The past year was an eventful period in the area of emissions trading and climate change regulation and policy development and 2012 is showing no signs of slowing down. Globally, climate change measures are encountering both resistance and successes as the world's nations struggle to control greenhouse gas (GHG) emissions. This blog post contains a rundown of some key stories we see developing in the coming months and which we will monitor and describe from time to time in this blog.
North America:
Canada has announced that it will formally withdraw from the Kyoto accord and the United States federal government has shown persistent opposition. In fact, a major European bank recently closed its US carbon trading business in a sign that there continues to be uncertainty regarding North American emissions trading systems.Even so, there is considerable policy development in the absence of national standards, as state and provincial-level governments are leading the way toward controlling GHGs.
As described in an earlier blog-post, Quebec is working toward launching a cap-and-trade system regulating greenhouse gas emissions. It will be the first Canadian province to start enforcing cap-and-trade regulations for carbon emissions. Quebec Environment Minister Pierre Arcand said that from January 1, 2013 onward the ceiling for allowable emissions will gradually become stricter.
The California Air Resources Board has designed a cap-and-trade program which started implementation activities on January 1, 2012, with an enforceable compliance obligation beginning in 2013. Currently, the first auction is scheduled for August 15, 2012. The program is aiming to bring transportation fuels under the cap by 2015, at which point 85% of the industry in California will be covered. California is also working closely with British Columbia, Ontario, Quebec and Manitoba through the Western Climate Initiative (WCI) to develop a harmonized cap-and-trade system.
Europe:
In Europe, the EU Emissions Trading System (ETS) is marching forward despite resistance from outside the union. The ETS has recently been validated by a European High Court of Justice (ECJ) ruling that the inclusion of the aviation industry in the ETS was valid under international law. The ruling came under heavy fire from China and United States, which have criticized Europe's "unilateral" approach and have threatened to disregard the system or take retaliatory measures.
Oceania:
Australia and New Zealand have revealed plans to link their emissions trading systems as soon as 2015. Australia plans to move from a fixed carbon tax to a flexible price mechanism so as to be compatible with New Zealand's program. The combined scheme would create the largest emissions trading system outside of Europe. It would also help to lock-in the system as, once the systems are linked, it becomes more difficult for either country to cancel their respective system. This is a particular benefit for Australia as the carbon tax scheme narrowly passed through the country's lower house.
China:
Chinese state media reported that the Chinese government has announced plans to launch a carbon trading system across seven carbon exchanges by 2013 and there has also been some talk of using a carbon dioxide tax to curtail GHGs. The pioneering carbon exchanges are facing some challenges – such as a lack of technical knowledge but no change in plans has been announced.
We will follow these and other initiatives carefully on this blog and look forward to an interesting year ahead!
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