Magazine/January, 2012 3
which had previously held the scheme
back in some countries.
Concerns were raised in California that the scheme wasn't doing much to combat climate change and was merely being used by the government as a way to pay
off its debts. However in 2011 Bloomberg predicted European emissions are set for a sharp fall in 2015 up until 2020 deadline year. It's difficult to predict exactly how much the cap and trade is causing that. And governments have tried to reassure sceptics, for example in Europe all countries are required to directly reinvest 50% of auction revenues for climate change purposes.
Carbon Leakage
Carbon leakage is a fancy term for when companies pack their bags and make a run for it to escape increased production costs brought about by cap and trade. In order
to stop this the European Commission has passed a list which will be in effect from 2015-2019. The list ensures that companies who have lots of international trade and who are especially vulnerable to increased produciton costs are put on the "At risk of ditching the EU" list at which point they are given special treatment
such as free pollution permits instead of sold by auction.
Because of the enormous surplus of permits their price hasn't hurt many industries' costs, therefore the ETS hasn't suffered much "leakage". However some claim the United Nations has been behaving badly with its Clean Development Mechanism(CDM). Basically this scheme allows businesses in developed countries to get permits to produce extra greenhouse emissions, in exchange the business must invest in a clean energy system in an underdeveloped country. If regulated properly this wuld have a carbon neutral effect, but it isn't regulated properly and western businesses have reaped the rewards. The Western Sahara people