Position Paper on Emissions Trading

ICCP: Position Paper on Emissions Trading

Overview

        The flexibility mechanisms included in the Kyoto Protocol are key provisions on which the economic viability of the treaty rests. They are essential for business and industry to make progress in reducing greenhouse gas emissions. It is important that the Parties work to establish the programmatic details of and to build upon the flexibility provisions agreed to in Kyoto.
        Article 17 of the Kyoto Protocol makes explicit provisions for emissions trading between Annex I (developed) countries. By allowing greenhouse gas emissions reductions to take place wherever they are most easily and efficiently achieved, emissions trading is at the heart of our ability to achieve reductions in a cost-effective manner. Recent studies have shown that emissions trading can reduce costs by 40-80%.
        The International Climate Change Partnership (ICCP), a coalition of companies and industries around the world committed to responsible participation in the climate change policy process, supports the following principles with regard to an emissions trading program.

ICCP Principles

Emissions trading programs should be voluntary and encourage maximum participation.

No quantitative limits on trading should be imposed on Parties or entities. Verified reductions from all sources and sinks should be eligible for trading.

Units of trade should be clearly denominated, normalized, freely transferable, and should remain with the earning entity for use at their discretion.

Credits earned prior to the first budget period through CDM, JI, or other early action projects should be eligible for trading.

Emissions trading should be allowed at the entity level (company, NGO, etc.), while recognizing the responsibility of Parties to manage their budgets.

The emissions trading program should be sufficiently simple to encourage active participation by industry. Artificial restrictions and bureaucratic impediments should be avoided to ensure that transaction, compliance, and administrative costs are minimized.

Verification and accounting procedures should be credible, transparent, and streamlined. Rules should apply to all Parties while maintaining enough flexibility to accommodate changes to the system in the future.

Each trade will have a differing degree of risk based on numerous complex factors, therefore, liability should be negotiated between buyers and the sellers. Exclusive reliance on buyer liability should be rejected.

Voluntary, domestic emissions trading programs should be encouraged to begin prior to the first budget period.

The International Climate Change Partnership (ICCP), organized in 1991, is a global coalition of companies and trade associations from diverse industries committed to constructive and responsible participation in the international policy process concerning global climate change. The ICCP recognizes that the continued growth in emissions of greenhouse gases is an important concern for all nations and that efforts are underway internationally and in national governments to develop policies that address this concern. ICCP also understands the importance of working within the process to achieve important environmental objectives while fostering continued economic development and improvement in living conditions for all.

October, 1998

For more information, please contact: ICCP, 2111 Wilson Blvd., Ste. 850; Arlington, VA 22201; Telephone: 703-841-0626; FAX: 703-243-2874; e-mail: iccp@alcalde-fay.com