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Category — International climate regulation

International Cap-and-Trade Taxation: U.S. Beware!

The American Clean Energy and Security Act (H.R. 2454, aka the Waxman-Markey climate bill) and the American Power Act (aka Kerry-Lieberman climate bill) both contained explicit provisions to create not just a U.S.-side cap-and-trade program for carbon dioxide (CO2) but also a single, transatlantic emissions trading scheme.

The problem is that even if cap-and-trade is dead in the U.S. Senate, its advocates remain committed and have options for international action. The more this can be understood, the more the electorate can reject U.S.-side help for a futile, costly international scheme to regulate CO2 in the name of “stabilizing” climate.

A clear warning that supranational cap and trade was planned beyond the EU’s borders came in a speech last May by the European Commission official Jos Delbeke, Deputy Director General DG Environment. He told an audience in Berlin that:

“We are confident that we now have a solid system from which we can link up to similar schemes elsewhere in the world. The EU’s goal is indeed a global carbon market.

The EU ETS and the future U.S. cap-and-trade system – integrated into a transatlantic carbon market – can be the twin engines driving the OECD-wide carbon market. The progress on domestic legislation in the U.S. is an essential step in this regard and we are encouraged by Congressional timetables for getting draft legislation to a floor vote in the coming months.”

I recently spoke to Adam C. T. Matthews, the Secretary General of an organisation called GLOBE International – an environmental policy talking shop for parliamentarians, who told me that this this is something “which Europe was desperate for”. They think that the carbon market could be in serious trouble without it.

Those drafting cap and trade legislation in the United States haven’t let their European counterparts down. In Waxman-Markey there is explicit provision to link with other cap and trade schemes. The conditions are set out in Section 728. International Emission Allowances:

“The Administrator, in consultation with the Secretary of State, may by rule designate an international climate change program as a qualifying international program if—

(1) the program is run by a national or supranational foreign government, and imposes a mandatory absolute tonnage limit on greenhouse gas emissions from 1 or more foreign countries, or from 1 or more economic sectors in such a country or countries; and

(2) the program is at least as stringent as the program established by this title, including provisions to ensure at least comparable monitoring, compliance, enforcement, quality of offsets, and restrictions on the use of offsets.”

For approved programmes – and the intention is clearly that the European Union Emissions Trading Scheme (EU ETS), at least, would qualify – emissions allowances from abroad are interchangeable with those granted in the US. Section 722. Prohibition of Excess Emissions makes that clear: [Read more →]

September 30, 2010   2 Comments