THE SUCCESS OF CAP&TRADE

Carbon emissions trading: more buy in, small impact; Carbon emissions trading gains wider acceptance among European power companies and heavy industries. But so far, carbon emissions trading has had only a marginal impact in reducing emissions.
March 4, 2011 (AP via Christian Science Monitor)

"The European system for putting a price on carbon emissions is gaining wider acceptance and is making a small dent in the amount big energy companies are polluting, according to a survey of more than 2,500 companies…[but] the cap and trade program adopted six years ago will only begin to bite when it enters its next period in 2013, analysts said.

"Under the cap-and-trade system, about 12,000 companies are allocated permits that limit how much greenhouse gases they can emit. Companies that exceed their allocations can buy credits from companies that have emitted less than allowed…Last year, the trade amounted to $123 billion…"

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"…The survey included hundreds of European power companies and heavy industries, and showed that 59 percent of those that responded already have reduced their emissions because of the system, up from 54 percent last year. Another 9 percent said they plan to lower emissions because of the cost of carbon.

"…[M]ost of the reductions were marginal, often less than 5 percent over the last two years…[largely because power] companies have been receiving their permits for free…[S]tarting in 2013 they will have to pay for their allocations in an auction with other companies…Despite a small increase in emissions last year as economies recovered from recession, overall carbon pollution has declined since 2005 and Europe was on target to meet its goal of slashing emissions 20 percent by 2020 from 1990 levels."

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"A similar cap and trade program was a cornerstone of President Barack Obama's policy on climate change, but failed to win congressional support. However, several regional trading schemes have been approved among U.S. states, most recently in California, and within five years carbon trading is expected to be established in China, Australia, Brazil and others among the world's largest polluters.

"The survey, conducted Jan. 27-Feb. 14, showed 49 percent of the 2,535 companies that responded thought the trading scheme was the most cost-effective way for Europe to meet its emissions targets, up from 43 percent the previous year…[T]he growing level of confidence was a surprise after the discovery in January of the cyber theft of about $50 million in carbon credits…"