Making Markets Work for the Environment

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[pic] MAKING MARKETS WORK FOR THE ENVIRONMENT

IETA, founded twelve years ago after the signing of the Kyoto Protocol, is a global trade association dedicated to the use of carbon pricing, emissions trading and market mechanisms to combat climate change cost-effectively.  From offices in Geneva, Brussels, Washington, San Francisco and Toronto it helps achieve the design, implementation and operation of carbon markets and emissions trading systems that work smoothly from the perspective of business and offer the best route to the eventual creation of a fully global carbon market.

IETA received legal non-profit status from the government of Switzerland in June 2000, and received United Nations Framework Convention on Climate Change (UNFCCC) non-governmental organization (NGO) accreditation in October 2000.

IETA is dedicated to ensuring that the objectives of the UN Framework Convention on Climate Change and of climate protection are met through the establishment of effective systems for the trading by businesses in greenhouse gas emissions. IETA strives to ensure that any such system functions in an economically efficient manner while maintaining social equity and environmental integrity.

IETA works to:

• advocate and promote emissions trading as an important element of addressing future carbon-constrained regimes; • develop standards in the GHG market, including for contracts in carbon trading, the financial accounting of greenhouse gases, and the validation and verification of emission reduction projects; • assist in global capacity-building through the organization of workshops and conferences with local stakeholders, governments and international experts; • provide a website to serve as the main information centre on emissions trading, project mechanisms and related issues; and • Organize a structured feedback process between IETA members and regulators such as the Kyoto Protocol’s Clean Development Mechanism executive board. IETA promotes the idea of a totally global market in greenhouse gases, a mechanism which allows corporations and governments to buy and sell the right to pollute. Key to this market is the Clean Development Mechanism (CDM), which allows governments and industry in developed countries to claim to be making carbon reductions by investing in supposed “clean developments” in the developing world. This is also known as offsetting.

Why Emissions Trading is More Effective than a Carbon Tax???

A cap and trade system is the best means to establish a quantifiable, legally enforceable limit on emissions which will ensure that essential climate change targets are met at the lowest possible cost. Such a program, when combined with offsets, will accelerate global emissions reductions. In addition, cap and trade provides the private sector with the flexibility required to reduce emissions while stimulating technological innovation and economic growth. Cap-and-trade is already the policy instrument of choice in many US States, the EU, New Zealand and Australia, and has proven to be effective in the US Acid Rain Program.

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Advantages of emissions trading are:

Cap-and-trade is designed to deliver an environmental outcome, in that the cap must be met.

This certainty is critical for the environment. While a carbon tax ensures an increase in energy prices, it does not ensure that emissions will be reduced to the necessary level. It may take some years for policy makers to establish the level of tax necessary to deliver a given emissions reduction pathway. The climate problem needs very urgent attention: it is widely accepted that global emissions have to begin to decline by 2020 in order to avoid the worst impacts of climate change.

The true price of carbon is not yet known, and cannot be identified to create a tax rate. Markets are critical for price discovery, and in the case of cap-and-trade can determine how efficiently and effectively emissions...
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