MADRID (Reuters) - Although it will never join the Kyoto agreement to curb
global warming, the United States is likely to adopt a carbon trading system
like the European Union's in future, a seminar in Madrid heard on Friday.
The EU carbon emissions trading system should serve as a prototype for a
U.S., or even global version, Massachusetts Institute of Technology lecturer
Denny Ellerman said.
"It is a multinational system and has achieved a uniform price," he told a
conference at the Pontifica de Comillas University.
"This on a global scale is going to be what happens."
Under the European carbon trading system, which started in 2005, each
industrial plant is given a tight carbon emission allowance.
Plants then have to buy additional emissions rights if they exceed their
allotment and that has led to the development of a carbon market for trading
both rights and credits earned from projects to cut emissions in developing
countries known as clean development mechanisms (CDMs).
The U.S. government has refused to join the Kyoto protocol, under which most
rich countries agree to cut their future CO2 output in a bid to limit global
warming, on the grounds it would hurt U.S. industry.
"It hasn't wrecked the European economy and that is an important lesson to
recognize," Ellerman said.
Countries like Brazil, China and India -- fast turning into major sources of
CO2 -- like the CDMs and by using them will limit their own emissions, he
said.
He sees the U.S. setting up its own emissions trading system by around 2010
or 2012, which should naturally link with the EU one, allowing arbitrage between
them. That would harmonize prices and establish a global price for a metric ton
of CO2.
CDMS are fundamental, as a cheap way of cutting emissions, and a country like
Brazil could offer its CDMs wherever the price was better, Ellerman said.
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