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pfala, flickr
At the World Economic Forum in Davos, Switzerland, BP's executive director Tony Hayward expressed the need for a broadened emissions trading program, and a worldwide standard carbon price. Hayward also said that the price of oil needs to rise in order to encourage investment. Currently, individual governments establish a cap on the amount of carbon corporations are allowed to emit into the atmosphere. The European Union has a carbon trading system in place; the United States has no federal program, though several states have enacted carbon cap-and-trade systems of their own.
There are signs, however, that the current administration will allow tougher regulations on companies that pollute. President Obama said he will review a waiver request that would allow a dozen states to make car manufacturers adhere to stricter greenhouse gas standards.
The EU system is not perfect, however. There have been allegations that corporations have been receiving carbon permits for free, essentially negating what is supposed to be a penalty for excessive polluting.
Though the carbon trading system exists, it clearly is quite flawed. Perhaps intelligence gained at the Forum in Davos will help create a clearer path forward.
How we can green our Summer
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Good post Jonathan! Regarding the "free" emissions credits in the EU, I think that refers to the initial set-up, when it seemed like the National Allocation Plans gave the biggest polluters emissions credits that exceeded the amount of pollution they were putting in the air. Based on that, given the free market nature of cap-and-trade, those companies whose allocations were excessive essentially received a subsidy... they can sell those credits back to someone who needs them. Since the annual caps get smaller and smaller, this one time "subsidy" will seem less important over time.
The over-allocation problem that you reference was visible 2005 when the trading began. I don't think 2008 reports will be skewed by it. Even so, I agree with you when you say the system is "quite flawed."
Ireland is about to implement a cap-and-share system on fossil fuels (cap the carbon, share the income). That's a way for you and me to have a stake in the game and to get money back if we reduce our carbon footprint. I like it!