Canada’s Debate

I’ve talked about a carbon market several times in recent weeks. I’ve argued before (and I’ll say it again) that emissions trading may not immediately reduce emissions, but the long-term effect of trading is both investment and cleaner technology. I say “argued” because I of course have been challenged on every turn with these assertions.

Anyways, I just thought I’d share with you another writer’s take on the system.

Europe has done it, with the result that there are 11,500 companies that are required to meet specific emission targets. Consequently, there are 11,500 companies deciding every year whether they are going to pay a penalty for exceeding their emission limits, pay the capital costs of upgrading their operations to reduce emissions, or pay a lot less to get a one-year exemption by buying emission credits that will count toward meeting their annual cap.

The market has delivered its verdict, and buying and selling emissions is a flourishing business. In 2005, trading in Europe reached $9.6 billion. Worldwide, the value of trading in the first nine months of 2006 doubled the entire trading of 2005 ($24.6 billion compared to $12.7 billion).

Why is this trading important?

In the first nine months of last year, firms, mostly from Europe and Japan, were involved in emissions trading that was responsible for reducing Chinese emissions in an amount equal to the total emissions in Canada for generating electricity, and almost equal to the total emissions for transportation. That was a huge accomplishment, and it’s too bad Canada couldn’t participate to improve the record even more.

Pretty much dispels the “it won’t make a lick of difference as long as China and America are exempt” argument…