Carbon Trading and the limits of free-market logic
3rd October, 2007
Carbon trading, its backers claim, brings emissions reductions and supports sustainable development in the global south. But, argues Kevin Smith, it may do neither, and is harming efforts to create a low-carbon economy.
If, as their proponents claim, carbon markets are wonderful tools for bringing about emissions reductions and provide economic support for clean technologies in the global south, then we should ask one question: why have they been met with a mounting chorus of criticism from civil-society organisations, social movements and journalists around the world?
Plans are being made, through processes like the G8+5 Climate Dialogue for countries like China (ie countries currently without commitments under the Kyoto Protocol) to adopt carbon trading as part of their climate policy, and there needs to be an assessment of whether such schemes really work in reducing atmospheric carbon – or if they are simply a means for polluting industries to profitably avoid the issue of making emissions cuts.
Cap and trade
The free-market logic behind the scheme looks simple on paper. Countries taking part in ‘cap and trade’ schemes like the European Union Emissions Trading Scheme (EU-ETS) have a limit set on the amount of carbon they can emit in a given time period (the ‘cap’). This...
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