The Sky is Not the Limit: - Carbon Trade Watch

More documents

Recommendations

Info

The solution, as proposed by industrylobby groups and neo-liberal thinktanks, is to encourage WTOcompliance across the board. Manycorporate lobby groups in particular,want unrestricted free trade ingreenhouse gases rather thangovernment regulation and taxation. 4The WTO’s supremacy over nationalgovernment’s ability to legislate makesit difficult to implement climate policies,including tough regulations onemissions trading markets, which donot conflict with free trade rules.Increasingly, regional tradeagreements such as NAFTA and theEU Single Market also contain suchmeasures. A recent NAFTA disputebetween the US and Canada over atoxic fuel additive, MMT, led to theCanadian government having to repealits ban of MMT, a substancemanufactured by US-based EthylCorp., and to pay compensation to thecompany for profit losses. 5Interestingly, the US government itselfbans the use of MMT in fuels, whereasCanada was instituting the ban after ithad signed NAFTA. Also of note, isthat in this particular dispute, EthylCorp. was able to sue the Canadiangovernment directly. 6 Such ‘investorstate’provisions are appearing in newtrade and investment treaties andthreaten to bring a whole raft of similarchallenges against countries’environmental and social standards bytransnational corporations.Investment Liberalisation: AnEmerging ThreatWhile global trade rules have anenormous impact on climate policy,global investment rules, as codified inthe WTO’s rules on services,intellectual property and trade-relatedinvestment measures, as well asthrough regional trade agreements,and through International InvestmentAgreements (IIAs) are also importantto consider.International investment can take twomain forms: foreign direct investment(FDI) and international portfolioinvestment (IPI). FDI can be definedas an investment by a corporationfrom one country in an asset (in wholeor in part) of a company (most often asubsidiary) in another country.Therefore a majority of FDI flows arein the form of mergers, acquisitionsand takeovers, which contributes tothe increase in size and concentrationof the economic power ofcorporations. 7Portfolio investments can be definedas the buying of stocks, bonds or otherparts of the financial markets that donot result in a ‘controlling stake’. Suchinvestment is often more short termthan FDI, and much more speculative.Emissions trading, broadly defined,involves both forms of internationalinvestment. Project-based trades suchas investment in a CDM or JI projectwould be considered FDI, while tradingin emissions permits would beclassified as portfolio investments.In the past, governments have tried tonegotiate special multilateralagreements on investment in the WTOand in the Organisation for EconomicCooperation and Development(comprising the 29 most industrialisedcountries).However intense public outrage andgovernment opposition ultimately ledto their demise. Corporate lobbygroups such as the InternationalChamber of Commerce (ICC) and the24
Sky for SaleThe Kyoto Protocol establishes threemarket-based trading mechanisms-Joint Implementation (Article 6), CleanDevelopment Mechanism (Article 12)and Emissions Trading (Article 17).The rules and procedures for thesemechanisms are still a work inprogress, but certain basic concepts oftheir function are already clear. Theyenable trading in greenhouse gasallocations between countries in theform of Assigned Amount Units (AAUs- Emissions Trading), CertifiedEmissions Reductions (CERs - CleanDevelopment Mechanism), andEmissions Reduction Units (ERUs -Joint Implementation). These ‘credits’will be the primary product traded inthe world markets as implementationof the Kyoto Protocol gets under way.It is these trading mechanisms andother policy questions related to theKyoto Protocol, which has raisedconcern over the WTO’s treatment ofthe climate agreement.World Business Council forSustainable Development (WBCSD)have been strong proponents of theseagreements, matching theirenthusiasm for international emissionstrading proposals. The EuropeanUnion continues to push for broaderliberalisation agreements andprovisions in the WTO, while the USand Canada have tabled ambitiousinvestment provisions in ongoingnegotiations around the Free TradeAgreement of the Americas. 8 But thebulk of international legislation oninvestment lies in the patchwork ofagreements between countries.There are currently over 2100 BilateralInvestment Treaties (BITs) now inforce worldwide. 9 These areagreements negotiated between twocountries, often containing veryextensive provisions affecting a wholerange of a country’s regulations -particularly environmental and socialrules. Regional free trade agreementssuch as the EU Single Market andNAFTA also contain such provisions.More than 80 per cent of all BITs nowin force have been negotiated since1990, and each year a higher numberare negotiated, amended orcompleted. 10 This trend is only set toincrease as countries in both Northand South compete with each other toattract investment.Playground RulesIn contrast, the UNFCCC andgovernments, caught up with the spiritof deregulation (or rather corporatefriendly re-regulation), have beenreluctant to develop strict rules andregulations for the use of marketbasedmechanisms in the KyotoProtocol. In the absence of tight rulesand strict enforcement mechanisms,business has been largely left to itsown devices and in many casesactively encouraged to develop therules of the market place as it sees fit.This laissez-faire approach makes iteasier for corporations to influence thepace and development of thesemarkets. Once certain norms andstandards are established, it will bemuch more difficult for governments tointervene in the markets. Through‘voluntary’ emissions trades, ‘pilotprograms’, and direct lobbying,corporations effectively inculcatecertain business practices intomainstream policy. Much of the morerecent US trading markets havedeveloped in this manner. The UnitedKingdom went a step further and setupits national emissions tradingregime to be entirely voluntary, withrelatively few guidelines. In general,where trading regimes havedeveloped, governments have beenwary of imposing stringent regulationsand accountability mechanisms oncorporations.On an international level, this is evenmore difficult to accomplish, asconsensus on sensitive economicpolicy decisions is often impossible to25
Page 1 and 2: Carbon Trade WatchBriefing No.1The
Page 4 and 5: 1. What is emissions trading?Pollut
Page 6 and 7: the scheme that were not abandoneda
Page 8 and 9: ehaviour of DSW, it is difficult to
Page 10 and 11: PCF promoting privatisationThe PCF
Page 12 and 13: 2. The Origins of Emissions Trading
Page 14 and 15: 2.3 Corporations at the EarthSummit
Page 16 and 17: 2.4 Corporate ‘good guys’?The t
Page 18 and 19: 2.6 Sinking the ProtocolBonn 2001:
Page 20 and 21: 3. Trading Rules3.1 The Kyoto Tradi
Page 22 and 23: 3.2 Renewables under SiegeEmissions
Page 26 and 27: “In the context of the KyotoProto
Page 28 and 29: ‘renewable’ projects.7 Although
Page 30 and 31: ased on the “successful” PCF mo
Page 32 and 33: • internal transfers of credits b
Page 34 and 35: 5.4 Think TanksPoint Carbon: Set up
Page 36 and 37: 5.6 Private Sector TradingInitiativ
Page 38 and 39: However, over the years,Greenpeace
Page 40 and 41: market rhetoric begins to clear.Emi
Page 42 and 43: Notes & ReferencesIntroduction:1. S
Page 44 and 45: 6. http://www.ich.no/kurs/he2002/ug
Page 46 and 47: 2. “Bush energy plan - policy or
Page 48 and 49: 4. The Dutch Government’s CDM pro
Page 50 and 51: 3. Competitive Enterprise Institute
Page 52 and 53: http://partners.wri.org/contrib_fin

The Sky is Not the Limit: - Carbon Trade Watch

Create successful ePaper yourself

Delete template?

Save as template?