For big business seeking CO2 emissions price, a ray of hope from Paris

Sun Dec 13, 2015 5:01am EST
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By Nina Chestney and Barbara Lewis

PARIS (Reuters) - For the most part, big business wanted one thing from the climate accord in Paris on Saturday: a price on carbon dioxide (CO2) emissions. While on the surface their hopes were dashed, looking deeper may give them cause for hope.

Multinational companies from oil giant BP to consumer products maker Unilever have called for a globally agreed way of pricing emissions of CO2 - the gas most widely blamed for global warming - to create an incentive for power plants and factories to shift to cleaner forms of energy.

That is opposed by big oil exporting countries such as Saudi Arabia as well as others, such as Bolivia, reluctant to embrace any market-based solutions.

But Saturday's landmark agreement in Paris included an inelegant reference to what some analysts think could eventually build a bridge to a global CO2 emissions trading mechanism.

The binding part of the deal, for the nearly 200 nations that agreed to it, allows countries to use "internationally transferred mitigation outcomes," which could allow nations on a voluntary basis to offset their own CO2 emissions by buying credits from other nations.

At some point, analysts said, that might lead to a tie-up between the European Union's Emissions Trading System (ETS), which is for now the world's biggest market for CO2 emissions permits, and China's planned trading scheme set to be launched in 2017, which will overtake it in size.

The reference is "critical in the context of the potential establishment of a crediting mechanism and to some degree to facilitate future potential emissions trading systems linkages," said Yann Andreassen, senior analyst at ICIS Tschach Solutions.

It is unlikely to happen as fast as some business sectors say they want.   Continued...

Environmentalists hold a banner which reads, "Crank up the Action" at a protest demonstration near the Eiffel Tower in Paris, France, as the World Climate Change Conference 2015 (COP21) continues near the French capital in Le Bourget, December 12, 2015.   REUTERS/Mal Langsdon  - RTX1YD4F