The international climate change negotiations have identified options for countries to achieve their greenhouse gas emissions reduction targets by either contributing to emissions-reducing projects in other countries or through the international exchange of emissions-reduction credits (trading). Such approaches offer significant opportunities to achieve greenhouse gas emissions reductions at lower societal costs than other measures, while providing significant additional contributions to environmental protection and sustainable development. Businesses have the ability to play an important role in enabling these ‘Mechanisms’ to function to their maximum potential.
The prospects for realizing these opportunities will depend on decisions concerning the international operation of the Mechanisms, and on the manner of implementation of the Mechanisms by national governments. These factors will in turn largely determine the role of businesses in the Mechanisms.
This paper provides a business perspective on the opportunities, issues, and barriers surrounding the practical application of these Mechanisms through examination of some opportunities to apply them within the petroleum industry, and the identification of the issues that must be addressed to enable such commercial applications.
Concern over potential climate changes associated with emissions of greenhouse gases has led to international negotiations seeking to limit the accumulation of these gases in the atmosphere.
Because the gases become well-mixed in the atmosphere soon after release, efforts to reduce emissions in any location in the world are roughly equivalent in their impact on atmospheric buildup. The cost of reducing emissions can vary considerably from location to location, however, with many of the lowest cost opportunities existing in lesser developed areas (for instance due to use of older or less efficient equipment). Reducing the overall cost to society of addressing climate change concern calls for creating effective means to access such reduced-cost emission reduction opportunities.
The Kyoto Protocol creates emission targets for only developed countries. In recognition of the importance of reducing the cost of emission reduction, the Protocol also creates mechanisms to access reduced cost opportunities in other areas. These mechanisms include emissions trading and credit for emission reduction projects conducted outside of one's national borders. Ongoing international negotiations and related national governmen
