May 22 2008
Emissions trading is seen by many governments and commentators as a major means of controlling global warming but it involves worrying assumptions on enforceability and potentially serious implications for development. A study in Regulation and Governance published by Wiley-Blackwell finds that the rise of emission trading brings contentious issues to the fore.
The study “Regulation Lite: The Rise of Emissions Trading” examines the development of emissions trading systems and the contentious issues presented. The research concludes that the system of emissions trading is fraught with challenges and can tend to reward rich polluters and to stifle development unless other measures are taken to ameliorate the effects of trading.
Author, Professor Robert Baldwin from the London School of Economics and Political Science says, “The Stern report offers an extremely optimistic view regarding the effects of emission trading. The modern use of emission trading has produced a model of regulation that is ‘lite’ in its inherent friendliness to the most powerful interests and which is resonant with highly questionable assumptions.”
Emissions trading relies on selling the rights to pollute and was established as a key instrument to control global greenhouse gases in The Kyoto Protocol of 1997. There has been an explosion of trading regimes and proposals following its inception.
“It is easy to fall into heroic assumptions regarding the enforceability of emissions trading rules but there are dangers that this system places faith in effecting global warming reductions in exactly those locations where enforcement and monitoring will be weakest. Although it may seem as a great hope for saving the world from global warming, emissions trading has the potential to seriously under-deliver; to reward historically rich polluters and to curb progress. It is essential to avoid both seeing emissions trading as a panacea and falling into complacency”, says Professor Baldwin.
This study illustrates the pressing need to confront the difficult issues presented by emissions trading and to face the challenges of combining ‘market’ and ‘democratic’ systems of legitimization. The world must avoid taking the easy route of seeking refuge in overly optimistic beliefs and assumptions.