Gases Trading Rights under Scrutiny; NEW MARKET: Buying and Selling the Right to Discharge Carbon Dioxide into the Atmosphere
Byline: PADDY ROONEY Country Land and Business Association (CLA)
THERE has been much publicity recently about the possible development of a market in a new commodity: carbon dioxide, or more accurately, rights to discharge it into the atmosphere.
For Country Land and Business Association (CLA) members this could be significant, because land and vegetation play a crucial role in the carbon cycle.
Carbon dioxide in the atmosphere has a ``greenhouse'' effect, warming the climate. Using fuels like petrol or coal produces more of the gas, increasing the effect. The consequent damage, coastal flooding for example, could be very costly.
In the 1997 Kyoto Protocol, a number of countries agreed to cut carbon dioxide discharges to levels of a decade ago to reduce the warming rate. This will be costly too, and the benefits of the agreement are disputed: carbon dioxide is only one factor among many affecting climate, and industrialising countries like China are not participating.
Nevertheless governments have embraced the idea, some perhaps seeing it as a means to gaining competitive (or political) advantage because the effects would bear heavily on certain countries - the USA especially. And doubtless some wish to parade their environmental credentials.
In this uneasy situation it is suggested that trading in rights to discharge carbon dioxide could offer an acceptable way ahead for all interests. Warming and the consequent damage due to atmospheric carbon dioxide affects all countries, but the resulting costs will not bear equally on all.
For some they will be less than the costs incurred by reducing discharges: such countries have an incentive to continue discharging, and might be prepared to pay for the right to do so, at least up to the point where total costs of doing so match those of cutting back. …