The European Union implemented a cap and trade scheme in 2005 to help it fulfil its obligations under the first phase of the Kyoto Protocol for reducing carbon emissions. The Scandinavian nations had independently imposed a carbon tax in the 1990s as part of their effort to reduce carbon emissions. US researchers have tracked the carbon disclosures from both regions of Europe and found that neither the EU's carbon allocation scheme nor Scandinavia's carbon taxes have made any significant impact on reducing greenhouse gas emissions.
Writing in the International Journal of Critical Accounting, Martin Freedman of Towson University, in Maryland, USA, and colleagues explain that when the Kyoto Protocol went into effect in 2005, the EU-15 -- the 15 nations who were members of the EU in 2004 -- designed a system of tradable carbon allowances as a preliminary step in the implementation of Kyoto. Freedman and colleagues have now looked at selected firms affected by Kyoto and analysed their disclosures on reduction of carbon emissions in Europe.
The team reports that on the whole neither the carbon tax nor the cap & trade system appears to have been very effective in achieving the goals of Kyoto during the period studied. It is impossible to say whether or not they led to any measurable changes in industry.
The EU committed to reducing its greenhouse gas emissions by 8% of the 1990 level with a deadline of 2012. The data analysed so far does not suggest that these targets will be met in time. With much of the world experiencing a recession, and with weather patterns in flux, other variables may contaminate any findings from an extended analysis, the team says. "We examined the 2005-2007 period which is before Kyoto officially started for the rest of the world," Freedman says. "The EU decided to start earlier, although based on the results it seems more like a practice period."
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