USA: Corporate Giants Begin Greenhouse Gas Trading

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WASHINGTON -- Seven corporations, including some of the world's largest multinational companies, have joined with an environmental group in seeking ways to trade emission permits to reduce their production of heat-trapping greenhouse gas emissions.

But critics say the partnership is just more of the same hot
air from the world's fossil fuel industry.

Corporate giants, including British Petroleum (BP)-Amoco,
Shell International and the chemical company DuPont, say they
have teamed with Washington-based Environmental Defense in
setting firm targets for reducing their own emissions, blamed for
global warming.

Some of the companies involved, including DuPont and BP, have
already pledged in years past to reduce their emissions by a
certain amount. At a press conference here in Washington
yesterday the companies reiterated their targets and said their
combined commitments will result in an annual reduction of at
least 80 million metric tons of carbon dioxide, the main
greenhouse gas, by the year 2010.

"The goal is to share learning and highlight the value of
solid, market-oriented rules, which will encourage even more
companies to step forward and reduce pollution," said Fred Krupp,
executive director of Environmental Defense, one of the nation's
largest environmental organizations.

Each company agreed that it will measure and publicly report
its emissions. The other corporations involved are Suncor Energy
Inc. and Ontario Power Generation, as well as Alcan of Canada and
France's Pechiney, the world's second and third largest aluminum
companies.

Together, the annual 1990 emissions of the partnership members
are 360 million metric tons, placing them among the top 15
industrialized countries in terms of emissions.

Most scientists believe that these gases -- caused by the
burning of fossil fuels, like oil gas and coal -- will bring
about global warming.

Already these gases have been blamed for heating the deep
oceans, fracturing Antarctic ice shelves and fuelling more
intense El Ninos. To deal with these threats industrialized
nations hammered out an international agreement, known as the
Kyoto Protocol, in which they pledged to reduce their emissions
by 5 to 7 percent below 1990 levels by 2008-2012.

Part of the Protocol, named after the Japanese city where it
was drawn up in 1997, includes the concept of international
emissions trading.

Supporters of these so-called market mechanisms -- including
the U.S. government, industry and even some environmental groups,
like Environmental Defense -- argue that similar trading plans
have worked well in the United States to reduce pollution at the
lowest cost.

But the detailed rules of how an international trading scheme
would work have yet to be decided. Next month more than 100
nations are heading to The Hague for an international conference
hoping to hammer out some of these details.

In the meantime, companies including Shell and BP -- with the
help of Environmental Defense in this new partnership -- have
already started their own internal trading programs to meet their
own targets.

In order to meet its target of reducing greenhouse gas
emissions by 10 percent from 1990 levels by 2010, BP launched a
global emissions trading system in January. The system involves
trading carbon dioxide and methane emissions in the form of
permits across the company's entire operations.

According to Jeff Morgheim, climate change director at BP,
more than 150 business units of the company in 100 countries
participate.

"To date, more than 1 million tons of carbon dioxide
equivalent permits have been traded in 350 trades," he said.

Shell International said it set up an emissions trading system
in January covering more than 30 percent of the company's total
emissions. Its target is to reduce emissions from its operations
by 10 percent from 1990 levels by 2002.

"Market-based solutions are the most effective way of
addressing environmental challenges, including bringing down the
cost of reducing greenhouse gas emissions," said Aidan Murphy,
vice president of Shell International's climate change program.

While the companies involved in the partnership with
Environmental Defense have not devised a formal set of rules for
trading between companies, they said they are sharing what they
have learned so far. Such a set of rules could develop in the
future, said Krupp with Environmental Defense.

The companies said that when, and if, rules for a global
emissions trading scheme are worked out by the world's
governments, their trading programs would simply merge with the
new system.

Most environmental groups have been highly critical of only
using emission trading to reduce global warming. Such an
international trading regime would be impossible to monitor and
enforce, they argue.

Further complicating the matter is that if permits were given
using a 1990 baseline, Russia and Eastern Europe would have
permits to trade based on reductions that were made since then,
not in an effort to curb global warming, but because of economic
collapse.

Therefore, international environmental groups like Greenpeace
and Friends of the Earth argue, the trading would not amount to
real reductions.

Groups opposed to trading are calling on countries to instead
reduce government subsidies to oil, gas and coal companies.

Joshua Karliner, executive director of the Transnational
Resource and Action Center, a San-Francisco-based corporate watch
dog, said yesterday's announcement amounted to little more than a
public relations exercise in terms of real reductions of
greenhouse gases.

Even if BP and Shell reduce the emissions caused by their own
operations, he said these companies are still producing the fuel
that causes the bulk of greenhouse gas emissions.

"These companies come off as good corporate 'citizens', when
they are really at the core of the problem because they produce
the fuel that is burned worldwide and ends up heating the
climate," he said.

According to Karliner, it is going to take intervention on
behalf of the United Nations, governments and communities to move
the world away from oil and gas and toward non-polluting forms of
energy, like solar and wind power.

"Market based solutions will not cause a fundamental shift
away from fossil fuels and toward renewable energy," he said.

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