The efforts to limit greenhouse gases within the E.U. are key because the withdrawal of the U.S. left the E.U. as the largest political entity following a comprehensive plan for regulation. Naturally, the Union tailored its program to match its existing regulatory capabilities. For the 55 percent of its total emissions produced by the building, transportation and other dispersed sectors that are difficult to monitor, the E.U. and its member states have extended a wide array of existing policies. These rules include, for instance, voluntary (soon to be binding) automotive fuel economy targets that were negotiated with the car makers. By next year, new vehicles sold in Europe are to achieve, on average, at least 41 miles a gallon for gasoline-fueled autos and at least 44 miles a gallon for diesel cars. (Automobiles in the U.S., by contrast, currently need only to reach 27.5 miles a gallon by 2010, and even fewer miles per gallon for trucks and sport utility vehicles. Actual U.S. average mileage is even lower due to various loopholes in the standards.)
The remaining E.U. sources—defined as producers of “industrial emissions,” including power plants—are fewer and larger, and thus easier to control. For these business segments, E.U. regulators designed an emissions trading scheme—also known as a cap-and-trade system—modeled on a successful U.S. acid rain-reduction program of the 1990s. Under this arrangement, every E.U. government allocates emission credits—each representing a ton of carbon dioxide gas per year—to its industrial plants. The companies then decide individually whether it is cheaper to reduce emissions, which would free up extra permits for sale, or buy permits from others on the open market. If emission cuts prove costly, demand for permits will rise and so will their prices. Alternatively, prices fall if low-cost technologies for lessening carbon dioxide release appear, or slow economic growth weakens the industries that emit CO2. By limiting the total number of permits, E.U. regulators fix pollution levels while the market sets the price.
Start-up Difficulties
Several teething problems have emerged in the short history of the E.U. carbon market. Countries have struggled when handing out the property to be traded—the critical starting point for any market. Many of the allocation plans that each government devises have arrived late and have been incomplete. In some cases they were laden with politically inspired manipulations designed to benefit favored firms or business sectors. Some governments are also pumping the market with cheap credits from the clean development mechanism, which lowers prices and therefore makes it easier for industry to comply with restrictions.
The E.U. has also encountered trouble in ensuring that traders get access to accurate information on the supply and demand of carbon credits. During the emissions trading scheme’s trial period, which began in 2005 and ends later this year, confusion in the market caused prices to gyrate from almost $40 per ton of CO2 to about a dollar today. The loss in value resulted when it became clear that governments massively oversupplied the market with permits, much as poorly managed central banks cause inflation by printing excess money. Brussels tightened the screws for the next trading period (2008 to 2012), which has sent the price for those permits to about $25 each.
Most controversial has been the distribution of permits to industry. The German government, for example, was keen to protect its coal industry. It awarded free credits to coal-fired electric power plants, whose owners then charged customers for carbon “costs” they never had to pay. Most of Europe’s electricity markets are not competitive, which has allowed utilities to find such ways to keep those extra revenues for themselves. Similar malfeasance has occurred in other countries, including the Netherlands, Spain and the U.K. In principle, the E.U. reviews each government’s allocation of credits so that favored companies are not subsidized unfairly. In practice, however, member states hold most of the political cards and are not hesitant to deal them as they deem fit.
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Add CommentThis type of system will just make undeveloped countries more competitive, now if the credits are only within a country or group it might be OK. In addition positive action to reduce our impact on the environment and to mitigate the effects are required. These credits do nothing in these areas.
Reply | Report Abuse | Link to thisQuestion: To mesh a carbon tax with cap-and-trade, should the government not put a MINIMUM price on carbon, not a ceiling, as the article asserts? (Ref. 3rd para. under 'A Four-Step Plan.')
Reply | Report Abuse | Link to thisE.D.
Ottawa
Canada
Clicking on the links to the Figures brings one to a slide show on endangered birds!
Reply | Report Abuse | Link to thisDeleted and replaced with revised version
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Edited by Duane Pendergast at 12/21/2007 10:36 AM
This is an excellent discussion and review of carbon trading concepts and initiatives.
Reply | Report Abuse | Link to thisThere is, however, no discussion of market possibilities to encourage removal of carbon dioxide from the atmosphere. Perhaps this is a consequence of the common assumption that it is better to capture emissions at source rather than try to deal with them after release.
The sidebar on "The Carbon Trade" focuses on cap and trade and so-called "offset exchange" in connection with the Clean Development Mechanism (CDM). I find the use of "offset" in that context somewhat of a misnomer as the carbon emissions discussed may not be offset in the usual sense. In the example discussed, it is implied that emissions from the developed countries will be compensated by reductions in emissions in developing countries. I suspect the reality in practice will be that increasing emissions from the developed countries will support projects in developing countries which will have somewhat lower emissions than might have occurred without CDM. The total net result will be increased carbon dioxide emissions.
