The EU is scheduled to start trading greenhouse gas (GHG) emission credits from 2005, under its emission trading Directive. Under the adopted Directive, member states will be able to exempt specific companies from participating in the mandatory scheme, however this process will not be easy. The draft Directive has also been expanded to include additional industrial sectors and all of the GHG's identified under the Kyoto Protocol.
2. Both atmospheric stabilization of greenhouse gases and the entry of developing countries into the climate regime are likely to require a move to per capita emission targets. Advocates of contraction and convergence point to its inherent equity and its ability to bring together developed and developing countries in a single framework. However, contraction and convergence recognizes that emissions from developing countries will grow and does not hold back their development in order to rectify damage caused by developed countries.
Contraction and convergence is based on per capita emissions and offers an opportunity to address issues of equity. With emissions shared on a per capita basis, developed and developing countries could trade surplus emissions rights.
According to this strategy, all countries will be allotted entitlements to pollute on the basis of a single per capita allowance. While the rich countries will have to contract their emission levels to reach this target, the poor countries will be allowed to develop their economies by increasing their emission to that level. This convergence target will have to be reached in a given time-period and, thereafter, will decline uniformly for all countries.
The per capita emission and the time for convergence will have to be negotiated internationally, taking into account the safe levels of CO2 concentration that can be allowed in the atmosphere. If these entitlements are permitted to be traded, developing countries can get substantial resources as a matter of right and not as handouts. These resources would help them leapfrog into clean technologies for power and transport and for overall development as well, without having to worry about losing their bargaining positions.