Greenhouse gas trading 101
Several large German companies complain about planned emission certificates. The arguments: Trade with emission certificates could destroy 60.000 jobs in Germany, increase power costs and costs too much money. BASF, the German chemical giant, expects additional costs of annualy 50 Million Euros (about 45 mio. Dollars) in order to reduce CO2 (or buy Co2 certificates).
But what is ghg trading all about? To me it sounded like a ‘dirty deal’: “We can’t reduce CO2 by ourselves because we’re stinkers — so we buy emissions from cleaner companies.” But it’s actually an interesting experiment. I asked Deborah Bisson, coordinator with GERT, a Canadian ghg trading pilot project and here’s what ghg trading is all about in a nutshell. If you need additional information, and Deborah has tons of it, drop me an email and I’ll connect you with her:
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“In the case of ghg, its a global issue. ghg doesn’t hurt to breath it, rather it interferes with global weather patterns. So one tonne of ghg emitted to the atmosphere from India, does no damage to India other than the damage it does to the whole planet. And the damage is the same whether that tonne is from India or Canada. So it doesn’t matter how or where the reductions of emissions occur, so long as they occur. This is the starting point for the logic.
Now, the next piece to the explanation is that the objective is to reduce emissions to the atmosphere globally by the amount the cientists recommend, but in the least costly way to societies and civilization worldwide. So, lets say Pakistan needs energy and the cheapest energy for them is a coal fired thermal generating plant. This would create a lot of ghg.
And we have agreed to let Pakistan, and countries like it, go on emitting GHGs because to require them to set ghg reduction targets would be too much of a burden on their developing economies and the social welfare of their people. But suppose, a Canadian company that needs ghg emission reductions goes to India and says, I will fund the difference between your planned coal fired plant, and a clean energy solution if you let me have ownership of the resulting emission reductions. If this occurs, you now have a bunch of emission reductions that would not have otherwise occurred, because… Pakistan had no international obligation to reduce emissions. This is what is known as a CDM (Clean Development Mechanism) in the context of the Kyoto Protocol.”
