Mexico’s Alternative to Global Cap and Trade Gains Steam

May 13, 2009

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Mexico’s proposal for a global climate change fund, instead of the rigorous cap-and-trade function favored by the European Union and President Obama, may win out for its pragmatic approach, one of the EU’s top climate negotiators indicated.

Mexico’s approach would establish a central fund, with each nation paying in based on their population, gross domestic product and greenhouse emissions.

The funds in the central pot would be divided among all countries based on their level of need to cut emissions, build green technologies or adapt to climate change impacts, reports Reuters.

Such a proposal may find favor for its flexibility, said Jos Delbeke, of the European Commission’s environment directorate. “It’s not a question of what we like, but of what may work, and the Mexican proposal gives flexibility that may be appreciated by the United States, Japan and by other donors,” he told Reuters.

For its part, the EU would like to see a global cap and trade program by 2015. The two ideas are not mutually exclusive, Delbeke said, indicating that a central pot could be funded by programs like the EU’s cap and trade facility.

The EU has fallen under criticism for the way its cap and trade program gave away carbon credits, diluting the value of open-market credits and creating major profits for some emitters.

Many industries in the U.S. would like to see carbon credits given away, but President Obama’s recent budget proposal sticks to a plan for 100 percent auction of permits.

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