Carbon markets slowly gaining ground

First launched in 2005 in the European Union, cap-and-trade markets are slowly but surely gaining ground around the world. John Dyer reports.

An initiative to develop a US-wide carbon market is a “transformative moment” in US history. (Image credit: Rich via Flickr)

Oregon Governor Kate Brown is looking for long-term solutions to the droughts and wildfires that ravaged the West Coast of the United States last year.

“It is extremely painful to watch the effects of climate change on our communities,” Brown, a Democrat, said in her state-of-the-state address to lawmakers on January 14. “The Rogue Valley was covered in smoke for over eight weeks last summer. Ninety per cent of our state is in drought. And last year was the warmest year in Oregon since 1895.”

Oregon turns to cap-and-trade

Empowered after her 2018 re-election victory, Brown has proposed a cap-and-trade system that would incentivize polluters to reduce their carbon emissions, taxing those who don’t and letting others seek permits that allow them to emit fewer greenhouse gases over the years. The goal would be to decrease Oregon’s carbon footprint by almost 80 percent in the next 30 years.

“Experience shows that this legislation would result in big emitters finding the cheapest way to reduce emissions, while generating millions for clean energy investments in our communities,” wrote environmentalists Hal Harvey and Meredith Connolly in an op-ed in the Statesman Journal, a newspaper in central Oregon.

Renewed interest around the world

Oregon’s efforts illustrate the renewed interest in carbon cap-and-trade programs throughout the world.

First launched in 2005 in the European Union and adopted later in California, South Korea and the Chinese province of Guangdong, cap-and-trade markets have largely been a success. In California, the system is forecast to cut emissions by more than 16 per cent between 2013 and 2020 and another 40 per cent through 2030, according to the Center for Energy and Climate Solutions, a Washington, DC-based think tank.

Opposition from developing countries

But many global leaders, especially in developing countries, are wary of limiting industry and economic growth today for the sake of allegedly undefined future goals.

In December, at the 2018 United Nations Climate Change Conference in Poland, Brazil and other countries prevented delegates from adopting rules for carbon markets, postponing discussions on the issue until another meeting is held this year in Chile.

The Brazilian group wanted to allow companies not covered by carbon markets in individual national economies to sell permits into sections that would be covered, Bloomberg reported. Germany and other countries believed that arrangement could lead to countries double counting permits for polluting.

No time to waste

The conflict was unfortunate, but advocates of cap-and-trade said the delay was an opportunity.

“If countries want to ramp up climate action, they must get more serious about international cooperation through market incentives,” said Dirk Forrister, president and chief executive of the Switzerland-based International Emissions Trading Association, or IETA, in a press release.

“But we should not let this slow us down – we don’t have time to waste. While we wait for the rules to firm up, committed countries and businesses should team up to start building cooperative markets – and the rule writers can catch up later.”

The IETA and others have released the Katowice Declaration on Sound Carbon Accounting to help foster pilot programmes for carbon markets.

U.S. states pushing for a carbon market

Oregon is not the only American state moving forward. Late last year, Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia and Washington, DC signed an agreement to enact a carbon market. New York State is expected to join the effort eventually.

“It’s one of the most important initiatives ever undertaken by the states on climate,” Union of Concerned Scientists president Kenneth Kimmell told Inside Climate News. “It is a huge, transformative moment.”

The details of the agreement have yet to be finalized.

But other stakeholders are lining up to support and expand the initiative. Recently, influential economists, including 27 Nobel laureates, former Federal Reserve chiefs and others released a letter calling for carbon taxes whose revenues would be given to consumers as “carbon dividends”.

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