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OK. Hundreds of billions of dollars could change hands in the coming years through a global market in greenhouse emissions. Last month's climate summit in Glasgow, Scotland, approved the new trading system. In theory, it's an efficient way to fight climate change. But there are pitfalls. NPR's Dan Charles has the story.
DAN CHARLES, BYLINE: Carbon trading takes buyers and sellers, and they were all there at the Glasgow summit in a giant exhibition hall. The buyers came from big companies that burn fossil fuels.
AHMED IDRESS: My name is Ahmed Idress, and I work for Capital Power in Canada.
CHARLES: Idress' company burns gas and coal to make electricity, which pumps carbon dioxide into the air, heating up the planet.
IDRESS: The company total emission is about 11.5 million ton.
CHARLES: And Canada is now taxing those carbon emissions.
IDRESS: As of today, you pay about $40 a ton. Next year, it's going to be $50. The federal government is asking that the price to continue to escalate to $170 by 2030.
CHARLES: Capital Power is cutting that tax bill a little by switching to cleaner energy, but it has another option under a system set up by the province of Alberta, where its plants are located. It can cancel out those emissions by buying carbon credits. It buys them from other companies in Alberta that earn them by doing something to cut their emissions, like capturing the greenhouse gas methane from cow manure. This is emissions trading. The theory is it's more efficient to let companies buy their greenhouse gas reductions from whomever can do it most cheaply and easily. Maybe that's dairy farmers. Kelley Kizzier from the Environmental Defense Fund says interest in emissions trading systems has been booming.
KELLEY KIZZIER: People are starting to understand that with this global crisis, carbon markets provide a really important tool.
CHARLES: California has an emissions trading system. The European Union does, too. And now those markets might be able to link up globally. The U.N. climate summit in Glasgow agreed on some rules for these international trades. Kizzier says it opens up new possibilities for companies like Capital Power.
KIZZIER: So let's say that a company in Alberta wants to buy credits from Brazil.
CHARLES: There now are rules for how to handle that transaction. And a U.N. agency can decide which actions, like building a wind farm or restoring a forest, are truly valid for earning credits. Some companies and countries are hoping to make a lot of money from this, which brings us to the potential sellers. Gabriella Dorlhiac from the International Chamber of Commerce in Brazil was representing a lot of them at the climate meeting in Glasgow.
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GABRIELLA DORLHIAC: Brazil really positioning itself as a massive supplier, since essentially carbon credits are a product.
CHARLES: She told her audience that Brazil could sell up to $100 billion worth of carbon credits over the next decade, mostly from protecting forests or expanding them. Kelley Kizzier from the Environmental Defense Fund says that's great.
KIZZIER: That's exactly what we want. I think people should be looking at this as a revenue opportunity and as a way that we get finance flowing from developed to developing countries.
CHARLES: It's developing countries that need money most to deal with climate change. But a lot of people are unconvinced that emissions trading is a good idea.
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UNIDENTIFIED PROTESTERS: (Chanting) No more zombie credits. No more zombie credits.
CHARLES: There were protesters in Glasgow who say these markets just let polluters keep polluting, for instance, through bad accounting. The zombie credits that those people were chanting about are credits that countries like Brazil earned years ago but never sold because there wasn't much demand for them. Now those old credits might get sold as carbon offsets, but they won't bring any new reductions in emissions. Or let's say a country is already protecting its forests just because that's the law, but then it also gets carbon credits for doing it. Those credits don't really represent a reduction in carbon emissions. Erika Lennon, an attorney with the Center for International Environmental Law, says the climate situation now is way too dire to let companies buy offsets for their emissions.
ERIKA LENNON: You're not reducing anything; you're just sort of trading around the world. And what we really need to do is reduce the overall emissions.
CHARLES: Many economists say for emissions trading to really work, countries will have to impose limits on those overall emissions that are much tighter than most have been willing to set so far. That's what it will take to boost demand for credits - driving up their price and convincing companies that it's just too expensive to keep burning fossil fuels.
Dan Charles, NPR News.
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