Nations may form global CO2 market without U.N. deal

Rich countries may act on their own to reduce greenhouse gas emissions by developing a carbon market they hope will lure in poor nations even if U.N. climate talks get bogged down, experts said.

Nearly 200 countries have been trying to reach an agreement to replace the Kyoto Protocol on global warming with a December deadline at a meeting in Copenhagen approaching.

But there remains a large rich-poor divide. Developing countries want industrialized countries to make deep cuts in greenhouse gas emissions in the international agreement.

Industrialized countries want poor countries to take on binding commitments.

To get past the differences, the rich world, including the European Union and the United States, may form a carbon market outside or parallel to the U.N. talks.

Rapidly developing countries like China may be inspired to join the market to sell emissions offsets such as clean energy projects.

One reason such a development would be attractive "is because countries like the United States, and other countries like China, South Korea, and Mexico may very well do more on their own domestic binding agreements than in a binding international agreement," said Nathaniel Keohane, director of economic policy and analysis at the Environmental Defense Fund.

The largest polluting countries have never agreed to binding cuts in an international agreement. The United States pulled out of the Kyoto Protocol, which did not require big developing emitters like India and China, the world's top greenhouse gas polluter, to make cuts.

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Source: Reuters