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Thinking globally, acting locally

April 7, 2004

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The states are showing leadership in their bid to trade greenhouse gas emissions.

From January next year the 25 member states of the European Union will begin trading in carbon dioxide. It will be the first multinational trading scheme in greenhouse gas to be implemented in the world.

In the words of EU Environment Commissioner Margot Wallstrom, the scheme means companies across 25 countries "must now start incorporating climate change into day-to-day commercial decisions and begin assessing what innovative steps they can take to reduce emissions".

By introducing the scheme three years before emissions trading is due to begin under the Kyoto Protocol, the community will, in its own words, be able to learn by doing.

It is also making a leap of faith that the conditions of the protocol are worth meeting, even if the protocol is not ratified. (More than 110 nations have signed the protocol, but the treaty cannot take effect unless Russia agrees to sign it.)

In the meantime the EU scheme will provide a working model for how member states on other continents can set up their own trade in greenhouse gas emissions.

Australian states and territories are now also investigating how to set up a national market in greenhouse gases.

The states are acting on their own initiative in the face of the Federal Government's refusal to sign the Kyoto protocol. (This year the Government stopped researching international emissions trading, arguing that such trade was unlikely to come into effect.)

The Commonwealth's stance is logically inconsistent: it accepts the scientific evidence that global warming is upon us, and also says it is committed to meeting its Kyoto emissions target by 2010.

But by not actually signing the protocol, the Government risks excluding Australia from the future international trade in greenhouse emissions foreshadowed by Kyoto.

The proposed national emissions market will give companies experience in emissions trading while also providing incentive for businesses to reduce their greenhouse gases.

While federal approval is not needed for the market to operate - because the power companies, factories and smelters that contribute most to greenhouse emissions come under state legislation - federal involvement would have the potential to move the process along.

As it is, the states will have to find a way to co-operate without leadership from the Commonwealth.

The United States, the world's biggest greenhouse gas polluter, has also refused to ratify the Kyoto Protocol, but that has not stopped leading US companies from taking environmentally responsible action of their own.

Last year emissions trading began through the Chicago Climate Exchange, whose members include Dow Corning, Dupont, Motorola, IBM and the Ford Motor Company. These companies have accepted that they are acting in their own interest by reducing global warming.

It is to be hoped that the Australian states will be able to make progress despite federal intransigence.


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