Open assessment on the location of burden of greenhouse gas trade

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Open assessment on the location of burden of greenhouse gas trade is about the question who should pay for the right to emit greenhouse gases. This is only a potential assessment; it is not actively performed. However, the question is important and timely. If a critical mass of interested people shows up, the questions presented in the assessment should be answered and communicated to policy-makers.


The current trade on greenhouse gas emission permits (GHG trade for short) is based on the principle that the economical actor who actually releases GHG into the atmosphere is the one who must buy emission quota to compensate for the emission (derived from the polluter pays principle). In practice, the major actors are large energy plants and factories, especially in metal and wood industry. Agrochemical, petrochemical, and aluminium sectors are likely to be included in the GHG trade system at 2013. A major problem in this system is that it measures factory-based emissions, which is not a trivial task. Therefore, small industrial or energy production units are exempted from the GHG trade.

An alternative to this system is not to measure actual emissions but potential GHG emissions attached to products within the countries participating in the GHG trade (trade area for short). For example, when someone imports or produces crude oil to the trade area market, almost all of it will be burned into CO2 within a short time period. If the greenhouse gas emission permit (GHG quota for short) must be paid when the product is brought to the market, there is no need to follow the fate of the oil to see who actually burns it, when, and where. The manufacturer or importer includes the cost of GHG quota into the price of the product, and the cost transfers in the price to the final enduser.

Of course, this system requires solid information about the actual emissions (those that have occurred already during the production phase before the product was brought to market) and the potential emissions (those that will occur during the use of the product) related to products. But this information does not need to be individual data from each factory like in the current system. Even if the system applies only to fossil fuels, the system is likely to cover more of the GHG emissions than the current system that excludes all traffic.