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USA: Corporate Giants Begin Greenhouse Gas Trading Program

by Danielle KnightInter Press Service
October 18th, 2000

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WASHINGTON -- Seven corporations, including several of the world's largest multinational companies, have joined with an environmental group in seeking ways to trade emission permits to reduce their production of heat-trapping greenhouse gas emissions. But critics say the partnership is just more of the same hot air from the world's fossil fuel industry.

Corporate giants including British Petroleum (BP)-Amoco, Shell International, and the chemical company DuPont, say they have teamed with Washington-based Environmental Defense in setting firm targets for reducing their own emissions, blamed for global warming.

Some of the companies involved, including DuPont and BP have already pledged in years past to reduce their emissions by a certain amount. At a press conference here in Washington on Tuesday the companies reiterated their targets and said their combined commitments will result in an annual reduction of at l east 80 million metric tons of carbon dioxide, the main greenhouse gas, by the year 2010.

''The goal is to share learning and highlight the value of solid, market-oriented rules, which will encourage even more companies to step forward and reduce pollution,'' said Fred Krupp, executive director of Environmental Defense, one of the nation's largest environmental organisations.

Each company agreed that it will measure and publicly report its emissions. The other corporations involved are Suncor Energy Inc., and Ontario Power Generation and also includes the Alcan of Canada and France's Pechiney, the world's second and third largest aluminum companies.

Together, the annual 1990 emissions of the partnership members are 360 million metric tons, placing them among the top 15 industrialised countries in terms of emissions.

Most scientists believe that these gases -- caused by the burning of fossil fuels, like oil, gas and coal -- will bring about global warming.

Already these gases have been blamed for heating the deep oceans, fracturing Antarctic ice shelves and fuelling more intense El Ninos. To deal wit h these threats industrialised nations hammered out an international agreement, known as the Kyoto Protocol, in which they pledged to reduce their emissions by five to seven percent below 1990 levels by 2008 - 2012.

Part of the Protocol, named after the Japanese city where it was drawn up in 1997, includes the concept of international emissions trading.

Supporters of these so-called market mechanisms - including the US government, industry and even some environmental groups, like Environmental Defense - argue that similar trading plans have worked well in the United States to reduce pollution at the lowest cost.

But the detailed rules of how an international trading scheme would work have yet to be decided. Next month more than 100 nations are heading to The Hague for an international conference hoping to hammer out some of these details.

In the meantime, companies including Shell and BP -- with the help of Environmental Defense in this new partnership -- have already started their own internal trading programmes to meet their own targets.

In order to meet its target of reducing greenhouse gas emissions by 10 percent from 1990 levels by 2010, BP launched a global emissions trading system in January. The system involves trading carbon dioxide and methane emiss ions in the form of permits across the company's entire operations.

According to Jeff Morgheim, climate change director at BP, more than 150 business units of the company in 100 countries participate.

''To date, more than 1 million tons of carbon dioxide equivalent permits have been traded in 350 trades,'' he said.

Shell International said it set up an emissions trading system in January covering more than 30 percent of the company's total emissions. Its target is to reduce emissions from its operations by 10 percent from 1990 levels by 2002.

''Market-based solutions are the most effective way of addressing environmental challenges, including bringing down the cost of reducing greenhouse gas emissions,'' said Aidan Murphy, vice-president of Shell International's climate change programme.

While the companies involved in the partnership with Environmental Defense have not devised a formal set of rules for trading between companies, they said they are sharing information on what they have learned so far. Such a set of rules could develop in the future, said Krupp with Environmental Defense.

The companies said that when, and if, rules for a global emissions trading scheme are worked out by the world's governments, their trading programmes would simply merge with the new system.

Most environmental groups have been highly critical of only using emission trading to reduce global warming. Such an international trading regime would be impossible to monitor and enforce, they argue.

Further complicating the matter is that if permits were given using a 1990 baseline, Russia and Eastern Europe would have permits to trade based on reductions that were made since then, not in an effort to curb global warming, but because of economic collapse.

Therefore, international environmental groups like Greenpeace and Friends of the Earth, argue, the trading would not amount to real reductions.

Groups opposed to trading are calling on countries to instead reduce government subsidies to oil, gas and coal companies.

Joshua Karliner, executive director of the Transnational Resource and Action Center, a San-Francisco-based corporate watchdog, said Tuesday's announcement amounted to little more than a public relations exercise in terms of real reductions of greenhouse gases.

Even if BP and Shell reduce the emissions caused by their own operations, he said these companies are still producing the fuel that causes the bulk of greenhouse gas emissions.

''These companies come off as good corporate 'citizens', when they are really at the core of the problem because they produce the fuel that is burned worldwide and ends up heating the climate,'' he said.

According to Karliner, it is going to take intervention on behalf of the United Nations, governments and communities to move the world away from oil and gas and toward non-polluting forms of energy, like solar and wind power.

''Market based solutions will not cause a fundamental shift away from fossil fuels and toward renewable energy,'' he said.





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