Justin Dargin Explaining GCC Carbon Trading Initiatives
If GCC carbon trading initiatives relied on each country unilaterally initiating a domestic carbon trading platform, each Gulf country would likely be guided by its own national interests, fearful that if one implements binding carbon limits, carbon-intensive industries would flee to another Gulf jurisdiction with less strict regulations.
In forging an optimal carbon abatement program, Gulf regulators should use as a template the
North American and EU experiences with market-based mechanisms that control environmental externalities. There is no need to reinvent the wheel. With a nuanced understanding of the special characteristics of the Gulf, GCC regulators will be able to create a carbon trading platform that would take into account the region’s myriad fossil fuel projects and leverage the Gulf’s massive liquidity to ensure that economic growth would not be handicapped.
This paper will examine the parameters that a hypothetical Gulf-wide carbon trading platform should optimally assume. In spite of the discouraging results at Copenhagen, many industrialized countries have made substantial inroads towards the establishment of national carbon abatement programs. It is generally presumed that the next decade will witness some manner of global carbon accord.
This paper, which argues the necessity of a Gulf carbon emissions trading platform, seeks to fill the dearth of literature relative to that region’s climate change mitigation strategies.
Section Two of the paper supplies background information on the efforts of the respective Gulf countries to establish their national carbon trading platforms, and describes carbon abatement projects that developed from 2007-2009.
Section Three discusses the elements essential to the creation of any Gulf-wide carbon trading platform. It also develops a methodical overview of a number of carbon trading schemes that could be implemented, and analyzes their respective advantages and disadvantages in the context of the Gulf.
Section Four discusses, in depth, the applicable lessons from the world’s first carbon trading platform, the European Union Greenhouse Gas Emissions Trading System (EU ETS), contextualizes them to the Gulf, and posits lessons for Gulf regulators as they begin to craft their own platform.
Section Five considers the importance of establishing a comprehensive monitoring, evaluation, reporting and verification (MERV) framework for the ultimate success of a carbon emissions trading platform. The section also posits that the best model for the Gulf would be a staged introduction, supported by a strong legal structure. Section Five also cautions about possible red flags for which Gulf regulators should remain vigilant.
Section Six concludes by incorporating the major points of the previous sections, and argues why a carbon trading emissions platform is a carbon abatement mechanism for the Gulf whose time has come.
Justin Dargin is a Research Fellow with The Dubai Initiative and a Fulbright Scholar of the Middle East. Justin Dargin is a specialist in International Law and Energy Law, and a prolific author on energy affairs.