Towards Sustainable Carbon Markets: Requirements for Ecologically Effective, Economically Efficient, and Socially Just Emissions Trading Schemes (original) (raw)
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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.
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.
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.
The Social Dimensions of Carbon Trading: Contrasting Economic Perspectives
2011
Neoclassical environmental economics considers carbon trading to be a reliable market based instrument that allows for reducing CO2 emissions at the lowest possible costs. Showing the economic potential of fossil energy for fuelling exponential economic growth, ecological economics reveals the strategic nature of CO2 emissions control as a thermodynamic corollary of fossil fuel use, as well as the ecological peril of making profitable the trading of politically generated carbon commodities that are all but ecological substitutes. Critical institutional economics insists on the exclusionary nature of carbon exclusive allowance or credits, as well as the moulding of institutional conditions favouring the control of strategic CO2 emissions as an institutional prerequisite. Property economics makes explicit that exclusive carbon control increases firms’ capitalization value by securing concern’s future income and profit as well as the direct relation between rights exclusivity, concern’...
Carbon Markets: Rehabilitating the Egalitarian Objection
Ethic@ - An international Journal for Moral Philosophy, 2018
While carbon markets have been increasingly scrutinized for their moral merits, the egalitarian critique of carbon markets has been largely neglected. Many admit that emission-trading schemes (ETSs), in their actual form, reproduce pre-existing inequalities. However, this is often seen as a contingent, easily-fixed problem, as carbon markets can fulfill egalitarian goals as long as the initial allocation of permits is made according to an egalitarian ideal. The goal of this paper is to challenge this idealistic rejection of the egalitarian critique of carbon markets by underlying seven structural features of carbon markets that explain why, in all likelihood, ETSs will always reproduce pre-existing inequalities (without even curbing carbon emissions). First, carbon markets are bound to cover mainly the activities of wealthy and powerful corporations. Second, carbon markets are excessively complex and their operations typically lack transparency. Third, information asymmetries persist between public servants and private firms regarding ETSs. Fourth, target setting is a political, highly partisan process. These four features give private firms the power to manipulate at their advantage the rules of a carbon market. Three other features explain why the motivations of agents under an ETS will most of the time be corrupted: carbon markets trivialize the harm done by carbon emissions; they alter our perception of nature's value; and they crowd-out our intrinsic motivations. Thus, influential private firms will have the power and willingness to bend carbon markets at their advantage.
Ephemera. Theory & Politics in Organizations, 2017
abstract This article argues that the analysis of the commodities exchanged on global carbon markets can help us grasp the current relationship between economic categories and environmental issues. In the article, global carbon markets are historically contextualized, analytically described and politically articulated against the background of two hypotheses: (1) that the process of progressive marketization of climate change occurs in connection with the emergence of a new modality of value production (which can be generically defined as 'cognitive capitalism'); and (2) that the governance of contemporary circuits of valorization tends to be located within the financial sphere and poses a constitutive and ongoing uncertainty/instability as a necessary condition for their reproduction. Subsequently, these hypotheses are tested with specific reference to the 'Clean Development Mechanism' as established by the Kyoto Protocol. In particular, the analysis will focus on the carbon commodities known as 'Certified Emission Reductions', which reveal an unprecedented relationship between use-value and exchange-value. I contend that the use-value of carbon commodities is not defined by an intrinsic ecological dimension; rather, it is produced under the exclusive condition of accepting the redeeming character of the market as fundamentally shaped by the formal principle of economic competition. The paper aims to demonstrate how the value produced in global carbon markets rests exclusively on the social actors' arbitrary acceptance of the 'carbon trading dogma’, namely an extremely entrenched – albeit empirically unprovable – political belief that climate change, although a market failure, can be viably solved only by further marketization.
Carbon trading: unethical, unjust and ineffective?
2011
Cap-and-trade systems for greenhouse gas emissions are an important part of the climate change policies of the EU, Japan, New Zealand, among others, as well as China (soon) and Australia (potentially). However, concerns have been raised on a variety of ethical grounds about the use of markets to reduce emissions. For example, some people worry that emissions trading allows the wealthy to evade their responsibilities. Others are concerned that it puts a price on the natural environment.