WASHINGTON, April 27 (UPI) -- American companies in Europe are having success with the "cap-and-trade" system of meeting greenhouse gas standards under the Kyoto Protocol, which a European official says shows Kyoto should receive a second look within the United States.
Robert Donkers, an environmental counselor to the European Commission, said at a congressional briefing Monday that American companies based in Europe are looking for a nod from the administration that would open the door for their partners and other corporations within U.S. borders to participate in the European Union's fledgling "cap-and-trade" trading system.
"Cap and trade" has become the nom-de-guerre for policymakers who support specific market-based alternatives to reduce greenhouse gas emissions. The system works by setting emissions limits and allowing polluters to buy and sell credits to help them meet emissions standards.
The EU launched its trading system to meet a goal to reduce member countries' greenhouse gas releases 8 percent by 2012. That target was outlined in the Kyoto Protocol to the United Nations Framework Convention on Climate Change. According to a statement from the Environmental and Energy Study Institute, which sponsored the briefing, some traders have estimated that within two years the carbon trade will be valued at euro 10-15 billion ($12-18 billion).
Donkers said American companies overseas are having "positive" experiences with the trading system, which has been in effect since January. He also said the EU's carbon dioxide trading so far has yielded prices between euro 7 to 16.45 ($9.00 to $21.32) since the beginning of the year. The trading price for April rests around euro 13 ($16.85), he said.
"We will just respect the market's rules," he said. "But it's really taking off."
American companies in EU countries must adhere to the Kyoto Protocol. Domestic companies are barred from participating in the EU's emissions trading scheme because the United States has not ratified the treaty. The United States has not budged from its non-participatory stance on Kyoto for eight years, even though it was intimately involved in its creation. The current administration eschews authorizing it because of concerns about the feasibility of the trading scheme and well-documented political opposition to participating in any policy that might "significantly harm the U.S. economy."
Part of the reason President Clinton did not serve the treaty to Congress for ratification in 1997 was the overwhelming vote of no-confidence senators gave in the form of a resolution that explicitly said the United States should not sign on to a protocol that does not outline strong targets for reducing emissions in both industrialized and developing nations.
But that opposition appears to be softening. Monday's briefing was organized by Sens. Dick Durbin, D-Ill., and Olympia Snowe, R-Maine, who along with 12 other senators submitted a joint resolution to Congress in February "expressing the sense of Congress that the United States should act to reduce greenhouse gas emissions." The resolution, which stops just short of calling for ratification of Kyoto, is before the Foreign Relations Committee. Also, Sen. John McCain, R-Ariz., submitted a bill around the same time to address the creation of a domestic "cap and trade" system to reduce greenhouse gas emissions.
The Bush administration's official stance on Kyoto and greenhouse emissions issue has not deterred EU officials, nor has it discouraged emerging private and public sector partnerships to use cap-and-trade as a back-door mechanism to get the United States to rethink its position. The fact remains that the country is still the largest emitter of greenhouse gasses.
President Bush has said in the past that he would not support ratification of Kyoto because, among other things, developing economies such as China are not held to the same standard or timetable for reducing emissions -- although that will likely change as analysts predict China's progression to a top-tier industrialized nation in the next decade or so.
Donkers told participants at the briefing that the cap-and-trade system provides incentives for investing in emerging technologies that could be applied to help developing countries manage their emissions better as they continue to grow. He called on the United States and the EU to take leadership in this area.
"We can help them with technologies (so they can) grow up in a sustainable way," he said.
The closest thing the United States has to domestic cap-and-trade projects comes from Chicago Climate Exchange, a private program that is gaining significant media attention, and a consortium of nine Northeastern states led by New York Gov. George Pataki called the Regional Greenhouse Gas Initiative. Chicago Climate Exchange has drawn participants from IBM, Bayer, Dow Corning, DuPont and even the Iowa Farm Bureau. Its literature boasts a $2.3 trillion portfolio of "socially responsible investments."
The Regional Greenhouse Gas Initiative, now in its second year, is working on a cap-and-trade scheme that would deal with power plant emissions. Although this state-level activity has generated speculation about RGGI's intent to have the administration ratify the Kyoto treaty, a representative with the Pew Center on Global Climate Change would not confirm it at the briefing.
"I think RGGI is providing a good example of leadership on this type of policy without federal intervention," said Josh Bushinsky, a Pew fellow who works closely with the organization. "The question in the future will be 'How does a regional initiative like RGGI fit into domestic policy?'"
