Oct 28 2009
All up in smoke
It’s been a while since we touched on this topic, and in the run up to Copenhagen I thought it would be a good idea to give an update on where industry players are and what’s happening on the ground.
Quick recap, CDM projects or clean development mechanisms are a certification issued under the Koyoto Protocol and the most common way to trade carbon credits.
Under a cap and trade system companies have a certain limit on the carbon they can emit – if they are going to go over that limit they will need to purchase more credits from a firm which has earned so called green points with sustainable projects such as clean energy production or forestry.
The Koyoto Protocol is however due to end in 2012.
This has left many wondering as to the future of the carbon trading scheme.
If companies no longer have a limit to abide by under the Kyoto protocol – then there is no need to purchase credits.
However an extension – amendment – or replacement agreement is expected in the run up to Copenhagen in December.
The question now that is stopping many from entering the market is – why get in now when things could change in two years time if an alteration is made to the CDM/ carbon market.
Some industry players will argue that while changes may be on the cards – getting in now to a market that is still relatively young such as the carbon trading market provides players with experience and foresight in to what is to come.
And as the climate change and emissions reduction is going to be a major issue by governments globally – this could turn out to be an extremely lucrative market.
On the other hand – are we likely to see an agreement or conclusions as to the continuation of the Koyoto Protcol come out in December in Copenhagen.
Some experts say that there is still way to much ground to cover before governments can come to an agreement, and in fact we are more likely to see some direction and a reconvened meeting in 6months following Copenhagen to come to a firmer agreement.
Moving aside from this – there is the whole debate as to whether carbon emissions really make a difference.
Are companies just emitting the same amount and paying for it?
At the moment its mainly western developed countries importing credits from the developing countries such as China and Indonesia.
There have been arguments that this does nothing for the developed countries and just shifts the issue under the carpet.
So what do you all think – does a cap and trade the way to go?
What are you hoping to see come out of the Copenhagen talks in December?
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