Europe Plans $200 Billion Climate Tax on Developed Nations

With eyes on the Copenhagen talks for discussion on the next climate policy, the European Union plans to propose a tax on the carbon emissions of the developed nations, a move which could generate more than $200 billion by 2020. These funds will be used in helping developing and poor nations move from fossils fuels based energy systems to those based on renewable sources.

The European Union proposes that carbon offsetting through the trade of carbon credits under the Clean Development Mechanism be phased out and replaced by a scheme under which the developed nations would commit to cut their but would also pay taxes for extra emissions. The proposal also calls for a similar scheme for the ‘advanced developing nations’ like India and China but fails to clarify its nature.

Carbon offsetting cannot be pursued as a long term solution to mitigate the global carbon emissions and thus the Clean Development Mechanism should be seen only as a transformational step and not the solution to the problem. Replacing carbon offsetting with binding emission reductions seems to be the obvious next step but one has to ask if the world can afford a climate tax at this time of economic meltdown.

UN Admits to Shortcomings in the Clean Development Mechanism

While reporting a 50 percent increase in the number of projects approved under the Clean Development Mechanism (CDM), the administrators at the U.N. Framework Convention on Climate Change (UNFCCC) acknowledged that the carbon trading system requires an overhaul. This is the first time that the UNFCCC has conceded to the fact that the CDM has loopholes which need to be filled in order to make the next climate treaty a success.

CDM is a tool incorporated in the Kyoto Protocol which helps industrialized nations to meet their emissions-reduction targets through investments low-emission projects in the developing world. It has been an instrument to spread clean energy use across the world and providing monetary assistance to thedeveloping countries to reduce their carbon emissions. But the mechanism has had its fair share of criticism.

Critics say that projects which could have been set up without any monetary help have also been incorporated in the CDM. Many other projects which pose potential environmental threat have been approved to sell carbon credits. While approving projects like wind farms for selling carbon credits it must be ensured that the ecology of the area is not going to face any adverse effects, that no trees are cut to make space for the wind mills and that the local population has no objections with the project. These aspects have been ignored so far.

Rising Emissions Of Developing Economies Must Be Tamed

With China overtaking US as the largest greenhouse gases emitter and India set to become third largest emitter by year end, developed nations can no longer be solely held accountable for the rapidly rising global carbon emissions. Under the Kyoto Protocol the developing nations are not required to reduce their carbon emissions while it is mandatory for the developed nations to reduce & control their emissions as stated and agreed up on in the Treaty. This marks a grave unbalance as the world tries to cap the rising emissions in the midst of an overwhelming economic crisis.

The developing nations, which now produce a substantial amount of emissions, have been left out and are not bound by any mandatory emissions reductions.

Both China and India are big players in the trade of carbon credits together accounting for nearly 80% of the credits sold. Even after earning funding for clean energy projects both these countries have failed to register any substantial reduction in their emissions. Although China is the biggest investor in renewable energy and India is witnessing a boom in the clean energy projects especially solar, their role as the new big emitters has made headlines around the world. 

UN Carbon Offset Program Requires Cleanup

Two Stanford University academics have found in their study that a significant number of projects in the developing countries are earning huge amounts of cash on the back of hollow promises of cutting back on their carbon emissions. The study reveals what are described as ‘routine abuses’ of the UN Carbon Offset Program.

According to the paper prepared by the academics, the projects which earn the money by selling carbon credits to companies in the developed nations (mainly Europe & North America) actually don’t necessarily require that money in order to grow. They also point out the discrepancies in the method of certifying projects as ‘eligible’ to sell carbon credits. This is seen as a big blow to the global carbon credit business which by some estimates could grow into a $3 trillion dollar market by 2020.