There is developing recognition of a concept that would actually remove carbon dioxide from the atmosphere and convert it to durable char or charcoal, which could then be used to sequester carbon in soil. Some researchers believe the sequestered carbon will play an additional role by significantly improving soil fertility. Interested readers can find information on this concept by searching for "terra preta" on the WWW.
Perhaps policy makers should relax their dogged focus on reducing CO2 emissions and consider the possibility they may constitute an opportunity to enhance the environment for life on earth.
Duane Pendergast
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Edited by Duane Pendergast at 12/21/2007 10:29 AM
Sorry for double post
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Edited by erichj at 12/22/2007 10:28 AM
I thought this ubiquitous carbon sink might interest you. Here's the current news and links on Terra Preta (TP)soils and closed-loop pyrolysis of Biomass, this integrated virtuous cycle could sequester 100s of Billions of tons of carbon to the soils.
Reply | Report Abuse | Link to thisTerra Preta Soils Technology To Master the Carbon Cycle
This technology represents the most comprehensive, low cost, and productive approach to long term stewardship and sustainability.Terra Preta Soils a process for Carbon Negative Bio fuels, massive Carbon sequestration, 1/3 Lower CH4 & N2O soil emissions, and 3X Fertility Too.
UN Climate Change Conference: Biochar present at the Bali Conference
http://terrapreta.bioenergylists.org/steinerbalinov2107
SCIAM Article May 15 07;
http://www.sciam.com/article.cfm?articleID=5670236C-E7F2-99DF-3E2163B9FB144E40
After many years of reviewing solutions to anthropogenic global warming (AGW) I believe this technology can manage Carbon for the greatest collective benefit at the lowest economic price, on vast scales. It just needs to be seen by ethical globally minded companies.
Could you please consider looking for a champion for this orphaned Terra Preta Carbon Soil Technology.
The main hurtle now is to change the current perspective held by the IPCC that the soil carbon cycle is a wash, to one in which soil can be used as a massive and ubiquitous Carbon sink via Charcoal. Below are the first concrete steps in that direction;
S.1884 The Salazar Harvesting Energy Act of 2007
A Summary of Biochar Provisions in S.1884:
Carbon-Negative Biomass Energy and Soil Quality Initiative
for the 2007 Farm Bill
http://www.biochar-international.org/newinformationevents/newlegislation.html
If you have any other questions please feel free to call me or visit the TP web site I've been drafted to co-administer. http://terrapreta.bioenergylists.org/?q=node
It has been immensely gratifying to see all the major players join the mail list , Cornell folks, T. Beer of Kings Ford Charcoal (Clorox), Novozyne the M-Roots guys(fungus), chemical engineers, Dr. Danny Day of EPRIDA , Dr. Antal of U. of H., Virginia Tech folks and probably many others who's back round I don't know have joined.
If pre-Columbian Kayopo Indians could produce these soils up to 6 feet deep over 15% of the Amazon basin using "Slash & CHAR" verses "Slash & Burn", it seems that our energy and agricultural industries could also product them at scale.
Harnessing the work of this vast number of microbes and fungi changes the whole equation of energy return over energy input (EROEI) for food and Bio fuels. I see this as the only sustainable agricultural strategy if we no longer have cheap fossil fuels for fertilizer.
We need this super community of wee beasties to work in concert with us by populating them into their proper Soil horizon Carbon Condos.
Erich J. Knight
Shenandoah Gardens
1047 Dave Berry Rd.
McGaheysville, VA. 22840
(540) 289-9750
shengar@aol.com
who can deny the politics behind the science of climate ,and how some thinktanks with funding support from north influence policies .is the finding of IPCC on glcier melts the tip of the iceberg of the science hoodo act to serve the interests of the developed world. why not the north show the lead in changing life styles and social systems to suit the ethics and economics of sustainable resource use and development.
Reply | Report Abuse | Link to thisno one can deny the economic advantage to the west in carbon trade while continuing to pollute.the advantage to the less developed is inflated and projected while the cost benefit in real terms favours the more developed .the developing world is increasingly being depicted as more responsible for future pollution. the science behind the future scenarios are highly dubious and influenced by vested intersts through funding support and peer pressure.
china and india are being shown as villains through data manipulation and GCM computer dta are being used for this jugglery. the world bodies are being hijacked partly for this ,and pachauri is suitably awarded. the very architects of the carbon trading have finally backed out of the protocol so that their interests are best served both ways,and scuttling that of competitors and potential growth centers.the credits are loaded in favour of the west through science and technology fixes . the world bodies are toeing the line for funds. what is needed is not more of the same but a drastic relook at the western model of growth and development through resource exploitation and depletion ,and focus on economics at the cost of ecology ,in real terms ,while making it appear as if the south is more obsessed with growth than environment through a game of data manipulation and jugglery of all sorts.it is high time that the politics of climate is called off through more transparent science. the developing world needs to be equipped and oriented towards this through support structures and a process of relearning
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