By Abby Volkmann ’13Environment Columnist
In the past, Europe has been the core of the world’s global carbon market. The Kyoto Protocol’s Clean Development Mechanism allows developed countries to assist developing countries in achieving sustainable development by earning tradable carbon credits for emissions reductions from clean energy projects in the developing world. Project developers invested billions to earn Certified Emission Reductions (carbon credits) that they sold to European companies participating in the cap and trade EU Emissions Trading Scheme.
However, Europe’s economic downturn strongly impacted the Union’s carbon market. Not only have emission reduction targets taken a backseat to the EU’s financial problems, but collapsed industrial activity, decreased demand, and reduced carbon emissions left Europe with millions of surplus emission permits, leaving room for carbon emissions to grow as the economy recovered without hitting the cap of phase two of the Emissions Trading Scheme.
While Europe’s emission trading system has faced a downturn, many other countries—developed and developing—are establishing their own carbon markets, making greater contributions than ever to the global action against climate change.
Australia implemented a carbon-pricing scheme (carbon tax) in July 2012, which has been successful thus far. Their Department of Climate Change and Renewable Energy reported a 9% reduction in emissions from electricity generators just six months after the scheme was introduced. Additionally, California introduced a landmark cap and trade program that will help the state reduce its greenhouse gas output to 1990 levels by 2020. The state is now working closely with British Columbia, Ontario, Quebec, and Manitoba through the Western Climate Initiative to develop a United States—Canada emissions trading scheme. South Korea and South Africa have committed to the implementation of carbon pricing mechanisms by 2015, and the World Bank is helping governments in Asia, Africa, and South America develop some form of emissions trading scheme.
The globalization of the carbon market has brought hope to what seems to be our world’s terminal illness that is climate change. If countries continue linking carbon markets as California is doing with Canada, the knowledge regarding the implementation and operation of carbon markets will expand. This may contribute to stronger cooperation and collaboration at the next global climate change summit, bringing us yet another step closer to overcoming climate change.