APEC Seeks to Lower Emissions
Finance ministers from the Asia-Pacific Economic Cooperation forum (APEC) met last week in Australia to discuss how to meet the region’s energy needs and combat global warming. Key to this effort, they concluded, is to establish a framework to take the place of the Kyoto Protocol when it expires in 2012.
Market-based strategies, like a cap-and-trade policy used in Europe, were discussed. A cap-and-trade policy sets an overall limit on emissions, and then grants entities (factories, for example) permits that allow them to emit a particular amount of pollution. If they emit less than what is allowed, they can sell the surplus permits to a business that can not or will not meet their emissions requirements. This puts a price on emissions and creates an incentive to lower them. The value of global emissions-permit trading was over $30 billion in 2006, with 81 percent of that in the European Union.
APEC economies represent half of the world’s trade and include the world’s largest emitters, the U.S. and China. Neither country is bound by the Kyoto Protocol: China because it is a developing nation, and the U.S. because it didn’t ratify it. Another APEC member and large emitter, Australia, also didn’t ratify Kyoto but seems to making some progress with the announcement last week that it will start a national CO2 emissions trading system by 2012 and set a global warming emissions reduction target by next year.
China plans to cut energy consumption by 20 percent over the next five years. However, Finance Minister Jin Renqing told APEC members that developed countries have the responsibility to help developing ones with the technology to achieve this. China is the world’s largest user and producer of coal, and just passed the U.S. as the world’s largest emitter of CO2.
Australian Treasurer Peter Costello was encouraged by China’s talk of using market mechanisms to cut pollution. He foresees his country playing a larger role as energy demand increases in the region but traditional supplies dwindle or are unusable because of their global warming impact. He assured China that its development will not be interrupted by energy scarcity and that Australia has “a lot to offer” it in terms of energy security.
