A review of carbon trading
THERE ARE 2.6 MILLION CARS in Beijing. This has caused pollution in the Chinese capital to rise three times above the acceptable level. This condition is an environmental concern that threatens the Beijing Olympics. Some suggest that 90 percent of the cars need to be removed from the streets during the games for the emissions to clear up. The world is waiting to see what plans the Chinese government has to reduce emissions in the city.
The Beijing experience tells us that it is easy to pollute the air, but difficult to clean up.
Its population density in Beijing is similar to that in the Philippine National Capital Region, or 16,000/sq km. This puts us in the same league with Shanghai, Taipei, Seoul and Jakarta.
In the Philippines, the Department of Environment and Natural Resources (DENR) greenhouse gas (GHG) emission inventory records show that the energy sector is the biggest contributor to air pollution.
The highest contribution to carbon dioxide emission comes from burning fossil fuel. On a national level, transportation is responsible for one-third of air pollutants. Another third comes from power generation, and the rest comes from industrial, commercial and residential sectors.
Reducing emissions
On a bigger front, it’s interesting to know what efforts are being done, especially by industrialized countries, to reduce their own emissions.
It has been more than a decade since most countries joined a treaty called The United Nations Framework Convention on Climate Change to study what can be done to reduce global warming. Recently, an addition to the treaty was approved: the Kyoto Protocol, which has more powerful and legally binding measures. It sets targets for more than 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions worldwide. This amounts to an average of 5 percent against 1990 levels over the five-year period 2008-2012.
The Protocol recognizes that developed countries are mainly responsible for the present high level of GHG emissions in the atmosphere due to more than 150 years of industrial activity. It therefore places a heavier burden on developed nations under the “common but differentiated responsibilities.”
The Kyoto Protocol was adopted in Kyoto, Japan on Dec. 11, 1997 and entered into force on Feb. 16, 2005. To date 180 countries have ratified the treaty. The United States is the only industrialized nation which has not ratified the treaty and therefore is not bound by it.
A new commodity
Countries with commitments to the Kyoto Protocol have accepted targets for limiting or reducing carbon emissions. These targets can be met through an administrative approach used to control pollution by providing economic incentives for reducing emissions of pollutants. It allows countries that have emission units to spare, or emissions allowed but not used, to sell this excess capacity to countries that exceed their own targets.
Through emission reductions or removals, a new commodity has thus emerged. Since carbon dioxide is the main greenhouse gas, this is referred to as trading in carbon. Carbon is now traded and monitored like any other commodity. This is known as the “carbon market or carbon trading.”
How it works
Countries that have ratified the treaty are given a limit on the amount of a pollutant that can be emitted. Those that need to increase their emissions must buy credits from those who pollute less.
This transfer of allowances is referred to as a trade. This means, the buyer is paying a charge for polluting, while the seller is being rewarded for cutting down on emissions by more than what was needed.
Other ways to meet targets
Besides carbon trading, the Kyoto Protocol offers other means for countries to meet their targets.
One of these is the Clean Development Mechanism (CDM). Under this scheme, a country is allowed to implement an emission reduction project in developing countries. Such projects can earn saleable credits which can be counted toward meeting Kyoto targets.
The Philippines is the 7th country with projects registered with the CDM executive board in Bonn, Germany. Mostly from the private sector, the projects include methane recovery like the Montalban landfill recovery, where methane is recovered for power generation. We also have renewable energy like the wind turbines in Ilocos, and fuel switching from fossil fuels to rice husks and coconut shells.
Another way is through the mechanism known as Joint Implementation, which allows a country with a reduction or limitation commitment to earn emission reduction units in another industrialized country. These units can be counted toward meeting its Kyoto Target.
Why carbon trading?
Carbon trading is a better approach than direct taxation or regulation. It can be cheaper and more politically acceptable for existing industries since the initial allocation often considers rights issued in proportion to historical emissions.
Most of the income generated goes to environmental activities and helps developing countries.
What can be done?
With our traffic pollution in NCR, it is evident that we should decongest Manila with new roads and additional mass transit systems to link up with outlying regions.
The second most densely populated region in the country is Calabarzon which is south of Manila with a population density of 561/sq km. The third most densely populated region is Central Luzon found north of Manila with a population density of 381/sq km according to the 2006 Philippine Statistical Yearbook.
For most of us ordinary citizens, carbon emission reduction can be achieved with a change of lifestyle. We can reduce backyard burning. We must reduce use of electric power and gasoline. We can be less dependent on generated power by consuming less of the world’s material goods.
Author: Amado de Jesus
Published in the Philippine Daily Inquirer
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