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Carbon Market - Essay Example

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For the first time in 2005 the European Union established a world's carbon market. They called it "EU Emissions Trading Scheme". The idea behind this scheme is to force polluting industries to buy permits in order to emit carbon dioxide. Therefore, companies will be encouraged to introduce low-carbon economy…
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Carbon Market
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"Carbon Market"

Download file to see previous pages The "EU Emissions Trading Scheme" turned into a failure, because the energy consumption went down and with it the demand to obtain permits. On the other hand industries attempted to increase their turnover selling the unused permits to other companies. What is more, the green energy projects have spotted producing the desires effect.
The author is asking what would be an adequate price for the carbon emissions. NASA climate scientist observes that for him proposing the right cost will determinate if we as humans can cope with the irreversible climate changes that we have caused. The author comments that there are numerous ways to put a value on carbon. One of them is to calculate what will be the cost per tonne to diminish the emissions. Another approach is "the social cost of carbon". This method estimates the damage price to the atmosphere for a lifetime. The World Bank conducted experiments with this method as well as Dutch government and UK treasury. However, they all variable are taken into consideration the estimation tremendously vary from 35 GBP to 140 GBP per tonne.
Another technique is the "shadow price of carbon". This one estimates factors like willingness to pay for the reduction of carbon emissions. All those approaches have their advantages and disadvantages. Unfortunately, all of them share a common shortcoming which the author calls "the paradox of environmental economics". In fact what is done is that people put price on the catastrophic and harmful carbon dioxide. They put price on killing the environment. This is the market solution failure to the environmental issue.

Governments have to spend and invest more money on renewable energy and this should be done as an economic stimulus. For example the UK has spent more than 20% of its gross domestic product to enhance the financial sector and only 0,0083% on green projects. Price mechanism to control the carbon emissions is imperfect and unworkable solution. The author is asking the rhetorical questions, if we could find a doable one. He hasn't find it as yet, but he is open to suggestions and commentaries.

In this article the author tries to show that "carbon trading" is the biggest trading commodity. Unfortunately, carbon trading does not offer a feasible solution with the problem of global warming. I agree with the author in that the governments should invest more in renewable resources, than collecting money from heavy industries which produce the damaging emissions. However, there is no proper solution for this environmental issue. Non-governmental and non-profit organizations have appealed for a long time that immediate actions must be taken for reducing the carbon dioxide into the atmosphere. Government should receive financial incentives to apply the green agenda.

Trading emissions in fact made some companies acquire monetary benefits out of polluting the air less. What happens is that companies which have successfully met the emission target and have surplus of carbon units might want to sell those to companies that fall short. So instead of following the proper way of obtaining the permit and pay extra, companies swap carbon certificates with no additional price involved.

An action welcomed by most of the countries was the commencement of Kyoto protocol. With this the world was divided into two - who countries that make the effort and change the existing infrastructure to pollute less ...Download file to see next pagesRead More
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