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Tuesday, 2 April, 2002, 08:20 GMT 09:20 UK
Emissions trading launches in UK
Bangladesh sunset
The scheme should encourage firms to cut emissions
By BBC science correspondent Richard Black

The first national scheme in the world for trading greenhouse gas emissions has opened in Britain.

The idea is to induce companies to help reduce humanity's impact on the global climate by giving them financial reasons to cut the amount of carbon dioxide they produce.

The UK is committed under the Kyoto Protocol to reducing greenhouse gas production by 12.5% from 1990 levels by 2008 to 2012.

The UK scheme is the first national system for trading carbon emissions anywhere in the world which is open to any kind of company.

Thirty-six businesses have so far signed up, although the government hopes the eventual total could run into thousands.

US precedent

Each company has promised to reduce greenhouse gas emissions by a certain amount, and in return the government has given it some money.

But now those companies can find the cheapest ways to fulfil their quotas.


A US scheme allowing companies to trade credits for reducing sulphur dioxide emissions led to sulphur dioxide pollution falling much faster than predicted

They can reduce their own use of fossil fuels, or they can buy part of their quota from another company - trading the credits, just as they might trade any other commodity.

There is a precedent for this idea. Just over a decade ago, the United States Government set up a scheme to reduce acid rain by allowing companies to trade credits for reducing sulphur dioxide emissions.

This has led to sulphur dioxide levels falling much faster than anyone had predicted, and at significantly lower cost.

The UK is just one of the European countries now interested in using this model to reduce carbon dioxide emissions.

The Danish and Dutch governments already have pilot projects in place, and the European Union is debating whether it should install a Europe-wide scheme.

New Zealand and Canada are among the other nations who may also set up carbon trading systems in the near future.

 WATCH/LISTEN
 ON THIS STORY
Emission trading debate
Roger Hickman, Friends of the Earth and Chris Fay, founder of the emissions trading scheme
See also:

28 Mar 02 | Sci/Tech
Greenhouse gases rise in UK
04 Mar 02 | Sci/Tech
EU one step from Kyoto ratification
11 Nov 98 | Global warming
What is carbon trading?
14 Aug 01 | Sci/Tech
Greenhouse gas trade go-ahead
20 Nov 00 | Business
Pollution trading goes online
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