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“Carbon trading isn’t working”

2009

Kevin Smith in China Dialogue

“Last week, Graciela Chichilnisky wrote that carbon trading can save a climate-change agreement. Here, Kevin Smith responds that such markets haven’t worked – and won’t in future.”

Carbon trading isn’t working, and doesn’t show any signs of improving either. The biggest experiment in carbon trading so far, the European Union Emissions Trading Scheme, has been a spectacular failure, which has not made significant emissions reductions, has absorbed enormous amounts of political will and attention and has acted as a huge subsidy for some of the biggest polluters in Europe, with a handful of energy companies making billions of Euros in profit without having to reduce their emissions.

Free-market ideologues still trumpet the virtues of carbon trading, but a host of NGOs, businesspeople and even government bodies now admit that we got it badly wrong. In the United Kingdom, the Committee on Climate Change – an independent advisory body to government – said they could not “be confident that the EU ETS will deliver the required low-carbon investments for decarbonisation of the traded sector” and recommended the use of more traditional regulatory intervention.

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