It's argued that in many cases the buyer may be in a better position to scrutinize the integrity of the credit. Opponents to a shared liability system argue that the buyer is in less of a position to ensure the integrity of the credit and should not be liable for the seller's irresponsibility. Early birds catch the worms In advance of final legislation on mandated greenhouse gas reductions, business is preparing to hedge against future price and liquidity risk in emissions credits. Trading captures innovation and creativity, and energizes staff. Trading promotes the early development of emission reducing technology.
Trading provides early experience in using markets to meet compliance requirements.
In view of these incentives, several trades have already taken place. For example, in early 1998, the Canadian firm Suncor Energy Inc. purchased 100,000 tons of CO2 credits with an option to purchase a further 10 million tons of reductions over a 10 year period from Niagara Mohawk Power Corporation. Edison International's Southern California Edison Co. In addition, an example of an inter-pollutant transaction took place when Arizona Public Service Company swapped 25,000 tons of SO2 emission allowances for 1.75 million tons of greenhouse gas emission credits from Niagara Mohawk Power. In addition to independent trades, industry is working with local and federal governments to promote pilot early trading systems. A key incentive of these pilot trading systems is the recognition of trades by government as credit for early action.