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By Ron Coates, 28 November 2000 14:00

NEWS The world conference on climate change in the Hague last week saw the breakdown of talks aiming to give force to the Kyoto Protocol, drafted in 1997 by 170 countries across the world to establish limits to global warming. The Hague talks fell apart over the legality of trading emission allowances - companies or countries paying to use the reductions in emissions made by others to make up for the shortfall in their own emissions quotas while they adjust their environment policies. Existing exchanges continue to operate, but analysts claim that a lack of a definite ruling on this issue will scare polluting organisations away from entering into new emissions exchanges. "The failure to reach agreement doesn't mean that global warming will go away," said Steve Drummond, senior energy adviser at PricewaterhouseCooper (PwC). "An exchange is the best way of mobilising capital and organisational intelligence to meet the targets on emissions that have been set. Drummond drew a parallel with the way such exchanges smoothed the way to reducing acid rain in America in the early 1990s. He said: "This is shown by the mechanism that George Bush senior set up 10 years ago to control acid rain." "The result now is that compliance costs are ten per cent of what everyone thought they would be they have reduced emissions by 80 per cent, are ahead of their target by 20 per cent and have made a real contribution to change," Drummond said. Nick Campbell, chairman of the Climate Change Working Group at the International Chamber of Commerce, said: "We came here expecting a decision which would have clarified the rules and guidelines of the Kyoto Protocol. We now walk away as empty handed as everyone else and leave as confused as when we arrived about the role we might play in contributing to solutions." During the Hague talks, two emission exchange companies announced deals. CO2e, which has PwC as an organising partner, announced two trades, equivalent to up to 1.9 million tonnes of carbon dioxide. New York-based Natsource brokered a deal between Trans-Alta, a Canadian utility, and a German utility.