Tradable Greenhouse Gas Budgets

Tradable Greenhouse Gas Budgets

A system of tradable greenhouse gas budgets is an idea that is gaining widespread support from "greens," economists, and politicians. Under the plan, each country is given a budget to emit a certain amount of greenhouse gases. A certain portion of this budget could be bought and sold on an open market like the stock or commodity market. Those countries which could not or would not meet its budget could buy some budget from countries that could easily meet their budgets (like those with extensive forest cover).

Carbon offset programs may be more politically acceptable than other programs "because they provide a mechanism for motivating wealthy countries to pay for a benefit of forest conservation that transcends national borders." In effect, such programs promote "the transfer of funds from industrialized countries to tropical countries as a commercial transaction rather than an act of charity" (Costa 1996).

There are several issues still to settle with such a system. How can the budgets for countries be set fairly without inhibiting economic growth? Is it fair that developed countries are allowed large budget? What about developing countries which require energy for growth, but often lack the technology to do so cleanly? Finally there is the problem of scale. How much overall pollution will we allow? When we reach this level what's to stop us from exceeding it especially when jobs and national economies are on the line? There will be great pressure to compromise and increase the scale of our activities at an unknown environmental cost. Strict penalties must be devised for those countries which exceed their budget. Failure to enact such penalties will result in failure of the system.

Under the Kyoto treaty on climate change, no formal limits were set for developing countries. Many environmentalists fear that big corporations will simply circumvent the treaty by building new energy-intensive work to developing countries. Also of concern is the emission limits granted to Eastern Europe. Many of these countries already have emission levels well below 1990 levels because of their shrinking economies. Therefore Eastern Europe will be able to afford to sell credits to western industrialized countries. In effect, the global community would be rewarding countries for running inefficient and polluting industries in the past. This would not lead to a reduction of carbon emissions, just a transfer of wealth.