Kyoto Summit: US proposes swap club for emissions

America says it intends to form a greenhouse gas trading `club', in order to help cut pollution. Nicholas Schoon, Environment Correspondent, asks whether the proposal will sink or save the faltering UN climate treaty talks in Kyoto.

Frustrated by the European Union's "intransigence", most of the rest of the developed world has begun negotiating a joint agreement to cut annual emissions of six gases which trap heat in the earth's atmosphere.

The treaty would involve nations being able to trade a declining quantity of pollution allowances between themselves, with each country in the club allocated initial quotas. Those which found it cheap and easy to cut emissions would sell their surplus permits to those which found it difficult.

It is an idea born out of frustration at the EU's demand that wealthy nations make the same percentage cut in their pollution - at a level which is much deeper than the rest of the developed world is willing to undertake.

The US says that its club, embracing Russia, Japan, Canada, Australia and New Zealand, would be able to make deeper pollution cuts collectively than each member could offer singly. Some states would increase their annual emissions over the 1990 to 2012 period which it looks likely the treaty will cover.

The EU has doubts about international emissions trading, seeing it as diverting countries from doing the maximum to cut climate pollution at home. It fears that if Russia were involved, there could be a large loophole in the treaty because that country's economic collapse has left its emissions way below their 1990 level. A trading system could give Russia huge quantities of allowances to sell cheap to the US and other countries, allowing them to increase their pollution.

John Prescott, Deputy Prime Minister, said it would be difficult to oppose the idea of a greenhouse gas club, since the EU already has its own. Under the union's proposal for cutting emissions, some of the member states, including Britain and Germany, will make deep cuts while poorer ones such as Portugal, Greece and Spain can raise their emissions.

The conference is due to end today, but may drag on into tomorrow because negotiations between more than 150 nations have become bogged down. Mr Prescott said: "We'll stay as long as we can to get [agreement]."

EU leaders and the UN were lowering expectations last night; it is clear that whatever overall emissions cut is agreed will be nowhere near the 15 per cent that Europe wanted. Somewhere around 5 per cent seems a likely outcome.