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Reuters: Shell chief calls for global carbon market

Thu Feb 15, 2007 7:24AM EST

LONDON (Reuters) – Royal Dutch Shell (RDSa.L: Quote, Profile, Research), the second biggest western oil major, has called for a global “cap and trade” system to cut carbon emissions and promote renewable energy resources and energy security.

Chief Executive Jeroen Van der Veer, speaking late on Wednesday at an industry dinner, said such a system would reward companies that invested large sums to capture and store carbon dioxide (CO2).

“The best news would be to get more cap and trade schemes around the world and merge them post 2012 (when the Kyoto Protocol on curbing greenhouse gas emissions expires),” van der Veer told Reuters after making his speech.

“For more impact, the system must be more global.”

Carbon trading schemes work by forcing companies and countries to buy permits to emit greenhouse gases — blamed for global warming — above a certain cap.

They already exist in the European Union and there are markets mooted markets in various U.S. states and in Australia.

Such carbon markets are seen as a cost-effective way to curb emissions by allowing participants to shop around for the cheapest cuts, or permits. A fully integrated global market would allow buyers to find the cheapest cuts of all.

Under the Kyoto Protocol, industrialized countries can meet their caps on greenhouse gas emissions by funding cuts in poor nations, in the beginnings of such a global trading system.

Van der Veer said a global carbon market would make fossil fuels cleaner and promote renewables around the world.

Exxon Mobil (XOM.N: Quote, Profile, Research), the largest western oil major, called on Tuesday for a global approach to fighting climate change using market mechanisms, without specifying a global carbon market.

Exxon has drawn criticism in the past for funding research and other groups skeptical about whether mankind is contributing to climate change, but more recently has engaged in industry talks on possible U.S. emissions regulations.

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