Emissions trading is making a comeback in 2008. The Kyoto Protocol's "commitment period" begins and the EU launches a new phase of its flagship carbon trading scheme. Will it work this time?
 | Infographic (click the image to open)The Kyoto Protocol's commitment period starts in 2008. See how much your country has to cut its greenhouse gas emissions |
Business leaders are not known for their fondness of regulation. So why is General Electric CEO Jeffrey Immelt calling for mandatory caps on carbon emissions in the United States?
Immelt and other business players recognize the need to reduce greenhouse gases, but believe that higher carbon prices will give businesses an incentive to invest in efficiency and low-carbon operations.
Economist Nicholas Stern, author of an influential 2006 review on the costs of climate change, put it bluntly. “Without such a price, there is no incentive to de-carbonize,” he said.
 | Infographic (click the image to open)Emissions trading is a market based way of reducing pollution. See how it works |
This year should see significant steps in this direction. The European Union officially begins the second phase of its flagship Emissions Trading Scheme, where carbon trading will be a major tool in reaching member countries' Kyoto Protocol commitments for the 2008-2012 period.
Norway, Canada, New Zealand, and states in Australia and the United States are developing or already running similar carbon trading schemes. The major challenge for the future will be to unite these schemes into a global market and establish a stable and relevant carbon price.
Doing so would facilitate future investments in carbon sequestration programs that would allow nations to install a generation of power stations running on fossil fuels without contributing to global warming.
author: James Tulloch
publishing date: January 10, 2008
