Discord in the air over emissions trading plan

Date: 18/06/1998

By Simon Coss

THE EU is set to clash with the rest of the industrialised world over how to use the controversial concept of 'emissions trading' to tackle global warming.

Deep divisions over how the system will work in practice emerged last week during talks in Bonn between officials from the countries which signed last December's international climate change deal in Kyoto, Japan.

The Bonn talks were intended to assess progress made since Kyoto and to prepare much of the groundwork for November's ministerial-level climate change meeting in Buenos Aires.

When they meet in the Argentinean capital, the Kyoto signatories are supposed to agree on the specific policies they will adopt to meet their greenhouse gas reduction pledges.

But the Bonn conference has highlighted just how far apart the major industrialised powers remain over how best to combat global warming.

Nowhere is this divergence of views more apparent than on the emissions trading question. Emissions trading, which was included in the final Kyoto deal at the insistence of the US, would allow countries to meet their greenhouse gas reductions targets by buying the 'right to pollute' from countries which do not fulfil their emissions quotas.

As greenhouse gas emissions are almost directly linked to levels of industrial output, countries with an emissions 'surplus' would tend to be underdeveloped or in industrial decline.

European critics of the system have argued, for example, that the US would use it to meet its reduction targets by buying emission credits from an impoverished Russia.

At the Bonn talks, the EU, along with many of the central and eastern European countries currently lining up to join the Union, put forward their initial thoughts on how the system might work in practice. Central to their approach is the idea that there will have to be a "concrete ceiling" on the amount of greenhouse gases that can be traded using the new system.

They also argued that countries should be obliged to make the lion's share of any greenhouse gas reductions through policies adopted at home and not be allowed to buy the majority of their cuts on the emissions market - a practice known as 'trading in hot air'.

However, a coalition of countries including the US, Japan, Canada, Australia, New Zealand and Russia insisted that Kyoto signatories were not qualified to set limits on emissions trading.

It also remains to be seen whether EU governments will, in practice, prove willing to pursue the sort of restrained approach to emissions trading their officials are now expounding in theory.

This week's marathon ministerial negotiations on how the 8% greenhouse gas reduction target agreed in Kyoto should be shared out between member states suggest it will be very hard for Europe to maintain a united front as the emissions trading debate hots up.