Carbon Markets and Carbon Taxes

Equitable Sharing of Carbon Space

May 18, 2010

The Economic Times - The third meeting of the BASIC (Brazil , South Africa, India and China) ministers on climate change was held in Cape Town last month. The joint statement, released at the end of the meet, emphasised on equitable sharing of carbon space. This seems to be the core issue in climate change negotiations.

According to the fourth IPCC report on climate change a temperature rise above 2 degree Celsius from 1990 levels might not be ecologically sustainable. There are detractors. But it seems there is a majority consensus globally that attempts should be made to keep the temperature at 2 degree Celsius.

This upper bound on temperature increase translates into an upper bound on green house gas (GHG) emissions. This is where the difficulty arises. Curbing emissions in the absence of technological advancement will hurt industrial growth.

The crucial question that emerges then is how to decide on the distribution of emission levels among economies. Developing countries argue that since historical emissions of GHGs by developed economies are a major cause for the precarious climate change scenario, the moral responsibility of taking the bigger burden on curbing emissions rests on them.

The Kyoto protocol tried to deal with this by dividing economies into annex 1 (developed ) and non-annex (developing and LDCs). The former had to make legally binding commitments on their emission cut targets. But the Kyoto protocol, which expires in 2012, has not been very successful since not many annex 1 members have managed to meet their bound targets. Further the US, one of the largest emitters of GHG, did not ratify the protocol. Neither did it make commitments to bind its targets.

The Copenhagen accord, a non-legally binding text, follows the principle of voluntary pledges of reduction commitments. These commitments fall short of the required levels to meet the 2 degree Celsius target ...

EU Climate Package Explained

April 9, 2010

BBC - In 2009 the EU adopted a wide-ranging package on climate change, following months of tough negotiations in the 27-nation bloc.

The package focuses on three areas: emissions cuts, renewables and energy efficiency.

Changes have been made to the original package unveiled by the European Commission in January 2008, to address European industrialists' concerns about green measures potentially making them uncompetitive at a time of weak global demand.

But the overall 20-20-20 targets have been kept: a 20% cut in emissions of greenhouse gases by 2020, compared with 1990 levels; a 20% increase in the share of renewables in the energy mix; and a 20% cut in energy consumption.

GLOBAL WARMING

The EU package builds on the international commitments made under the 1997 Kyoto Protocol. These commitments only run until 2012.

EU governments want other major polluters worldwide to adopt targets similar to the EU's - especially the US, the biggest polluter.

But there was widespread disappointment at the outcome of the UN conference on climate change held in Copenhagen in December 2009. It failed to produce the binding global targets that the EU wanted.

Copenhagen's last-minute deal did not explain in detail how the target of limiting global warming to 2C this century could be achieved.

EU 20-20-20 TARGETS

20% cut in greenhouse gas emissions by 2020
20% increase in use of renewable energy by 2020
20% cut in energy consumption through improved energy efficiency by 2020

US President Barack Obama has put green targets on the agenda in a way that the Bush administration never did. He has pledged a 17% cut in emissions from 2005 levels by 2020. But in real terms that amounts to just a few percentage points, the BBC's environment analyst Richard Black says, as US emissions have risen by about 15% since 1990.

Moreover, there are signs that the US Congress will not go as far as backing a 17% cut.

China, India and other significant industrial powers will also have to come on board if global warming is to be tackled effectively.

Scientists say global warming is already happening and predict that if the planet's temperature rises more than 2C above the pre-industrial level there will be more extreme weather phenomena and rising sea levels, threatening coastal areas.

Climate specialists, including the European Environment Agency, say northern Europe is getting wetter and the south drier, Arctic summer sea ice is melting faster than expected, many plant and animal species are moving further north and uphill.

Deforestation and the burning of fossil fuels are blamed for the warming effect, because they increase carbon dioxide (CO2) in the atmosphere - the main greenhouse gas ...

EU Considers General Carbon Tax

The minimum tax would apply to fuel, natural gas and coal.

March 5, 2010

BBC - The EU’s new Taxation Commissioner, Algirdas Semeta, is working to revise the EU’s existing Energy Taxation Directive, his spokeswoman said.

Carbon taxes already exist in EU members Sweden, Finland and Denmark. In France the idea is being hotly debated.

Responding to the EU plan on Thursday a UK government spokeswoman said:

“We do not support the idea of a mandatory pan-European carbon tax.

“The existing Energy Taxation Directive gives member states the flexibility to introduce a carbon tax if they wish.

“We believe that member states are best placed to choose the policy tools for achieving their climate change objectives.”

In Brussels earlier this week, Commissioner Semeta said the adoption of carbon taxes “on a larger, European scale seems desirable, as they would undoubtedly encourage innovation to strengthen energy efficiency and environmental protection”.

An EU-wide carbon tax would require the agreement of all 27 EU member states’ governments.

A new carbon tax that was supposed to go into effect in France at New Year was struck down, in a blow to President Nicolas Sarkozy. France’s Constitutional Council, a legal compliance watchdog, said there were too many exemptions for polluters in the tax plan. The tax was set at 17 euros (£15) per tonne of emitted carbon dioxide (CO2).

Prime Minister Francois Fillon said the government would work on a new law taking account of the legal ruling.