Green Trade & Development
Used for years in local and regional pollution control programs in the United States, market approaches are now recognized for their ability to provide cost savings and flexibility to companies and countries committed to greenhouse gas control. Green Markets believes that well-crafted rules and oversight are needed to assure that pollution trading does not compromise environmental objectives. With greenhouse gas trading, though, we also believe that the benefits can go well beyond compliance flexibility and economic efficiency.
The greenhouse gas reduction market can potentially catalyze projects with important local environmental, economic, and quality-of-life benefits. The Kyoto Protocol’s Clean Development Mechanism (CDM), for example, enables trading between industrial and developing nations, providing a framework that can result in capital flows to environmentally beneficial development activities. Although the United States is not participating in the Kyoto Protocol, several US programs enable similar transactions on a voluntary and regulatory basis.
While international trade in greenhouse gas reductions holds substantial promise as a source of new funding for sustainable development, this market can be largely inaccessible to many smaller-scale projects, remote communities, and least developed localities. To facilitate participation and broaden the benefits, several barriers must be overcome, including: a lack of market awareness among stakeholders and prospective participants; specialized, somewhat complicated participation rules; and the need for simplified participation mechanisms for small projects, without which transaction costs can overwhelm the financial benefits of participation. If the barriers are adequately addressed, greenhouse gas trading can play an important role supporting activities that benefit people’s lives and the environment.
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