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Reason Magazine - Hit Run > Carbon Market Collapse Imminent?

Reason Magazine - Hit Run > Carbon Market Collapse Imminent?
Lewis O'neal  |  by www.reason.com. All rights reserved. 7.12 | 4:02

| December 6, 2006, 11:23am

In October, all of the European Union countries forwarded their proposed National Allocation Plans for carbon dioxide emssions to the European Commission. The idea of the EU emissions trading scheme (ETS) is that permits to emit the global warming gas carbon dioxide should be screwed down over time lowering actual emissions. One problem, most of the countries submitted emissions plans that allocated permits for more than is currently being emitted--in other words, instead of reductions, they proposed increases.

Collectively, EU countries have allocated permits allowing emissions 15 percent higher than actual emissions. If these proposed allocations stand that could put the kibosh on Europe's nascent carbon market. As EC Environment commissioner Stavros Dimas , If member states put more allowances into the market than are needed to cover real emissions, the scheme will become pointless and it will be difficult to meet our Kyoto targets.



So Dimas promised to whack the carbon scofflaws and demand that they lower their emissions allocations to effect genuine cuts. Now, Germany has given its answer and it's a great big raspberry. Reuters , Germany rejected Berlin's climate change targets for 2008-12, the economics ministry said on Friday.



If Germany won't go along, don't expect France, Britain, Poland, and so forth to do so either. Some thoughts on the future of the ETS .

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Comments to "Carbon Market Collapse Imminent?

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| December 6, 2006, 11:48am |
That's it. Putting my foot down.
Neither the nor the are going to europe, ever!

| December 6, 2006, 12:03pm |
Its good to know that Europe is so very concerned about emissions that they'll set aside their own interests for the sake of helping the enviro...

a wait, no they're not, signing the Kyoto apparently was just for the good publicity. So why is everyone mad that the US didn't sign it now?

biologist | December 6, 2006, 12:06pm |
social contracts never work unless there is some means of enforcement
| December 6, 2006, 12:07pm |
biologist,
Yea, that is why I am boycotting europe.

See earlier post.

| December 6, 2006, 12:11pm |
Unless I'm missing something, this seems like an enforcement issue. I don't understand Bailey's point in his linked article that a carbon tax would be more easily enforced.

If European nations can get away with issuing too many carbon permits, why couldn't they get away just as easily with failing to implement the agreed upon carbon tax? Or conversely, if the carbon tax could be enforced via raised tariffs, why couldn't that be done with failing to limit permits? Maybe what's happening is a factor of dealing with the EU versus its member nations?

| December 6, 2006, 12:18pm |
All they need to do is provide massive government subsidies to the fossil fuel industry and they'll be the Bush administration. | December 6, 2006, 12:18pm |
Oh, and maybe start some elective foreign wars. | December 6, 2006, 12:21pm |
I can't wait for the day when Bush calls Scmidt and tells him that he caused Katrina.

| December 6, 2006, 12:23pm |
Can anyone tell me how these carbon permits are distributed by the member nations? I believe we have some form of emmission trading in the US, no? How do we do it differently?

| December 6, 2006, 12:24pm |
Nice illustration of how people respond to such "incentives".
Is it possible to figure out how much pollution is produced as a result of the cost of beauracracy and other government functions?
I bet we could cut our emissionss significantly if we could reduce government to a tenth its current size.

| December 6, 2006, 12:35pm |
fydor,
I am not sure, but if they were worth anything clones of Jim Bowie would be springing up all over to forge them for sale. | December 6, 2006, 12:37pm |
I believe we have some form of emmission trading in the US, no? How do we do it differently?


The US only runs emission trading schemes on easy-to-measure and easy-to-scrub point-source problems. CO2 emission is none of these.
Nonetheless, it does seem that one can measure CO2 emission at the fuel purchase point.

Surely someone knows how much of each carbon fuel is consumed by whom in Europe. One would think the smallest players -- excluding firewood -- are going to be gasoline retailers, which are still easily measured. Has such a mechanism been tried in Europe?


If, as I suspect from what I've read, handing out carbon emission credits is based on anything other than carbon emission, then all bets are off. | December 6, 2006, 12:39pm |
Off the top of my head, I recall reading that the 'plan' was to initially allow the emmissions permits to rise for a short while before clamping down. This was ostensibly to let the system itself mature, so that businesses could get use to the idea without having the doublewhammy of both enforcement and lack of experience.


I could be wrong...

maybe I willfind the reference. But it at least makes a certain amount of sense.
And Fyodor, there is the voluntary Chicago Carbon Exchange.

Only Europe has a mandatory exchange. | December 6, 2006, 1:57pm |
This will fail because you are asking sovereign entities to involuntarily transfer wealth to one or more of their neighbor/competitors.
Why on earth would they do that?


It looks like none of them could think of a reason either. | December 6, 2006, 3:50pm |
Crap! I just bought a whole basement full of carbon.

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