Thursday, April 15, 2010

'We should avoid using climate for making new trade wars'

The European Union (EU) may have been hinting at imposing a carbon tax to force exporting countries into taking urgent steps towards adopting cleaner technologies, but EU’s Climate Action Commissioner says the carbon trade, or cap and trade, system is preferable to a carbon tax system. In New Delhi, Kirtika Suneja recently spoke to Connie Hedegaard about this cap and trade system and more. Edited excerpts:

Why do you prefer a carbon trade system to a carbon tax one?
In a carbon trade system, you put a price on carbon and set a cap on how much carbon can be emitted. There is also an incentive structure, so when emission permits are scarce, there is a price on them and those who are energy efficient, don’t need to buy those permits. In a carbon tax system, some countries might feel that because they are rich, they can pay the tax and others can do the reductions.

How do business houses react to such a system?

The business world gets to know that they can’t get as many permits as in the previous one, as the quota gets tightened. It forces them to innovate and find new smarter and intelligent energy-efficient solutions. Those who are energy-efficient, can be rewarded because they don’t need to buy energy allowances. All the 27 countries in Europe follow this system and business houses also did not mind it. We have set a target for 2020 and so, the businesses know the playing field till then.

What are the implications of levying a carbon tax on any country?
We should try to avoid using climate and environment for making new trade wars. We have to pursue an international framework to put a carbon trading system in place. We don’t have to put taxes on different goods to indirectly start a trade war. It is not difficult to start a trade war. That’s an easy solution and a last resort. Europe’s priority is a carbon trading system, a system of highest environmental integrity. I would not like to speculate into anything more.

You visited the Maldives before coming to India. What is the sentiment there?
The discussion at the Maldives revolved around sea rise. They are extremely vulnerable and already feel so. So, we should not talk only of the big players like the US, China or India, but also the smaller ones who are suffering and we can’t afford to wait for adaptation and financing mechanisms. They did not create the problem and should not be suffering the most.

What do you expect from the climate talks in Bonn?
The talks in Bonn are expected to start a process towards Cancun. These will be the first set of talks after Copenhagen, and I hope they are constructive. We need to get specific on decisions and actions, and start discussing the actual issues not just the procedures. Moreover, there will also be a ministerial level meeting in Bonn on May 2-3.


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