Can carbon trade be a solution to global warming?
Carbon trading is a market mechanism intended to tackle global warming. Though it dates back to 1989 it only took off as a market after the Kyoto Protocol was signed by some 180 countries in December 1997, in Kyoto, Japan. The Protocol calls for 38 industrialized countries to reduce their greenhouse gas emissions between the years 2008 and 2012 to levels that are 5.2 percent lower than those of 1990. Carbon is an element stored in fossil fuels such as coal and oil. When these fuels are burned, carbon dioxide is released and acts as what we term a "greenhouse gas". Carbon is the common denominator in all polluting gases that cause global warming. Under Kyoto, each participating government has its own national target for reducing carbon dioxide emissions. This was an important issue discussed in recent Bali conference. US Senate has recently discussed a climate change bill promoting carbon trading. The Kyoto Protocol is the first scheme that includes global trading in greenhouse gases, but the idea of trading pollutants was first tried in the 1970s when the US decided to trade sulphur dioxide and nitrous oxide to tackle acid rain. The key idea behind carbon trading is that, from the planet's point of view, where carbon dioxide comes from is far less important than total amounts. So, rather than rigidly forcing the reduction of emissions country-by-country (or company-by-company), the market creates a choice: either spend the money to cover the costs of cutting pollution (emissions), or continue polluting (emitting) and pay someone else to cut their pollution. Carbon would be given an economic value, allowing people, companies or nations to trade it. If a nation bought carbon, it would be buying the rights to burn it, and a nation selling carbon would be giving up its rights to burn it. The value of the carbon would be based on the ability of the country owning the carbon to store it or to prevent it from being released into the atmosphere. A market would be created to facilitate the buying and selling of the rights to emit greenhouse gases. The industrialized nations for which reducing emissions is a daunting task could buy the emission rights from another nation whose industries do not produce as much of these gases. The market for carbon is possible because the goal of the Kyoto Protocol is to reduce emissions as a collective responsibility. There are two main ways to exchange carbon. The first is what is called a cap-and-trade scheme whereby emissions are limited and can then be traded. Under Kyoto developed countries can trade with each other. The European Trading Scheme (ETS) is a cap-and-trade scheme and the largest companies-based scheme around. There are also voluntary cap-and-trade schemes. The Chicago Climate Exchange (CCX) is such a scheme. The second main way of trading carbon is through credits from projects that compensate for or "offset" emissions. This kind of trading works like this: an eco-consultancy that brokers environmental services conducts an eco-audit of a client and comes up with a presumably accurate estimate of how much carbon the client's activities release into the atmosphere. At the other end of the operation, the firm scours the world in search of environmental services that could offset its client's emissions. These services are usually forests and tree-planting projects and are known in the business as carbon assets or carbon sinks, because trees remove carbon from the atmosphere and sequester it in their wood. The activity of these sinks is often called carbon sequestration. Using a variety of methodologies, the environmental services broker arrives at an estimate of how much carbon a particular sink sequesters, and then assigns it a monetary value and sells it to a client. The client then subtracts from its carbon account the carbon sequestered by its newly purchased carbon sink. The client is said to be carbon-neutral or climate-neutral when its carbon assets equal its carbon emissions. The carbon trade is legitimized by the Clean Development Mechanism (CDM) of the Kyoto Protocol, an international agreement that aims to deal with the threat of global warming. The CDM is one of the Protocol's market-based “flexible” mechanisms, which include emissions trading and joint implementation. Two examples of environmental services brokers in the carbon trade are Climate Care and Future Forests. The London-based Climate Care is a non-profit organization that sells carbon offsets to individuals and companies and uses the money to invest in climate-friendly projects, like wilderness protection in Uganda, energy efficiency in the Indian Ocean island state of Mauritius, and small-scale hydro power in Bulgaria. Its corporate clients are mostly travel agencies like Ecotours, Whale Watch Azores, Nature Trek, and Andante. The for-profit Future Forests, also based in England, says on its web page: “We help you to see how much CO2 is produced by the things you do, and suggest ways you can reduce those emissions. What you can't reduce, we can neutralise (or 'offset') for you -- by planting trees that reabsorb CO2 and by investing in projects that cut down CO2 emissions, such as those which use renewable energy sources. ” The World Bank, one of the main players in carbon financing, estimates the value of carbon traded in 2005 to be about $10bn. The Bank believes the carbon market has the potential to bring more than $25bn (£14bn) in new financing for sustainable development to the poorest countries and the developing world. While some NGOs and “green” businesses favour the carbon trade and view it as a win-win solution that reconciles environmental protection with economic prosperity, other environmentalists and grassroots organizations claim that it is no solution to environmental problems such as global warming. Critics of the idea suspect that some countries will exploit the trading system and the consequences will be negative. Many argue against the ethics and the feasibility of carbon trade mechanism: it turns the earth's carbon cycling capacity into commodity that is to be traded by the same corporate hands that are destroying the climate. Nobel Peace Prize winner Al Gore and institutions like the World Bank and the Pew Center on Global Climate Change support carbon trading as a viable market-based solution to fight global warming whereas 'Carbon Trade Watch' argue that carbon trading actually delays the crucial process of big polluters reducing their emissions. There's a difference between planting trees, which benefits the climate, and planting trees as part of a programme sanctioning further fossil fuel burning, which does not. “The real solution is the conservation of energy, the reduction of consumption, a more equitable use of resources and equitable development and distribution of clean and renewable low impact energy sources,” states the World Rainforest Movement. Mirza Galib is Lecturer, Primeasia University miz_galib@hotmail.com.
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