9:24am Wednesday 1st July 2009
By Keith Thomson
Kyoto, in Japan, has been the international focus of attempts to slow down climate change for the last dozen years. It gave its name to the protocol agreed by the United Nations Framework Convention on Climate Change which set CO2 reduction standards and targets for individual countries, but it will soon be replaced by Copenhagen, where the post-2012 programme will be decided this December.
It’s a necessary next step, as Kyoto has failed in its main objective of reducing the CO2 emissions from industrial countries by five per cent from the 1990 level – in fact, few countries met their individual targets and the concentration of greenhouse gases in the atmosphere is still rising. CO2 in the atmosphere was 357 parts per million in May, 1990, and this May, 2009, it was 390ppm.
Kyoto developed a complicated system of cap and trade to try to make electricity producers and metal smelters more efficient by providing a number of CO2 emission permits that could be traded and would have a price that rose and fell – just like the stock market, and in the same way had various hedge funds and future prices that made many of the dealers very rich rather than reducing the amount of CO2.
Additionally, many of the first-round permits were free and not auctioned and then traded to make a considerable profit, and the scheme was weakened by allowing offsets in other countries to be counted.
Unfortunately, it is likely that Copenhagen will carry on with the cap-and-trade approach, based on the experience of the European Trading Scheme, and the US is just introducing a similar arrangement that is so complicated it needs 648 pages to describe it.
A more successful approach would be to have a carbon tax on all fossil fuels at the point of first sale. Electricity and petrol would be more expensive, but the tax would be returned as a regular equal payment to individuals and, while the big users would be worse off, most of us would benefit. Our purchasing habits would certainly change.
A direct carbon tax is very simple, and understandable, and avoids the dangers in a ‘banking’ approach. British Columbia, in Canada, has just introduced such a scheme, with a bonus back to the taxpayers, and France is also hoping to do something similar by 2011, and will support the Swedish ambition to make such a system Europe-wide when they take over the EU presidency in July.
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