context of
the global steel manufacturing industry. Ninety per cent of the sector’s emissions come directly from
the primary blast furnace method, which is far cheaper than environmentally friendly alternatives.
Given the inefficiency of this method, firms utilising it must purchase carbon credits, adding
significantly to their cost of production. This has led many European steel manufacturers to source
semi-finished steel from lower-cost locations such as Brazil and Ukraine, which are not subject to the
EU ETS (Beauman, 2007). The obvious implication of this trend is that carbon dioxide emissions are
not reduced; they merely occur elsewhere instead. This significant flaw is arguably not inherent in
emissions trading; rather it is the result of such a scheme’s inability to include all members of the
global economy. Given the interconnected nature of world industry, future policy makers must ensure
that any emissions trading scheme also encompasses developing nations in some way. Additionally,
the ‘carbon inputs’ used in the overseas manufacturing of imported goods could count towards the
emissions of importers as a way of preventing the outsourcing of ‘carbon intensive’ manufacturing.
The diverse range of contributing pollutants and industry sectors undermine the efforts of any social
coordination systems to accurately target the cause of climate change. Harvey (2007) discusses how
greenhouse gases such as nitrous oxide produced as by products of processes used to manufacture
chemicals are not included in the EU ETS, despite contributing nearly five percent of total emissions; a
proportion which greatly exceeds the market capitalisation of the chemical industry. The difficulty of
any one mechanism to fully internalise an externality resulting from numerous causes could be aided
significantly if future emissions trading schemes were to merely measure the effect of various
greenhouse gases in terms of their ‘carbon dioxide equivalent’, or the amount of carbon dioxide that
would have the same global warming potential. Adopting such an approach could prevent certain
industries from avoiding their emission reduction obligations.
The use of emissions trading is an effective means to encourage industry to reduce its greenhouse gas
emissions; however flaws in its implementation need to be addressed in future policy initiatives. Any
emissions trading scheme needs to be carefully integrated with international agreements to ensure
consistent targets, minimal information costs and the possibility of permit exchange between regions.
Given the uncertainty over the likelihood and magnitude of future events, policy makers ought to
adopt a cautious approach given the irreversibility of climate change damage.
References
Beauman, Chris (2007), “Climate change poses stern challenge” in Financial Times. London (UK): Oct
8, 2007. pg. 4
Ellerman, A. Denny and Buchner, Barbara K. (2007), “Symposium: The European Union Emissions
Trading Scheme: Origins, Allocation, and Early Results” in Review of Environmental Economics and
Policy, Winter 2007, v. 1, iss. 1, pp. 66-87
Freebairn, John (2003), “Principles for the Allocation of Scarce Water” in Australian Economic Review,
June 2003, v. 36, iss. 2, pp. 203-12
Gittins, Ross (2007), “Carbon trading v taxes - a winner eases ahead” in The Sydney Morning Herald
31/03/2007 viewed 10/10/2007 <http://www.smh.com.au/news/business/carbon-trading-v-taxes–a-
winner-eases-ahead/2007/03/30/1174761748992.html>
Harvey, Fiona (2007), “Doubt about regime” in Financial Times. London (UK): Sep 18, 2007. pg. 3
Michaelowa, Axel and Butzengeiger, Sonja (2005), “EU Emissions Trading: Navigating between Scylla
and Charybdis” in Hamburg Institute of International Economics; Climate Policy, 2005, v. 5, iss. 1, p.
1-9
Pindyck, R. & Rubinfeld, D. (2005) “Microeconomics” 6th ed. Pearson Prentice Hall New Jersey p. 642-
653
Stern, Nicholas (2007), “The Economics of Climate Change – The Stern Review”, Cambridge University
Press
Wills, I. (2006), “Economics and the Environment: A signalling and incentives approach” 2nd ed, Allen
& Unwin NSW p. 5, 240-260
(UK) Department for the Environment, Food and Rural Affairs (2003), “Emissions Trading Schemes”,
viewed 03/09/2007 <http://www.defra.gov.uk/environment/climatechange/trading/index.htm>
European Commission (2007), “The Kyoto Protocol – A Brief Summary”, viewed 03/09/2007
<http://ec.europa.eu/environment/climat/kyoto.htm>
Intergovernmental Panel on Climate Change (2007) “Climate Change 2007: The Physical Science
Basis” in Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental
Panel on Climate Change
Author unknown (2006), “Govt rules out carbon tax” in ABC News Online 09/11/2006
Viewed 09/10/2007 <http://www.abc.net.au/news/newsitems/200611/s1785099.htm>
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• 2 years ago
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Dr. C
The production limits are the causes of problems in developed nations. Under the treaty, these nations
typically far exceed their allowable carbon dioxide production quota. The costs of exceeding this quota
(penalties, offset trading) are quite high, which results in artificially high energy costs. Many European
countries pay astronomical energy costs simply because they have chosen to.
