By: Haley Tamberi
In 2005 the Kyoto Protocol came into effect. The main outcome of this agreement overall is to lower greenhouse gases by 5 percent compared to the estimated level in 1990. The rules of the Kyoto agreement permit carbon trading from country to country. Following the cap and trade theory, which has in the past proved success with acid rain and sulfur dioxide levels. If a country is under the capped limit the extra credits can be sold to another country that is overproducing. Determining the fixed amount a country is allowed to obtain is determined mainly on the emission rates for that individual country prior to 1990. 126 countries have honored this protocol leaving only 4 industrialized countries left to join. US is one of those countries and does not embrace this act then global business competition will impact several US companies. There is an estimate that the greenhouse emissions market will reach $100 billion by 2010. Economically this proposal provides an incentive for companies and countries to reduce greenhouse gas emissions and benefit. However, many environmentalists believe it is wrong to allow anyone the right to pollute and don’t feel that this tactic will not result in any success. They also argue that countries may be able to ignore the new limits. Carbon trading could lead to more open market trading than actual emission controls. There is a huge debate on whether this the adequate approach to deal with greenhouse gas emission globally. What are your thoughts?
8 comments:
First of all i think that it is quite ridiculous that the US hasn't signed. We are one of the biggest polluters of greenhouse gasses. Especially if India and China have signed. Does anyone have a good reason as to why the US wont sign? Thanks
The cap and trade system is essentially a good idea, in that it helps to internalize externalities into the market system through the buying and selling of emission credits. The only problem is that it is very difficult to set the price of these credits, and the upper limit of emission standards, in a way that truly reflects where the efficient equilibrium of the market should be. I don't know what the specific numbers are for the Kyoto Protocol, but maybe the US doesn't agree with where the policy has set these prices and regulations? Any thoughts?
U.S. participation was noticeably absent from supporting the agreement. The Bush administration, along with the senate, argued that the goals were established by political negotiations and would be harmful to the economy of the United States.
We should consider and address the following:
1) Global warming cannot be effectively addressed without world participation. China and India, two of the top five emitters of greenhouse gases are exempt from the Kyoto Protocol. Developing countries emit more greenhouse gases than the developed countries. Fourteen out of the top twenty emitting countries would not have to limit their emissions under the current protocol. Any advancement made by participating countries could soon be reversed by allowing exempt countries to continue in their practices. This appears to have more political aspirations in sight than the achievement of environmental goals of reduced emissions.
2) Economic concerns have also played an important role. This impact would be most prevalent in the non-exempt developed countries since restrictions would not be imposed on the developing countries. Businesses could relocate where there are no emission limits thus increasing their profitability.
I agree with many of the comments here. Until the whole world signs on there are going to be issues. However, that doesn't mean cap and trade is entirely ineffective. I do wonder two things though. 1) Are there limitations on it? Such as can you only participate if you are actively trying to reduce your emissions? 2)What happens when the balance of under-limit and over-limit runs out and polluting countries continue to pollute without a reduced country able to match it? (far in the future and theoretical of course, but still...)
Cap and trade simply offers a choice to either purchase permits and pollute or reduce pollution and save the cost of the permits. Expenditures can be, and should be, managed by companies which can determine their own economic success, or failure, in today’s economy. Government involvement could prove detrimental to an already struggling company.
By investing capital in pollution abatement technology, there are several realized benefits. Instead of buying pollution permits, the funding can be used for plant upgrades. If upgrades are not economically feasible then an alternative for compliance exists without the danger of fines being imposed and/or the fear of imprisonment for non-compliance.
Reduction in emissions also provides an incentive by allowing the sale of previously purchased pollution rights.
Although the cap and trade is not a perfect system, I am confident that this theory will adapt and continue to succeed with greenhouse gas emissions.
Morally, we have an obligation to reduce emissions. Economically, we have the right to survival. A balance between the two could prove difficult.
I personally think the Kyoto Protocol is a bad deal. If the United States ratified and participated in Kyoto, the total cost over the coming century would be more than $5 trillion. The environmental benefit would only decrease the temperature by 0.3 degrees F by 2100.
yes, I also think the Kyoto Protocol is a bad deal for USA because it was more about putting the U.S. economy at a disadvantage than helping the environment. Moreover, it allowed developing countries to minimize the impacts by establishing an adaptation fund for climate change. For example, India and China, which have ratified the Kyoto protocol, are not obligated to reduce greenhouse gas production as they are developing countries; i.e. they weren't seen as the main culprits for emissions during the period of industrialization thought to be the cause for the global warming.
The real way to effectively control environmental problems like carbon dioxide emission levels is to implement a carbon tax. The Kyoto Protocol is a beneficial legal agreement between many countries, but the problem is that the leading contributers to climate change and pollution do not have to follow it. The US, China, and India have not ratified the protocol, and this presents huge problems. The US signed it but this does not mean much. To really help reduce climate change all countries including developing ones should have to have some type of environmental protocol. Developed countries should help fund projects in developing countries to help them start out with more environmentally friendly industries rather than waiting until their economies are good enough to support high environmental standards.
Ultimately if done correctly cap and trade for CO2 should be able to work just as well as it had for SO2. The idea that you're giving someone "the right to pollute" is absurd; our current system (or lack of a system rather) is closer to legalizing pollution than a cap and trade system would be.
Of course, if the carbon limits are not set stringently enough then cap and trade may be ineffective but that's an issue for our politicians and economists to duel over.
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