Kyoto, cap-and-trade not working in EU
April 3rd, 2008 by Jim JustGreenhouse-gas emissions are still rising in Europe despite the Kyoto Protocol and an elaborate cap-and-trade system. Emissions continued to about 1.1% last year to 1.9 billion metric tons, following similar increases in 2005 and 2006.
What went wrong? Governments gave away too many permits to polluting industries like steel and aluminum makers and power generators. No one really knew what emissions were in Europe, so regulators based allocations on estimates provided by countries, which in turn got the estimates from companies. The result: In 2006, the first year actual emissions data became available, they turned out to be less than the caps. Not a single steel mill was modernized or coal plant sacrificed for natural gas.
The lesson: caps only work if we have accurate numbers on what emissions are – and if we don’t give away the right to emit.
Update: the Wall Street Journal’s Environmental Capital blog has a piece titled “The $100 Billion Windfall: Why the Utilities Love Cap-and-Trade.”