This story from MarketWatch reviews the economic opportunities that the United States will miss if we do not move toward a greenhouse gas cap-and-trade system as has been adopted in Europe using a market-based approach to solving air emissions issues that we in the United States invented. In fact, my environmental professor at Harvard Law School was one of the early proponents of such a system for air pollutants in the United States. We have had a market for emission reduction credits for sulfur dioxide, volatile organic compounds, nitrous oxides, and certain particulates in many areas of the country. The U.S. representatives successfully added a cap-and-trade program to the Kyoto Protocol for controlling greenhouse gas emissions.
We should be careful not to let an idea "Made in the U.S.A." become a source of economic benefit for other countries, while we sit back and let it slip away. The European Union Emission Trading Scheme has had its faults, and has gone through trial and error, but billions of dollars in credits have been traded and will be traded in the future.
The reality is that companies are already forging strategies for addressing risks and benefits from a U.S. trading system. California and many northeastern states have already adopted such trading systems and are attempting to set up an ability to trade with the EU ETS. Most major emitters of greenhouse gases have concluded that it is not a question of if, but when, a national system will be put in place to control these emissions in the United States.
In fact, a variety of companies have come together and are calling for a national cap-and-trade system. Duke Energy, DuPont, Alcoa, BP America and several other companies have created the United States Climate Action Partnership. On the USCAP website the group "lays out a blueprint for a mandatory economy-wide, market-driven approach to climate protection."
The article below makes an arguement that for economic reasons the United States should adopt a system for the entire country, and enter the carbon credit business.
By William L. Watts, MarketWatch
Last Update: 4:53 PM ET Feb 13, 2007
WASHINGTON (MarketWatch) -- Wall Street could miss its chance to be a global center for carbon trading if the United States fails to get in on efforts to set up global trading in carbon dioxide emissions as world leaders seek to limit greenhouse gases and curb global warming, a senior British lawmaker warned Tuesday. "Wall Street could be the world center for carbon trading," said Stephen Byers, a member of parliament in the United Kingdom who also serves as a co-chair of the International Climate Change Taskforce and the chair of market mechanisms working group on climate change established by the Group of Eight industrialized nations.
London is already working to prepare for global emissions trading, and New York risks losing out "on what's going to be a huge money earner and an employer of tens of thousands of people," Byers said at a news briefing on the eve of a Capitol Hill summit that will bring together business executives, legislators and government officials from 20 countries.
Europe uses a cap-and-trade system designed to reduce emissions of greenhouse gases. Under the system, governments set limits on emissions. Companies then buy or sell credits against those limits. Critics have noted that European officials have wrestled with flaws in the system.
But California and northeastern states have announced plans to put their own systems of caps in place. And lawmakers have also introduced bills that would implement federal caps on emissions.
Last month, a group of firms and environmental groups dubbed the United States Climate Action Partnership, called on Congress to enact mandatory caps on carbon emissions. Read about the new political climate around global warming.
Some climate-change experts view carbon taxes as a more efficient way to reduce emissions, arguing that such a levy can be spread equally across sectors and doesn't penalize firms that have already taken steps to cut their output of greenhouse gases.
The forum is expected to discuss a range of options. But Elliot Morley, a member of the U.K. parliament and the president of the global association of legislators that is co-hosing the conference, said that while different options maybe more appropriate for different countries, a trading system has held some clear advantages for the United Kingdom.
"It is a market-driven system ...taxes are always unpopular," said Morley, who also serves as British Prime Minister Tony Blair's special representative to the G-8's climate-change dialogue.
The United States is responsible for around a quarter of the world's carbon-dioxide emissions. The two-day conference comes amid increased warnings about the perils of global warming for the environment and the world economy.
German Chancellor Angela Merkel will keynote the conference in a speech delivered via video link, outlining Germany's priorities on climate change during its current term as president of the G-8.
William L. Watts is a reporter for MarketWatch.
