Carbon trading: unethical, unjust and ineffective? (original) (raw)
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The high cost of cost efficiency: A critique of carbon trading
Carbon trading, as a market-based climate policy that allows polluters to comply with emissions reductions commitments with tradable pollution rights, is presented by its proponents as the most cost-efficient alternative for climate change mitigation, while critics counter that the cost-efficiency argument ignores the harms that result from commodifying carbon. This thesis contributes to this debate, which is fundamental for the future of environmental policies, by exposing the social costs of carbon trading and making the case against its inclusion in the climate policy-mix. The argument developed here draws from theoretical contributions on the social costs of private activities and on value conflicts, as well as critical perspectives on the neoliberalization of nature and the limits of the market. Emissions trading was firstly proposed as an alternative to efficiency-maximizing or pigouvian environmental taxation. Based on the property rights approach to social costs, emissions trading would allow regulators to escape the impossible task of calculating the optimal level of pollution and offer instead a cost-efficient way to achieve an exogenously determined level of pollution. This theoretical shift would allow economics to be centred on discussing the best means to achieve given ends and relived it of discussing ends. The ends-means dichotomy, however, does not hold outside textbook economics, as well as the description of emissions trading as a simple and efficient alternative to direct regulation. As the US experience with emissions trading shows, creating markets for tradable pollution rights requires government investment in a regulatory apparatus that is no less complex than what is required for direct regulation or taxation. This experience also illustrates how the purported efficiency of emissions trading systems is a flip side of their weak environmental performance and their disregard for social justice and democratic participation. Carbon trading schemes created under the Kyoto Protocol raise additional problems. Compared to “cap and trade” schemes based on a single pollutant and a restricted number of sources, schemes like the EU Emissions Trading System are more complex and require further government intervention. Furthermore, flexibility instruments like the Clean Development Mechanism allow industrialized countries to pollute beyond their emissions commitments and raise issues with the disputable integrity of methodologies that account for emissions reductions from offset projects relative to an arbitrary baseline. The dismal performance of these schemes is illustrated by their inability to provide an incentive to decarbonization, while distributing rents to polluters and creating new sources of corruption. These issues are not reducible to discussions on accounting procedures and other technicalities. Opening the “black box” of carbon quantification and commensuration reveals that its calculations sideline relevant uncertainties and assume a degree of accuracy that scientific knowledge and technology cannot deliver in the present. Yet, since accounting for emissions increases or reductions requires political decisions on what is to be accounted for, what is the relevant metric and what is an acceptable degree of uncertainty, further scientific and technological developments are not enough to make it possible to produce the unambiguous numbers that carbon trading requires. Going further on the discussion of the implications of carbon commensuration and abstraction, this thesis presents an argument against the inclusion of carbon trading in the climate policy-mix based on four normative critiques. With the support of critical literature, it is argued that carbon trading is ineffective, undemocratic, unjust and unethical and that, for these reasons, it can only be considered as a cost-effective policy when its social costs are ignored. An argument against carbon trading reformism is then presented by illustrating how trying to mitigate the negative effects of carbon markets by imposing restrictions on trading leads to the erosion of these markets. A better alternative is claimed to be supporting climate policies that foster a plurality of values and deliver social benefits. The thesis concludes by advocating a shift in the climate policy debate to a discussion on the values that are fostered or hindered by each policy. A general framework is proposed that respects value pluralism and acknowledges conflicts between incommensurable values, which is not compatible with market-based policies.
Although emissions trading is embraced as a means to curb carbon emissions and to incentivize the use of renewable energy, it is also heavily contested on ethical grounds. We will assess the main fundamental objections and possible counterarguments. Although we sympathize with some of these arguments, we argue that they are unpersuasive when an emissions trading system is well designed: emissions should be accounted ‘upstream,’ on the production rather than the consumer level. Moreover, allowances should be auctioned, and regulatory measures (such as an escalating tax on additional allowances) could instigate the right kind of behavior towards the environment.
Carbon trading for climate justice?
(2014) Asia-Pacific Journal of Environmental Law, 17:111-130. http://heinonline.org/HOL/Page?handle=hein.journals/apjel17&div=7&g\_sent=1&collection=journals
Carbon markets – both emission trading systems and baseline and credit systems – are an increasingly common policy instrument being introduced to address climate change mitigation. However, their design is crucial to ensure that they deliver cost-effective emission reductions while maintaining environmental integrity. This Element puts together a comprehensive, principle-based overview of the risks and abuses to environmental integrity and cost effectiveness that have emerged for carbon markets at all jurisdictional levels around the world, provides concrete examples, and offers effective policy and governance solutions to overcome such risks. This title is also available as Open Access on Cambridge Core.
MAGKS Papers on Economics, 2011
Domestic climate policy emissions trading schemes appear to be spreading all over the word. However, carbon markets in existence often suffer from dilution in terms of ecological effectiveness, economic efficiency, and social justice. Thus, in order to firmly base carbon markets on the main pillars of Sustainable Development, this paper defines the criteria of ecological effectiveness, economic efficiency and social justice and operationalizes them for giving design recommendations for sustainable carbon markets. Methodologically, the paper uses welfare and institutional economics, jurisprudential reasoning, and modern climate justice thinking in order to discuss the three criteria. In addition, design and implication analysis is applied in order to develop design recommendations for sustainable carbon markets. By doing so, the paper provides evaluation criteria for emissions trading schemes in existence and in planning, but also allows for improvements in order to make emissions trading a valuable instrument of a sustainable global climate policy.
This article offers a critique of global carbon markets and trading, with a special focus on the Clean Development Mechanism of the Kyoto Protocol. It explores problems with the use of tradable permits to address climate change revolving around four areas: homogeneity, justice, gaming, and information. Homogeneity problems arise from the non-linear nature of climate change and sensitivity of emissions, which complicate attempts to calculate carbon offsets. Justice problems involve issues of dependency and the concentration of wealth among the rich, meaning carbon trading often counteracts attempts to reduce poverty. Gaming problems include pressures to promote high-volume, least-cost projects and the consequences of emissions leakage. Information problems encompass transaction costs related to carbon trading and market participation and the comparatively weak institutional capacity of project evaluators.