Companies clean up - in the wrong way
The Guardian, Wednesday 28 January 2009
What is the EU's emissions trading scheme?
Emissions trading, sometimes called cap and trade, tackles climate change by providing economic incentives to achieve reductions in carbon and other greenhouse gases. The emissions trading scheme (ETS) is the world's most advanced example of a market-based scheme under which a cap has been set on the amount of greenhouse gases which may be emitted.
How does it work?
Companies are issued with permits to emit a certain amount of greenhouse gas. Any permits they do not use can be sold, while companies which overrun their allotment must buy permits to cover the excess.
Does it cover all companies?
No, it applies to large industrial producers such as steelmakers and power companies. Airlines are to be included from 2012.
What is the problem with it now?
Companies are selling their permits in large numbers. Many large companies are seeing their output fall rapidly in the economic downturn which means they do not need to pollute as much. As the permits were mostly given out free, their sale allows firms to cash in while making few environmental sacrifices.
Is this illegal?
No, but selling permits that are not in use goes against the spirit of the scheme, which was to reward efforts to reduce emissions. The sell-off has also depressed the price of carbon, which makes renewables projects less affordable.
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