The international greenhouse emissions trading landscape has changed markedly over the past month. And its not just due to the election of Barack Obama as the United States’ next president.
A Western world slipping into recession has shifted the ground under the feet of governments in developed nations. It comes also as climate negotiators head for Poznan, Poland for the annual conference of the UN climate convention - two weeks of talks aim to make progress toward a new global climate treaty to succeed the Kyoto Protocol after 2012.
At the end of 2008, the signs are positive in the US and Australia for moves toward carbon regulation, the cornerstone of which will be emissions trading schemes. In Canada and Japan the signs are mixed, but in Europe and New Zealand, however, regulatory processes have hit significant political snags.
US and CanadaObama, of course, campaigned heavily on energy and climate, promising a big stimulus for alternative energy sources and an emissions cap and trade scheme to deliver significant cuts to emissions over coming decades. Doubts that he would keep to these commitments in the wake of the financial and economic crisis were somewhat assuaged last week when he restated the intention to launch a carbon trading scheme to a climate summit of state governors.
There is no commitment yet from Obama on its timing, with energy policy likely to be the first cab off the rank. But the Senate Environment and Public Works Committee Chair, Barbara Boxer, has signalled she plans to introduce a new climate change bill quickly into the new Congress that convenes in January. Boxer said that the bill would reflect Obama’s policy.
Canada’s prime minister Stephen Harper moved swiftly following Obama’s win to propose a unified North American emissions trading scheme across both countries. Harper said Canada and the US should be as one in the fight against climate change and they should work together to “do so in a way that does not further impair ... the economic situation of our countries”.
But while Harper’s Conservative government has on the surface embraced emissions trading, its ambition for greenhouse emissions reductions fall short of Obama’s targets. Enacted limits on emissions are weak and Harper proposes cutting emissions by 20 per cent below high 2006 levels by 2020, while Obama would cut US emissions to 1990 levels by 2020, then by 80 per cent by 2050.
EuropeIn the European Union, the acknowledged leader on climate policy in recent years, a commitment by member states to agree a strong new energy and climate policy package by the end of the year is in trouble. At the heart of the package is a target to cut emissions by 20 per cent by 2020 and a tighter framework for Phase Three of the EU Emissions Trading Scheme covering the period 2013-2020. The package is now being opposed by eastern European nations which say that under the outlook for a tougher economic climate in coming years, the burden on their industries will be too great.
A move to full auctioning of emissions permits for power generators from mainly free allocations in the first phases is a major bone of contention, as is the plan to reset the base year for emissions reductions from 1990 to 2005. This would particularly impact the former Soviet bloc economies of the East which have had an easy ride under the ETS so far. Their emissions had already plummeted during the 90s with collapse of old industry.
As EU members strive to resolve a stand-off that sees Poland lead its neighbours in refusing to support the package, the delay has implications for the Poznan talks in that very land. The EU had initially set its December deadline for approving the policy to set an example of strong commitment to climate action to the rest of the world. France, holding the current rotating EU presidency, and Britain are united in support of the package while Italy has sided with the eastern nations.
New ZealandIn New Zealand, a long-delayed emissions trading scheme, which finally passed into law just this month, has already been suspended after the fall of the Clark Labour government in national elections a week later. New National Party prime minister John Key moved quickly to order a parliamentary select committee review of the scheme in line with his campaign commitments.
Key has previously promised that a review would be swift and a revised emissions trading scheme put in place within nine months. That has slipped to a year, and talk of a straight carbon tax alternative is now back on the table. Ominously, the National Party’s coalition minor partner in the conservative government, the right-wing Act Party, appears opposed to carbon regulation.
AustraliaAcross the Tasman Sea in Australia, the first anniversary of the election of the Rudd Labor government has seen it stand firm on the commitment to introduce an emissions trading scheme, despite the global financial crisis and economic downturn.
The government in Canberra is due to release a policy white paper in December on final recommendations for a cap and trade scheme to begin in mid-2010, including naming an emissions reduction target for 2020.
JapanJapan is dipping its toe in the water on emissions trading. A trial voluntary-only scheme launched by the government last month is now accepting applications from companies willing to commit to an emissions reduction goal and trade emission permits with others in the scheme.
It’s a wary embrace of carbon pricing from a government that has been under enormous pressure from industry in recent years to resist the setting of emission caps and putting a price on carbon. The prime minister, Taro Aso, has also declared that ways be examined to shut financial market speculators out of the trial scheme’s permit trade.
Early indications are that many of the reductions will come from big industrial emitters paying smaller companies and organisations to do the real emissions cutting work.
Sources: Canwest News Service, Van Ness Feldman, Yomiuri Shimbun, Reuters, New Zealand Herald, EurActiv.
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