GOING GREEN WITH CARBON TRADE
“Going green” has become a very popularly used slogan all over the world. A slogan which connotes our individual and corporate responsibility to create a sustainable environment, reduce global warming and curb Green House Gas (GHG) emissions while preserving and protecting our planet. Nations rallied together at Kyoto Japan to sign the Kyoto Protocol to the United Nations Framework Convention on Climate Change; an international environmental treaty aimed at “achieving stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous human interference with the climate”. Going green has transcended beyond using energy saving light bulbs, inflating vehicle tires to the right pressure or utilizing renewable energy to cashing out and trading on reduced emission otherwise known as carbon trade of carbon credits which are currently being traded on global stock exchanges for up to $5.00USD.
The Kyoto Protocol sets out mechanisms with which participating nations may stabilize green house gas emissions. These mechanisms are Emissions Trading, the Clean Development Mechanism and Joint Implementation. These mechanisms enable developed countries (Annex B Countries) meet their green house gas emission limits by purchasing GHG emission reduction credits (carbon credits) through financial exchange projects that reduce emissions in developing countries or from developed countries with excess GHG emission allowances. Another way the mechanism works is that Companies are issued emission permits and given a specific emission allowance or credits. The total amount of allowances and credits cannot exceed a capped amount. Companies that need to increase their emission allowance must buy credits from those who pollute less. The transfer of allowances is referred to as a trade. Consequently, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced its emissions.
Nigeria in December 2004 ratified that protocol and the senate in July 2009 commendably went a step further by signing the Climate Change Bill into law. The bill shall implement the Kyoto Protocol and other subsequent similar international agreements or treaties Nigeria shall participate in. It also seeks to set up a Climate Change Commission which would be responsible for the strategic harmonization, strengthening and coordination of resources, policies and actions relating to climate change, reduction of Green House Gas, create policies on climate change as well as promote, regulate and develop the carbon market.
As lawyers, it is our responsibility to familiarize ourselves with the new climate change bill, advise our clients on the legal and regulatory framework, and position ourselves for advisory on carbon exchange, carbon credits as well as emission reduction allowances and compliance. The question we must ask ourselves includes our preparedness to turn off the light bulbs and cash in with our allowances which may inevitably reduce production. As a Nation that utilizes millions of tons of energy daily more particularly in the Petroleum sector which is our main resource stream, are we ready to compete with other ratifying nations with the complex mechanism which caps and reduces production, trade allowances for sustainable projects or are the words “Going Green” only synonymous with our nations flag.