‘Cap and trade’ climate scheme won’t work in US either, warn European environmental groups

16 April 2008
For immediate release

With George Bush today expected to outline options for a ‘cap and trade’ scheme to tackle US greenhouse gas emissions, European environmental groups warned that a similar policy in the European Union has been a ‘total failure.’

European emissions have risen in the three years during which the EU Emissions Trading Scheme (EU ETS), which accounts for the vast majority of trades in the world carbon market, has been in operation.

Heavy industry lobbying has led to an over-allocation of the free pollution permits issued by the scheme, allowing large polluters to generate billions in windfall profits but offering them little incentive to change to cleaner energy and reduce emissions.

“Cap and trade schemes provide businesses with an opportunity to delay making the transition to low carbon technologies”” says Kevin Smith, a researcher with the Carbon Trade Watch project of the Transnational Institute, an Amsterdam-based think-tank. “Carbon trading will make huge profits for a handful of polluting companies in the US, but it will not bring about the emissions reductions that are so desperately needed.”

“The European cap and trade scheme has seen industry lobbying at every stage” says Oscar Reyes, also of the Transnational Institute. “There is no reason to believe that this situation would be any different in the US, where corporations enjoy an even greater degree of political influence.”

“There are many more effective policy tools than emissions trading to fight climate change, such as increased spending on public transport and more conventional regulations to cut energy use” says Jutta Kill of the environmental group FERN. “An effective policy should cover all sectors. The US military alone is responsible for the same amount of emissions in one day as the whole of Sweden is in one year.”

Further information
Kevin Smith, Carbon Trade Watch, <mailto:kevin@carbontradewatch.org>kevin@carbontradewatch.org, +44-207-700-7971

Oscar Reyes, Transnational Institute, <mailto:oscar@tni.org>oscar@tni.org, +31-647-035-778

Anne Peterman, Global Justice Ecology Project, <mailto:globalecology@gmavt.net>globalecology@gmavt.net, PHONE
 
Notes
1. Permits sold and re-sold as part of the EU Emissions Trading Scheme (EU ETS) account for $19 billion of an estimated global market of $23 billion. See World Bank, State and Trends of the Carbon Market 2007 p.3

2. Recently released European Union statistics indicate that industries covered by the ETS emitted almost 1.88 billion tonnes of carbon dioxide against allowances of 1.91 billion tonnes. In other words, the ‘cap’, which is meant to reduce emissions, failed to cap emissions because it was set above the level of actual emissions.

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