New York might help US to shed its toxic image

By Andrew Beatty

Date: 20/01/05

Barring some eco-minded divine intervention, George W. Bush is not about to sign up to the Kyoto Protocol.

When the US rejected the 1997 agreement soon after the toxic Texan arrived in office there was widespread condemnation and the US was painted - to an even greater degree - as the world's ecological bogeyman.

Conversely the European Union won plaudits for setting up its own domestic emissions trading scheme, keeping faith in the Kyoto Protocol and eventually cajoling Russia into signing up.

But outside the moral limelight currently occupied by the EU, the US has been beavering away at its own 'cap-and-trade' reduction schemes for decades.

As early as the 1970s, the Environmental Protection Agency launched its Emissions Trading Program, which offered a first glimpse of how a market-based approach to curbing emissions might work. But it was excruciatingly complicated.

Credits were given for reduced emissions on a case-by-case basis, meaning there was no standard to trade in. Strict certification procedures meant that the scheme was cumbersome, costly and thus largely unsuccessful.

A decade later a scheme to reduce lead in petrol was more successful, with refineries able to bank unused credits and so cut some of the cost of meeting targets without lengthy investigations and trading costs.

According to the Pew Centre on Global Climate Change, in a typical quarter up to one fifth of all emission rights were traded, pointing to a significantly more successful system.

The early 1990s saw an explosion in cap-and-trade systems, chiefly focusing on the acid-rain producing sulphur dioxides and nitrogen oxides.

Federal, state and regional initiatives were established, many of which proved to be successful in their primary goal of reducing emissions in a way that is affordable to business.

Given this history, it is not surprising that the US was one of the main players in the Kyoto negotiations pushing for a market-based approach.

But despite its experience, a compulsory US-wide emissions trading scheme for carbon still seems some way off.

In 2003 a joint Republican-Democrat proposal advocated a countrywide tradable greenhouse gas emissions scheme, including carbons, which would begin in 2010. By official estimates it would cover industries which represent 85% of US carbon dioxide emissions. It fell by 12 votes in the Senate.

Yet for US environmentalists there is still some hope on the horizon.

By April this year, New York's state governor George Pataki hopes to have set up a trading system in carbon dioxide along nine north-eastern seaboard states.

At present the project only covers emissions from power plants, but with the majority of the US's electricity generated by fossil fuels, it is being hailed as a major step forward.

Environmental campaigners hope that a successful bottom-up trading system could make even a sceptical Bush administration sit up and take notice. And there are plans to expand.

Canada is soon set to begin its own carbon trading system as a way of meeting its Kyoto obligations and already there is talk of linking up the US and Canadian systems.

And the saintly EU has not ruled out linkages with other trading systems - so long as standards are maintained. The bogeyman might yet shed its toxic image.

Article reports on the United States' 'cap-and-trade' emission reduction schemes. As early as the 1970s, the US Environmental Protection Agency launched its Emissions Trading Program, which offered a first glimpse of how a market-based approach to curbing emissions might work.