Carbon Trading and Climate Change

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Over the past, the earth has undergone climatic fluctuations. Throughout history, our ancestors endured droughts, floods and famine. To survive, they invented new ways to farm and to hunt, to make their dwellings and to clothe themselves; they migrated across the globe, and they fought each other. The climatic fluctuations they faced were relatively small. Presence of reasonable amount of carbon in the atmosphere had made the earth’s climate and temperature remarkably constant for millennia.

Agree with me today with no hesitation that the word ‘Carbon’ is going to be the much talk about and will stay for long. This carbon is responsible for our earth’s sudden and unusual climatic fluctuation. Until just over two centuries ago the carbon in the atmosphere was in balance. But when we discovered that we could unleash the energy stored over millennia as coal, gas and oil in carbon reservoirs and uses it to drive machines, the amount and the rate at which carbon entered the atmosphere began to increase dramatically. This was the start of the Industrial Revolution. Undoubtedly, human activity has led to excessive carbon emission causing the earth’s temperature to rise and we anticipate extreme climatic fluctuation. The world is on the verge of exerting maximum effort to reduce the carbon emissions that cause climate change.

The Kyoto Protocol of 1997 by which all countries are required to reduce their greenhouse gas emissions by 5% -from 1990 levels- in the next ten years, ie 2012—or pay a price to those that do. The idea was to make developed countries pay for their wild ways with emissions while at the same time monetarily rewarding countries with good behavior in this regard. Since developing countries can start with clean technologies, they will be rewarded by those stuck with ‘dirty’ ones. The fact is “Carbon” will become the single most-biggest commodity ever traded.

Carbon Emission Reduction or CER could be achieved through Clean Development Mechanism (CDM), Joint Implementation (JI) or Buy Carbon Credits from markets popularly called Carbon Trading or Emission Trading.  CDM is a project which is executed by the developed country in a developing country where they help in buying necessary technology which otherwise the developing country cannot, on their own, afford to bring that technology change in the existing infrastructure which can result in less carbon emissions and in turn the developed countries own the carbon units generated by bringing that technology change.

JI or Join Implementation is a similar approach, only difference being the both the parties involved in executing such a project are from the developed world.  In Carbon Trading, if the developed world falls short of the emission targets, they can buy those from the market, from someone who was successful in meeting those targets and has a surplus of carbon units with them. This also means it’s not important that someone is doing more to reduce carbon emissions and someone else is just buying the rights to pollute the air. Some economists have called emissions trading a “win-win” situation, as well as “a free lunch.” But they also opined that every market-mediated transaction is not always fair or equitable. The Development Critique made an effort to analyze the effects of developed countries’ policies on developing nations.  It has been asserted that powerful countries and groups may seek to turn the climate crisis to their own advantage as, unfortunately, the emission trading criterion has ignored the effect of emissions trading programs on the development prospects of the world’s poorest nations. Emissions trading schemes may allow the developed world to enter and then exploit developing countries.

Development critique has stressed that history is replete with examples that development programs, hidden behind the guise of development assistance, are actually motivated by the economic goals of the developed countries; stunting development of developing counties, trapped in a relationship of dependence and domination with the developed world, pressed the developing world into an inferior and self-perpetuating trade relationship, exploit them and extract part of the locally produced surplus, create new avenues for exploitation by the developed world and finally blame the developing world for its continuing poverty. Rather than getting rich through comparative advantage, developing nations continually were producing the cheapest raw materials and agricultural products while developed nations continually developed new and better technology to export to the poor developing world at high prices.

International emissions trading schemes might allow developed nations to buy the cheapest emissions reductions opportunities en-masse, before developing countries acquire binding strategy of their own. The idea here is that the price of emission will rise over time as cuts become more and more difficult to make. As soon as a viable international emissions trading program takes shape, emissions credits will become very valuable.  Further, emission trading allows developed nations to claim credit toward their leadership obligations for funding of reductions in developing countries, reductions that also earn credits for developed nations themselves. Many developing nations are ill-equipped to evaluate emissions trading programs thoroughly and to judge if and how they might benefit from participating. The developed world continues to hold the trump cards.

Nagaland will surely enter this complex fray sooner. With huge forest cover, we have immense potential to contribute mitigating assets to the global climatic turmoil. Nagaland may make detrimental trades because we have not developed the infrastructure and managerial capabilities necessary to evaluate and negotiate potential bargains. Nagaland is so desperately impoverished that we may be willing to cheaply sell off resources that will be necessary for our development in the future. Let us also consider Nagaland with technological advancement and its obligation to pay for emission. However, Emission trading will make future pollution reductions more expensive because rich countries or firms will purchase the world’s cheapest abatement credits in a regime’s evolution, before Nagaland obligations become effective.”
If at all we start carbon trading and then if we could answer this question “Why we want to start carbon trading?”, we can turn this crisis into an opportunity to transfer technologies and expertise to Nagaland in exchange for emissions credits. The revenues we gain from emissions credits could be used for sustainable development and adaptation to climate change. While dealing with emission trading, we have to keep on assuring ourselves the contribution we are to make in mitigating climate change.

Nagaland won’t let this issue be another “Trojan Horse”.