While most people are still prudently changing light bulbs and recycling coffee cups to fight global warming – or at least their gnawing conscience – policy-makers have long moved on to more drastic techniques to cope with the environmental drama.
Under the Kyoto treaty – which came into force in 2005 – industrialized countries agreed to reduce their greenhouse gas emissions by an average 5.2% compared with 1990 levels between 2008-2012. As some countries are unable to meet this norm, an international carbon emission trading market was created. Companies investing in projects, such as energy efficiency schemes that reduce emissions in countries such as Russia and China are awarded a credit for each ton of carbon dioxide saved. These can be sold to countries such as Canada, Japan and EU member states that need to reduce their emissions under the protocol.
Back in the economical boom years it seemed like a smart pragmatic theory to view global warming not as a natural, but rather as an organizational disaster and tackle it as such. British economist Nicholas Stern even called climate change "the biggest market failure in history" and carbon trading was supposed to fix that.
Yet, there is also a flipside of the coin: now that environmental values are being incorporated within the economic realm, they are also moving along with regular economical cycles. Thus in concordance with the current economic recession, the price of the EU allowances for carbon emissions has fallen by half since mid-2008. Intended to price fossil fuels out of the market, the system is instead turning them into the rational economic choice: As the economy stagnates, polluting becomes dirt-cheap!
Last summer it still cost an amazing €31 to throw one ton of CO2 up your smokestack, but in April 2009, during the give-away global recession sale, the price of European Union allowances for carbon dioxide emissions reached an all-time low of €8.20. As the economic prospects have been improving prices of carbon credits are now recovering to a level around €14 at the European climate exchange.
Nonetheless, James Lovelock – godfather of the green movement – already denounced the EU's carbon trading scheme as a scam. Others have suggested that carbon offsets – and emissions-trading schemes, their industrial-scale siblings – might be the environmental version of subprime mortgages.
Arguably, the problem is not that markets in greenhouse gas pollution exist, but rather that the general public is still largely unaware of their functioning and has been disconnected from a lot of the decisions that have been taken about the expression of 'environmental value' within the economical domain.
According to climate change expert Bryony Worthington, “A lack of engagement from civil society on this topic is dangerous since such markets are entirely the construct of civil servants and politicians who are notoriously vulnerable to industry lobbying. Without strong voices to counterbalance the doom mongers claiming tough caps and carbon pricing will put them out of business, you get trading schemes that fundamentally lack the ambition to accomplish the job they are intended to perform.” (link to Guardian article)
So if you are serious about fighting global warming, rather than merely recycling coffee cups, you might want to buy some books on economical theory. I am eagerly awaiting the emerging courses and research departments on 'economic-environmental' studies.
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