Page last updated at 18:03 GMT, Monday, 20 July 2009 19:03 UK

Harrabin's Notebook: Carbon trading

In a new column, the BBC's Environment Analyst Roger Harrabin draws on his experience of a quarter of a century reporting the environment to ask if developing nations are failing to lead the way on the drive to cut emissions.

Steel works (Getty Images)

A report to the British government confirms the massive gap between rich countries' obligations on climate change and their achievement in cutting emissions.

According to the UN, rich countries need to reduce emissions between 25% and 40% by 2020 to prevent dangerous climate change (in so far as what we know constitutes dangerous climate change).

But so far wealthy nations have only committed between 7% and 9%, based on 1990 levels.

The failure is outlined in a report by the UK prime minister's special representative on carbon trading, Mark Lazarowicz MP.

Striking the right balance

It says the international carbon market is vital if the world is to meet its climate targets in future, and predicts that by 2020, global carbon markets including the US could be worth between two and three trillion dollars a year.

Some of the cash would be given to developing countries to help them get clean technology.

The report confirms the EU position of calling for reform of the UN system known as the Clean Development Mechanism (CDM).

The CDM has inadvertently allowed some firms in developing countries to claim cash credits from rich nations for clean energy schemes they would have installed profitably without the incentives.

The EU wants to shift to a system decided on an industrial sectoral basis.

A separate report by the pressure group Sandbag, run by former Defra climate change official Bryony Worthington, calls for much tighter regulation of the EU Emissions Trading System.

The value of carbon credits has slumped because the recession has accidentally reduced pollution.

Sandbag says firms are now scooping up so many emissions credits at bargain prices that they won't have to install clean technology until 2015.

Governments say this was expected as it is not fair to expect firms to invest in technology if profits are low. To green groups this is not reassuring, given the scale of the carbon cuts scientists say is needed.

It's always been a Catch-22. It's hard to cut emissions when the economy is booming, but it's hard to cut in recession because there's no investment cash available.

For cutting emissions you need just the right temperature of the economy - not too hot, not too cold. I wonder when that might be?

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