Furthermore, these countries are expending large sums to utilize "alternative" electricity sources, even
though these sources are far more expensive than the power sources they have now (even with the
penalties). Frequently, these sources also cause more environmental harm than the carbon dioxide
production they offset. For example, hydro-electric power is expensive (large initial outlay) and it turns
thousands of acres of vital habitat into a lake. Nuclear is also extremely expensive, and does have some
environmental risks.
The carbon credit trading has also caused an environmental catastrophe in the 3rd world countries that
were supposed to benefit from it. Do not be mistaken, those 3rd world governments do receive a hefty
sum of cash, but they do it at the cost of their people and their environment. For example, the Kyoto
Protocol recognizes eucalyptus plantations (and other forest plantations) as a carbon sink, but it does not
recognize forest preservation as a sink. The result is that 3rd world countries are destroying rain forests to
create plantations which they can use for carbon credit trading. They also frequently chase peasant
farmers off of their lands without compensation for the same purpose.
Oh, and Pros.... If the objective is to make energy more expensive, and dictators more wealthy, then the
Kyoto Protocol has succeeded brilliantly. I generally feel these are bad things, so I can only conclude
Kyoto has no Pros.
Source(s):
http://ideas.repec.org/a/eee/enepol/v29y…
http://www.reedsmith.com/library.cfm?cit…
http://www.edf.org/documents/4867_Santil…
http://archive.greenpeace.org/pressrelea…
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kyoto is bad, very very bad. All kyoto would do is create restrictions our government couldn't reach
resulting in higher taxes, inflation, political unrest, and socialism.
go to-
http://www.youtube.com/skyrish99
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○ 2 years ago
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• danadee l
Kyōto Protocol, international treaty adopted in 1997 that sets concrete targets for developed countries to
reduce the greenhouse gas emissions that contribute to global warming, also known as climate change.
The Kyōto Protocol is a supplementary treaty to the United Nations Framework Convention on Climate
Change (UNFCCC) and went into force in February 2005. More than 130 countries are party to it, with
this figure set to rise; so far, however, the United States has refused to ratify the treaty.
Under the Kyōto Protocol, developed, or industrialized, countries are subject to legally binding
commitments to curb their emissions of the six main greenhouse gases: carbon dioxide, methane, nitrous
oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride. The targets are based mostly on the
emission levels of these pollutants in 1990. In general the treaty calls for industrialized nations to reduce
their greenhouse gas emissions by 5 percent below 1990 levels. The target goals must be accomplished
by 2012, and commitments to start achieving the targets begin in 2008. Developing countries—that is,
most countries in Africa, Asia, and Latin America—are only subject to general commitments.
The Kyōto Protocol is a flexible treaty, allowing individual governments to decide what specific policies
and reforms to implement to meet their commitments. It also allows countries to offset some of their
emissions by increasing the carbon dioxide absorbed, or sequestered, by trees and other vegetation.
However, eligible sequestration activities, and the amount of offsetting allowed, are tightly controlled.
In addition, the Kyōto Protocol established three market-based mechanisms to help bring down the costs
of lowering emissions. These mechanisms are known as joint implementation, the clean development
mechanism (CDM), and emissions trading. Under joint implementation and the CDM, a country can invest
in a project to curb emissions in another country, where it is cheaper to do so, and thereby acquire the
resulting credit to offset against its own target. Under emissions trading, a country that exceeds its own
target of lowering emissions can transfer the surplus credits to another country that is finding it more
difficult to reduce its emissions. Developing countries can participate, but only through the CDM.
