It has been suggested that such trading might usefully be applied on a global scale to reducing greenhouse gases. Offsets could be generated by conservation, recycling and the closing down of old, dirty plants. The ability to sell such offsets on the market would provide an incentive to work towards environmental protection. The generators of greenhouse gases, for instance, who would have to buy offsets, would find their costs were higher and would have an incentive to lower their emissions. Furthermore, by selling offsets, Third World countries could undertake environmentally sound investments (such as reforestation or protecting forests scheduled for harvest) that were financially underwritten by the developed world. (Tietenberg 1990, p. 45) The assumption here is, of course, that the new factories and growth of greenhouse generating activity would be occurring in the First World. The Business Council of Australia favours tradeable permits, arguing that they reward companies willing to innovate and seek excellence in pollution control, and they also harness the profit motive on the side of the environment. They give the example of how tradeable permits can work in the fishing industry. Regulations on southern blue fin tuna in Australia were replaced by 'individual transferable catch quotas'. The government set the total level of the catch, and the rights to that catch were traded. The council argues that this was successful in that the catch was allocated on the basis of 'the different efficiencies of industry participants (1991, p. 10). Tietenberg gives a similar example from New Zealand, where the idea of reducing everyone's catch proportionately was rejected because it would have upset economies of scale. It would have meant that each boat was not working to its full capacity. It was thought to be better to have fewer boats fishing. The New Zealand Government introduced transferable catch quotas on all fish caught, and used the revenue from fees charged for the quotas to buy out some fishers. They bought out those who would take the lowest price. Those who paid the fees were happy because the sustainability of the fishery was more certain. In another application of the idea of tradeable emission rights, the US Government has allowed the four major US CFC manufacturers to decide how they will meet the 15 per cent reduction in CFCs that the government is aiming for. They are able to buy and sell CFC production rights. (Thompson 1990, p. 51) In March 1993 the US EPA auctioned off rights to emit sulphur dioxide, which is a primary cause of acid rain. It raised $US21 million selling 150,000 'allowances' mainly to electricity companies. Each allowance will allow the company which paid for it to release 1 tonne of sulphur dioxide into the air after 1995. The price for each allowance was between $122 and $450, much cheaper than paying for flue gas scrubbers to remove sulphur dioxide from their emissions (Kiernan 1993, p. 10).  |
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