From 2005 through 2007, emissions from within facilities covered by the Kyoto Emissions Trading Scheme have risen by around 1.8 percent. (If we adjust for facilities entering and leaving the system, which I’m not sure we should, that total would be more like 1.6 percent.)
This rise in emissions happened in spite of the fact the E.U. emissions as whole have fallen. This is not a secret, exactly, but when people talk about instituting cap-and-trade in the U.S. it is worth remembering this is not a case of taking something that worked, just not as well as we like, and making it better. Phase I of European cap-and-trade was a failure.
But weren’t additional emissions compensated via cuts elsewhere, like Asia, Africa, and Latin America? Didn’t the Clean Development Mechanism take care of it? As an answer to that, let’s look at a little snippet from Al Gore’s testimony to the U.S. Senate on January 28, 2009:
Corker: As of November 1 2008, International Rivers has calculated that most of these offsets that are called Clean Development Mechanisms that I think hugely distort the market. Hugely distort the market. Most of the projects, three-quarters of them were already under construction and were going to happen anyway. So the whole issue of additionality is a pretty big deal ...”
Gore: “Thank you. Another thoughtful question. I think there is general
agreement that in Copenhagen significant reforms of the CDM, uh
Collective Development Mechanism, ah Cooperative Development Mechanism,
have to be implemented ... I agree with ya.”
Collateral Damage Mechanism aside, I hope cap-and-trade supporters will agree any system they support needs to actually lower emissions. That means something more than a tweaked version of the ETS.
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Comments
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Twoste Posted 12:33 am
12 Feb 2009
Also, the fact that Al Gore can't remember what CDM stands for doesn't say much either.
Phase I of the EU ETS "failed" because the policy makers failed to accurately set emissions caps for the market. It was only a "failure" in the sense that nothing like it had ever been done before on a mass scale, much like RGGI is now in the US, only on a much larger scale (and that's overallocated to some extent as well). Phase II of the EU ETS has been, arguably, accurately allocated, but the rigidity of EUA supply combined with the global economic downturn has made the market fundamentally long, and thus looking as if it will suffer a total price collapse soon. Again, not a "failure" but simply an emissions market behaving as an emissions market should. Whether we need regulatory measures like a price floor or a price ceiling is for the policy makers to decide, but those would restrict what is an otherwise free market.
As for the CDM overall, one need only look at a) where the majority of CDM projects are based (China) and b) the design of the CDM Executive Board and the criticisms leveled against it in the past to know that this is not a perfect system for emissions reduction. But it does benefit from a natural supply side mechanism in its distribution of CERs to the market, and there is much talk of reforming the whole thing at COP 15, possibly to make it more of a sectoral rather than national emissions reduction system. But there's a lot of politics to be hashed out first, as evidenced by events at Poznan, where reforms to the CDM were killed by the EU and others.
Whether the CDM and EU ETS are reducing CO2 emissions is not known yet and likely won't be for a while. But one can hope...
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Gar Lipow Posted 11:46 am
12 Feb 2009
As to price floors and so on interfering with "what is otherwise a free market", I find that a very revealing statement. That would imply the emissions market is more important than an actual emissions reduction. Again, I hope cap-and-trade supporters who genuinely want cap-and-trade to be an instrument to reduce emissions will bear in mind that this is the mindset of many of your more conservative allies.
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Twoste Posted 9:56 pm
16 Feb 2009
Otherwise, hindsight is 20/20. If only we could go back in time and do things differently, unfortunately we can't...and if we could, I'm sure it would emit a lot of GHGs.
Is a market more important than actual emissions reductions? That's like asking, "is it better to do something than nothing at all?" Sometimes raging against the machine is called for, this is what many see as idealism. Is the emissions market idealistic? I have no idea. I think it makes money as a market should. But do the people that operate it have moral standards? Yes, I think they do. Can cap and trade reduce emissions? Who knows. Maybe, maybe not. No one can say for sure. I'd like to think there's a wonderful Protestant work ethic in place here that says "We'll keep trying until it works." Although, according to Nic Stern and James Hansen, we're already locked in to 30 plus years of global warming now even if we cease all GHG generating activities today. So, break out the booze and cigarettes and let's party like its 9 BC because the sea levels, they gonna rise. Or build an ark. Take your pick. Kind of like the emissions market...
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Gar Lipow Posted 5:12 am
17 Feb 2009
As to "too late", it is too late to reverse certain damage that has already been done, and further damage that has been locked. But what we are not yet locked into is a cycle of irreversible feedback. We are going to lose a lot of coastline; a lot of people living in coastal cities and towns and villages and rural areas will have to move inland. We are gong to see some major freshwater rivers become salt rivers. But what is locked can at least be compensated for. Loss of agricultural potential is still small enough that it can be compensated for by a reduction in meat consumption and a switch from industrial to organic farming. (Of course for those things to any good will require a reduction of economic inequality.) Keep going and we can see our absolute capacity to produce food cut by half or more. We don't have time for trading schemes that don't actually reduce reductions. If an emissions market won't actually reduce emissions, we have a lot of other choices, and we had better start adapting them.
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