Safeguards are in place to ensure that emission credits are genuine.
--------------------------------------…
--------------------------------------…
Developed countries are subject to stringent reporting requirements, and a compliance committee
considers any suspected noncompliance. Countries commit to achieve a certain level of their target goal
beginning in 2008. Any country that fails to meet its emissions target may be penalized by having to meet
a proportionally higher target for the following commitment period and by having to prepare an action plan
to show how emissions will be reined in.
The entry into force of the Kyōto Protocol was delayed for several years while countries finalized its
details. A package of decisions, known as the Marrakech Accords, was finally agreed to in 2001, setting
out in detail how the protocol’s rules and mechanisms will work. Implementation is now underway, with
the CDM already operational. Many businesses are especially keen to participate in the market
mechanisms, and the European Union (EU) launched a regional emissions trading system in January
2005. Meeting the protocol’s targets, however, will be a challenge for many countries.
Talks are due to start soon on next steps in the international effort to control climate change. Key
controversial issues will include when and how to negotiate stronger commitments for developing
countries, and how to secure the participation of the United States. Under the administration of
Democratic president Bill Clinton, the United States supported the protocol but never submitted it to
Congress for ratification because of opposition from the Republican Party. When Republican George W.
Bush became president in 2001, the United States withdrew its support for the protocol. Bush claimed
that the treaty would harm the U.S. economy and was unfair to industrialized nations because developing
countries were not required to control their emissions.
Latest Developments
CBC reports that 40 percent of the climate change budgets at Environment Canada and Natural
Resources have been cut. Programs cut include the One Tonne Challenge, a high-profile public
education campaign on climate change, and the popular EnerGuide Retrofit Incentive Program of grants
to help make Canadian homes more energy-efficient.
Both Prime Minister Stephen Harper and Environment Minister Rona Ambrose have been expressing
interest publicly in the Asia-Pacific Partnership on Clean Development and Climate, also called AP6 or
Kyoto Lite, as an alternative to the Kyoto Protocol.
Rona Ambrose has come under fire from both political and environment opponents who say she is trying
to sabotage negotiations on the second phase of the Kyoto Protocol.
Background
The Kyoto Protocol is a UN-led international agreement reached in 1997 in Kyoto, Japan to address the
problems of climate change and reduce greenhouse gas emissions. The Kyoto Protocol went into force in
February 2005.
The Kyoto Protocol involves moving away from fossil fuel energy sources - oil, gas, and coal - to
renewable sources of energy - hydro, wind and solar power - and to less environmentally harmful ways of
burning fossil fuels.
Greenhouse gases such as carbon dioxide, methane and nitrous oxide are mainly generated by burning
fossil fuels. Higher levels of greenhouse gas emissions cause global warming and climate change.
The Kyoto Protocol commits 38 industrialized countries to cut greenhouse gas emissions by 2008-2012 to
overall levels that are 5.2 percent below 1990 levels. Targets for greenhouse gas emissions reduction
were established for each industrialized country. Developing countries including China and India were
asked to set voluntary targets for greenhouse gas emissions.
The Canadian target for the Kyoto Protocol is to reduce greenhouse gas emissions by six percent below
their 1990 levels by 2012.
The United States did not ratify the Kyoto Protocol, and in February 2002 introduced the Clean Skies and
Global Climate Change initiatives, in which targets for reduction in greenhouse gas emissions are linked
directly to GDP and the size of the U.S. economy.
In April 2005, the Liberal government issued a revised implementation plan and pledged $10 billion to cut
greenhouse gases by 270 megatonnes a year by 2008-2012. Emission targets for large industrial
polluters were relaxed.
During the 2006 federal election campaign the Conservatives said they did not support the Kyoto
Protocol. However, since winning the election with just a minority, the Conservative government members
have been a little more circumspect in their comments, and instead talk about the targets being unrealistic
or unachievable.
Deeper emission targets will be needed after 2012 if the objective of stabilizing atmospheric greenhouse
gas concentrations at a safe level is to be met.
Canada can reduce greenhouse gases more cheaply if it works within the context of an international
system.
The costs of not acting include the costs of droughts, floods and poor health.
Canada would lose international credibility and create foreign policy problems for itself if it withdrew from
the Kyoto Protocol.
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