The science of climate change is now clear, but the politics is very muddy. Historically, the major polluters were the rich, industrialised countries, so it made sense that they should pay the highest price. The Kyoto Protocol, adopted in December 1997, set binding targets for these countries to reduce their greenhouse-gas emissions by 5 per cent on average against 1990 levels by 2012. But by 2007, America’s greenhouse-gas levels were 16 per cent higher than 1990 levels. The American Clean Energy and Security Act, which was passed in June, commits the US to reduce emissions to 17 per cent below 2005 levels by 2020, yet this is just 4 per cent below 1990 levels.

The Kyoto Protocol also allows industrialised countries to trade their allocation of carbon emissions, and to invest in carbon mitigation projects in developing countries in exchange for Certified Emission Reduction Units, which they can use to meet reduction targets. But emissions trading, or offsetting, is not in fact a mechanism to reduce emissions. As the Breakthrough Institute, an environmental think tank, has pointed out, the emissions offset in the American act would allow "business as usual" growth in US emissions until 2030, "leading one to wonder: where’s the ‘cap’ in ‘cap and trade’?".

Such schemes are more about privatising the atmosphere than about preventing climate change; the emissions rights established by the Kyoto Protocol are several times higher than the levels needed to prevent a 2°C rise in global temperatures. Allocations for the UK, for example, added up to 736 million tonnes of carbon dioxide over three years, meaning no reduction commitments. And emissions rights generate super profits for polluters.

The Emissions Trading Scheme granted allowances of 10 per cent more than 2005 emission levels. This translated to 150 million tonnes of surplus carbon credits, which at 2005 prices translates into profits of more than $1bn.

Carbon trading uses the resources of poorer people and poorer regions as "offsets" for richer countries: it is between 50 and 200 times cheaper to plant trees in poor countries to absorb CO2 than it is to reduce emissions at source. In other words, the burden of "clean-up" falls on the poor. From a market perspective, this might appear efficient, but in terms of energy justice, it is perverse to burden the poor twice – first with the impact of CO2 pollution in the form of climate disasters and then with offsetting the pollution of the rich.

In a globalised economy, addressing pollution by setting emissions levels for each country is inappropriate for two reasons. First, not all the citizens of a country contribute to pollution. As a result of China becoming the world’s factory, its CO2 emissions outstrip those of the US, putting it in first place worldwide. In 2006, China produced 6.1 billion tonnes of CO2; the US produced 5.75 billion tonnes. But in the US, emissions were 19 tonnes of CO2 per capita, compared with 4.6 tonnes in China. And much of China’s CO2 could be counted as US emissions, because China is producing goods for US companies that America will consume. Wal-Mart, for example, procures most of what it sells from China.

Similarly, while only 2.13 per cent of the world’s emissions emanate from the UK’s domestic economy, CO2 is created on the UK’s behalf in China, India, Africa and elsewhere. The global carbon footprint of UK companies is not known, but estimates suggest that emissions associated with worldwide consumption of the top 100 UK products accounts for between 12 and 15 per cent of the world total.

Thanks to industrialisation, the rural poor in China and India are losing out on their land and livelihood. To count them as polluters is doubly criminal. When global firms outsource to China or India, they need to be responsible for the pollution they carry overseas.

Regulating by carbon trading is like fiddling as Rome burns. Governments and the UN should impose a carbon tax on corporations, both for production – wherever their facilities are located – and for transport, which the Kyoto Protocol does not account for directly. Incentives for renewable energy are also essential. We face a stark choice: we can destroy the conditions for human life on the planet by clinging to "free-market" fundamentalism, or we can secure our future by bringing commerce within the laws of ecological sustainability and social justice.

Vandana Shiva is an Indian feminist and environmental activist.  She is the founder/director of Navdanya Research Foundation for Science, Technology, and Ecology.

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