The European Union Greenhouse Gas Emission Trading Scheme () -
the world’s largest greenhouse gas market was established in 2005. The
objective of the ETS – a cap-and-trade system, was to help its members
rein in their greenhouse emissions as per the However,
the that according to the European
Environment Agency, carbon emissions of participant industries have gone
up. More specifically, emissions rose by 0.4 per cent between 2005 and 2006 and again by 0.7 per cent in the 2006-2007 period.
Europe’s failure to
meet its targets can be attributed to the fact that the reforms weren’t
tough enough. Initially, too many trading permits were handed out that threw the market in disarray. In addition, the carbon market is not impervious to political/industrial influences that tend to steer it off-course. David Victor of Stanford University says "The central
lesson from Europe is that governments must find ways of
managing the allowances that clearly are going to be one of the most
valuable pieces of public property in the 21st century."
The United States is likely to see the emergence of a carbon market in
the near future, since both the presidential candidates – Obama and
McCain are in favor of a market based scheme. Hopefully, US will be
able to draw valuable lessons from EU’s experience and set up a carbon
market, backed by a stringent framework of regulations that will pave the way for a
greener future.
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