Kyoto, Gleneagles, and Brussels
The Commons blog
By cstagnaro on Climate
At the G8 meeting in Gleneagles, Scotland, the 8 most industrialized countries issued a joint statement on climate. There President Bush's focus on energy efficiency as well as search for long-term solutions (as opposed to "cap & trade" schemes for greenhouse gases) is largely endorsed by, among others, leading European nations. Consequently political debate on climate has moved towards a more science-based, long-sighted, truly global approach - at least this is what I claim in a TCS article.
If that is true the European Union might take the opportunity to revise its Emissions Trading Scheme (ETS), the tool it adopted in order to make it cheaper the pursuit of the Kyoto targets. In fact it is pretty clear that the EU will not be able to meet its goals through actual reduction or intra-European trade of allowances: the European Environment Agency's data show that European emissions are far too high. Moreover since most European countries are emitting well above the 1990 levels - whereas they would be supposed to be on track to emit 8% less than 1990 by 2008-12 - the ETS will likely not work for the very fact that... there will be little quotas to sell in the first place. We are going to have a very low supply vis-à-vis a very high demand. The scarcity is reflected in the rising price of quotas themselves.
When the process began on January 1st, 2005 Kyoto-optimists guessed that the price would be around 10 euros per tonne, yet it is today as high as 30 euros per tonne and it will likely increase to less than 40 euros per tonne (which is the cost of sanctions for non-complying countries). The only way Europe has to meet the targets is to buy "hot air" from Russia and other emerging economies - however, if that is the case, no actual reduction in emissions is achieved. What we would have is simply a wealth transfer from the EU to other countries.
I do hope that European policy-makers, as well as industry and the general public, are realizing the ineffectiveness of EU climate policies and regard Gleneagles as a new starting point. After all it is easier to get from Brussels to Gleneagles then from Brussels to Kyoto. |
