Carbon trading the way forward for the Gulf
Published: Mar 9, 2010 14:06 Updated: Mar 9, 2010 14:06
Environmentalists have traditionally seen Gulf countries as pantomime villains when it comes to tackling climate change.
This view is unlikely to have changed in light of a rather non-committal approach from nations in the region, in particular to extensive talks on establishing a legally-binding global agreement on cutting carbon emissions in Copenhagen in December last year.
The position of Gulf countries is clear. They want to be compensated one way or the other if their oil-based economies are significantly undermined by such an agreement.
China is still the world’s worst polluter, emitting well over six billion tons of carbon dioxide in 2006, according to figures from the United Nations.
Collectively, members of the Gulf Cooperation Council (GCC), with the addition of Yemen, emitted 738 million tons, 12 percent of China’s total emissions.
That is despite the fact that the total population of these nations (just over 40 million) accounts for just three percent of the estimated 1.3 billion people living in China.
In addition, on average the amount of carbon dioxide emitted per person (per capita) in the GCC is just over 26 tons, compared to just 4.6 tons per head in China.
One mooted solution for these countries to help reduce these high levels of carbon emissions is to introduce a carbon-trading scheme. In a nutshell, this would allow companies to buy and sell carbon emissions, rewarding those who have achieved significant cuts in pollution, while punishing those who do not.
For example, if one business manages to reduce its carbon emissions to a level significantly below its target, then it can sell these offsets to other companies that have exceeded their permitted amounts of pollution.
However, critics point out that in order for the system to work, it needs participating countries to agree to significant cuts in pollution.
In addition, they argue that participants could use the scheme as an excuse to avoid implementing serious and immediate cuts in their carbon emissions.
Another crucial argument against carbon trading is that countries could use it to give more generous emissions caps to leading national industries, thus reducing the need for bigger businesses to buy and sell permits. This is exactly what happened when the European Union introduced a carbon trading system a few years ago, leading to a dramatic drop in the cost of permits.
For these reasons, it is perhaps not hard to see the appeal of such schemes to countries in the Gulf, especially as the World Trade Bank has estimated that the carbon market worldwide has more than doubled to $126 billion in the space of a year.
Whatever the case, the signs are that this will be the way forward for nations in the region. The Masdar project in Abu Dhabi, which aims to develop the first carbon-neutral community near the city, has already said it will use carbon trading as a way to generate income for itself.
Bahrain, Oman and Qatar are other countries reportedly looking at implementing carbon-trading systems.
A prominent Riyadh-based Western diplomat, who is also an energy expert, says the introduction of a scheme in the region can work with the right level of regulation.
She says each country would need to set up a national authority to stringently monitor companies’ efforts in reducing their emissions, adding that Saudi Arabia has already established such an organization.
“If you say, ‘I as a company have invested fantastically in energy-efficient technology and I have reduced my carbon emissions by x percent,’ then the government authority will come in and check that. They then need to make what is called a certified emission reductions certificate, which is then traded on the market,” she said.
The diplomat added that the United Nations would also ensure that a country is adhering to its pollution targets.
She also claimed that oil-producing nations are in a difficult position where cutting carbon emissions are concerned.
“They need to make very substantial changes to their economies. What is the right way for them to diversify their economies and how can they best incentivize that?” she said.
The expert added the success of a carbon-trading scheme in the Gulf would depend on the countries’ willingness to invest in renewable technologies, as well as whether oil companies are open to technologies such as carbon capture and storage, which could have a huge positive impact on their emissions levels.
One of the Middle East’s top environmental groups has expressed skepticism at whether carbon trading could work in the Gulf.
Munqeth Mehyar, who is chairman of Ecopeace/Friends of the Earth Middle East (FoEME), said he would need to see how any scheme implemented would work in practice before making a judgment. He suggested that Gulf nations have been irresponsible where oil production is concerned.
“We are burning [oil] to get energy at a time when we can really get energy from other sources like solar, wind or geothermal. Regionally, we are really blessed with the long sun hours and solar power should be [considered] in a much more serious fashion,” he said.
“We should save this oil for future generations rather than hide behind carbon trading and giving people the excuse to keep trading the way they are.”
Mehyar criticized Gulf nations for their perceived lack of long-term thinking, claiming they are more interested in cashing in on oil now rather than investing in future generations.
He also refuted the suggestion oil producers should be compensated if they agree to significantly cut their emissions, claiming there is already enough money to implement any legally binding agreement on reducing pollution.
He added that while solar projects are slowly getting off the ground in Abu Dhabi and Oman, he would like to see other countries taking advantage.
Accepting that renewable energy technology is still costly in the region, Mehyar called on Middle East governments to introduce subsidies to help kick start a green energy revolution.
“It is simple arithmetic to see how much renewable energy would cost, the difference between using conventional methods and renewable energy methods, and to be able to compensate people who take the initiative,” he said, adding that this was one way to ensure that any carbon-trading scheme implemented in the future would be a success in the long-term.
Both Mehyar and the energy expert agree on one thing: Carbon trading in the Gulf can work, as long as countries in the region are committed to making serious cuts in their emissions.
Whether that actually happens, remains to be seen.
Gulf Cooperation Council (GCC) CO2 emissions in 2006
Country | Annual CO2 emissions (in ‘000s) | % change since 1990 | CO2 per capita (in tons) |
Bahrain | 21,292 | 79.2 | 28.82 |
Kuwait | 86,599 | 112.5 | 31.17 |
Oman | 41,378 | 299.7 | 16.25 |
Qatar | 46,193 | 292.3 | 56.24 |
Saudi Arabia | 381,564 | 77.4 | 15.78 |
United Arab Emirates | 139,553 | 154.6 | 32.85 |
Yemen* | 21,201 | 121.0 | 0.98 |
*Yemen still to join GCC
Source – United Nations Statistics Division
Comments
ROCKY SUKHJINDER SINGH FAGURA
Mar 12, 2010 18:37
Report abuse