In
early 2005, the world is taking a first step down the path towards a low-carbon
energy future. The Kyoto Protocol under the UN Framework Convention on
Climate Change (UNFCCC) is entering into force on 16 February, and a number
of private-sector initiatives, as well as regional and local action, are
also underway. The transition to a new, climate-friendly economy presents
new challenges, but also opens up new opportunities. These include the
development of new products and markets related to climate change abatement,
such as international trade in "emissions reductions" derived
through the so called Kyoto Mechanisms (emissions trading, joint implementation
and the clean development mechanism).
In order to explore
this changing international policy environment and its implications
for the world trade system (and vise versa), ICTSD is organising an
informal roundtable among trade delegates and interested stakeholders.
The event includes a presentation on the overall framework, as well
as presentations on emissions trading and the clean development mechanism
specifically.
The development
of these new schemes and markets for carbon credits is still in progress.
While designed as stand-alone systems, there are, or can be, connections
between carbon trading and the overall framework of WTO rules. These
connections are as of yet not clearly defined, but will become relevant
as actual experience in emissions trading begins to accumulate, and
the scale of trading increases. There is no universal agreement on whether
traded emissions reductions should be considered as goods or services,
or neither. Questions that arise include: Does cross-border trading
fall directly under WTO rules (the GATT/GATS) or not? Should cases of
conflicts should be resolved under the dispute settlement mechanisms
of the WTO or the Kyoto Protocol? Emissions trading and the CDM are
also spawning a new set of related services, such as brokerage, and
in the case of the CDM, engineering, environmental, legal and verification
services. What are the implications of countries' commitments under
the GATS? Investments through the CDM, managed strategically, also offer
the opportunity for developing countries to diversify and lessen the
vulnerability of their economies, thus helping them participate more
effectively in international trade.
