*EPF421 03/21/2002
Text: Report Cites Growth of Emissions Trading to Address Climate Change
(Trading activity increases around the world) (970)

A new report by the Pew Center on Global Climate Change says emissions trading has become the policy of choice for addressing climate change in nations around the world.

According to a March 19 press release, the report concludes that while the greenhouse gas emissions market remains fragmented, trading activity has increased around the world over the last five years.

The report, entitled "The Emerging International Greenhouse Gas Market," says that among the forces making trading in greenhouse gas credits popular are progress in the international climate talks, new carbon trading systems in Europe, and private sector trading initiatives in the United States and elsewhere.

Greenhouse gas emissions, such as carbon dioxide from the burning of fossil fuels, are blamed for causing global warming.

Under the 1997 Kyoto Protocol, 38 industrialized nations have agreed to cut their greenhouse gas emissions to an average of 5.2 percent below 1990 levels by 2012. Trading emissions credits is one of the mechanisms promoted by the protocol for combating global warming. The credits are earned by companies that exceed mandated emissions cuts, and sought by companies that will fall short in meeting mandated cuts.

The Kyoto Protocol has not yet been ratified by most industrialized nations. The Bush administration refused to join the protocol after expressing concerns about the costs of compliance.

The Pew Center report says that in the absence of a ratified international agreement, regional, national and subnational trading programs are operating under different rules, which could inhibit "market convergence" and increase the costs of trading.

However, Pew Center President Eileen Claussen says the "outlines of a genuine greenhouse gas market" are beginning to emerge. "Governments and businesses around the world understand that emissions trading is essential if we're going to address the issue in the most cost-effective way possible," she said.

A complete copy of the report can be found at the following Web site: http://www.pewclimate.org/projects

Following is the text of the press release:

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Pew Center on Global Climate Change

Press Release

March 19, 2002

Report Shows Emerging Greenhouse Gas Market

Washington, DC - Emissions trading has become the "policy of choice" for addressing climate change, according to a new report from the Pew Center on Global Climate Change that documents the emergence of a market for greenhouse gas emissions.

While the market remains fragmented, the report concludes that trading activity has increased around the world over the last five years. Among the forces bringing trading to the fore are progress in the international climate talks, new carbon trading systems in Europe, and private sector trading initiatives in the United States and elsewhere.

The Pew Center report, The Emerging International Greenhouse Gas Market, describes the characteristics of the market to date and key features of early trades. In the absence of a ratified international agreement, the report's authors conclude that the new market is evolving in a fragmented way. Regional, national, and subnational trading programs are operating under different rules, which could inhibit "market convergence" and increase the costs of trading.

"Despite the United States' inaction, it is abundantly clear that we are beginning to see the outlines of a genuine greenhouse gas market," said Eileen Claussen, President of the Pew Center on Global Climate Change. "Governments and businesses around the world understand that emissions trading is essential if we're going to address this issue in the most cost-effective way possible".

"The challenge now is to forge links between these emerging regimes in order to ensure that trading systems are compatible, " Claussen said. "We are already beginning to see interest in the U.S. Congress, and private sector efforts to build a trading system are even farther along. The need for certainty, consistency, and a level playing field will encourage a merging of trading regimes.

The report also evaluates the potential evolution of the greenhouse gas market, particularly in light of recent developments in climate change policy in the United States and internationally.

The report's conclusions are based on a review of greenhouse gas transactions to date, including case studies of two transactions between four utilities: TransAlta and HEW, and PG&E and Ontario Power Generation. According to the authors of the report, the experiences of these companies illustrate the benefits of trading, as well as the challenges of conducting trades in a nascent market that is lacking in clear rules.

Part of "Solutions" Series, The Emerging International Greenhouse Gas Market was authored by Richard Rosenzweig and Matthew Varilek of Natsource, LLC, and Josef Janssen of the University of St. Gallen in Switzerland. It is the latest report in the Pew Center's Solutions series, which is aimed at providing individuals and organizations with tools to evaluate and reduce their contributions to climate change. Other Pew Center series focus on domestic and international policy issues, environmental impacts, and the economics of climate change.

A complete copy of this report -- and previous Pew Center reports -- is available on the Pew Center's web site, www.pewclimate.org/projects.

The Pew Center was established in May 1998 by the Pew Charitable Trusts, one of the United States' largest philanthropies and an influential voice in efforts to improve the quality of the environment. The Pew Center is conducting studies, launching public education efforts and working with businesses to develop market-oriented solutions to reduce greenhouse gases. The Pew Center is led by Eileen Claussen, the former U.S. Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs. The Pew Center includes the Business Environmental Leadership Council, which is composed of 36 major, largely Fortune 500 corporations all working with the Pew Center to address issues related to climate change. The companies do not contribute financially to the Pew Center - it is solely supported by contributions from charitable foundations.

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(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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