The market of global warming.

• Author: Karram, Zachary

The average temperature of the Earth's surface has risen by 0.6° Celsius since the late 1800s and is expected to increase by 1.4° to 5.8° by 2100. Such a drastic change has the potential to create serious consequences in the ecosystems and widespread damage to human society through floods, lower agricultural yields and extreme weather patterns. To prevent such a disastrous change in global temperature, the United Nations Framework Convention on Climate Change (UNFCCC) has led the way in the establishment of standards to curb global warming and dangerous climate change. With the coming into force on 16 February 2005 of the Kyoto Protocol-a legally binding agreement to reduce greenhouse gas (GHG) emissions worldwide (see UN Chronicle, Issue 3, 2004)-industrialized countries are required by 2012 to cut their emissions, on average, to 5.2 per cent below their 1990 levels. Developing nations are permitted to maintain their current emission levels, as they are more vulnerable to potential economic impacts of new environmental standards.

When people think of global warming, pollution immediately comes to mind, as well as how human activity is becoming one of the pre-eminent environmental issues of today. Behind the scenes, however, global warming has always been a tricky economic issue. In a world of short-term gain versus long-term consequences, big businesses and nations at large have been reticent in adopting measures to better the environment down the road at the cost of an expanding economy. While nations worldwide want to prevent the slow degradation of the environment, they are hesitant to risk jobs and profits to implement seemingly costly environment-saving measures.

This problem was given voice most prominently by the United States, whose argument was based on economic issues. The Convention realized that asking nations to adopt environmental measures without taking into account the inevitable high costs involved would create international resistance and backlash. As a result, the Kyoto Protocol provides several "flexible mechanisms", allowing nations access to cost-effective opportunities to reduce emissions in other countries. While the cost of limiting emissions may vary greatly from country to country, the effect on the atmosphere remains the same regardless of where the reduction occurs.

One such mechanism provides for industrialized countries, known as "Annex I" parties (see box on page 50), to acquire units from other countries...