From the University of Edinburgh
Free market is best way to combat climate change, study suggests
The best way to reduce carbon emissions and combat climate change is through the use of market forces, according to a new study.
Researchers who monitored the effectiveness of the European Climate Exchange (ECX) – the world’s biggest carbon trading platform – found it to be as efficient as Europe’s two biggest exchanges, the London Stock Exchange and the Euronext Paris.
Using free market platforms like the ECX to combat climate change could provide the basis for the introduction of a mandatory emissions cap and trade scheme worldwide.
The report found that the value of the trades on the ECX were higher after the market closed, a sign of growing sophistication within platforms. It means that trades were made with greater confidence based upon increasingly detailed information.
Researchers said there are also signs of maturity based on increased liquidity – the immediate availability of a party to trade with – and price efficiency, which means all available information is incorporated into prices so they are traded in a relatively transparent manner.
The ECX was created by the EU Emissions Trading Scheme (EU-ETS) in 2005 to help the European Union (EU) achieve its obligations under the Kyoto Protocol to reduce carbon emissions.
The EU set limits and issued permits for how much carbon firms could emit into the atmosphere. If companies exceed their limit, they incur regulatory penalties.
To avoid this, the EU-ETS allows firms with high emissions to buy the permits of other companies on platforms such as the ECX. By creating a market, it gave firms a financial incentive to reduce their carbon emissions.
Researchers said that changes are needed to ensure the EU-ETS survives Europe’s economic downturn. Since the study appears to confirm the ECX’s effectiveness, researchers say the EU-ETS should be allowed to self-adjust emission caps in reaction to changes in the Eurozone’s fortunes and industrial production.
Gbenga Ibikunle, from the University of Edinburgh Business School, said: “While individual responsibility for combating climate change is important, much needs to be done to incentivise companies – especially those who emit most of the world’s carbon – to cut back too. This study shows that free market mechanisms such as the EU-ETS can be effective in doing that. Several other schemes around the world are already learning from this and adopting it as a model.”
The paper is published in the International Journal of the Economics of Business.
All of these people keep assuming that CO2 is causing climate change. It just ain’t so!
Game, set, match!!
SkepticGoneWild 🙂 appears to be more in a twist than Eli. Opinions vary.
This just might be a good idea, because market force might be the best mechanism to decide that carbon emissions don’t need to be reduced in the first place, and that dangerous AGW is not going to occur.
This kind of ‘accidental discovery’ when market forces are unleashed has happened before, e.g. when Gorbachev decided to introduce market forces and a greater degree of openness to improve and/or reform soviet communism-the result was the end of soviet communism itself. This was not intended, but it occurred because market forces found out that the system was based on fatally flawed foundations to begin with.
I would also argue that Christianity’s stranglehold on western society followed a similar pattern, although the process here is far less clear and more controversial; once Protestantism gained a foothold and rebelled against the authority of the Roman Catholic church, it unleashed a spirit of inquiry and individualism that eventually rebelled against the authority of religion altogether, as well as, according to the sociologist Weber, provided the driving force behind market capitalism itself.
Market forces are dangerous when one tries to use them for political purposes, they tend to turn against you, unless the reasons you introduce them are based on fundamental human realities to begin with.
Just think of how bad a bubble was created with asset backed commercial paper, debt obligations that actually had real tangible assets associated with them, and then consider how much of a bubble could be created out of carbon indulgences based on nothing at all.
Banksters are probably having wet dreams at the very thought.
There’s nothing “free market” by implementing these crazy carbon trading schemes. There’s no negative demand for air. Creating an artificial market and artificial demand is the antithesis of “free market” concept.
Of course, since CO2 or any gas at any concentration in the atmosphere cannot detectably warm the climate, carbon taxes or any other misbegotten effort to decrease carbon emissions WILL DO NOTHING. OUR CLIMATE IS NOT CONTROLLED BY CO2.
CO2 IS PLANT FOOD AND IT IS GREENING THE PLANET.
Controlling carbon is solely about controlling people.
It’s been so many years ago that I worked, briefly, behind a cash register that I don’t really remember it anymore. But, I suspect it’s a relatively mundane, unrewarding job. So, when I happen to be with my sister, my older sister, and she whips out that credit card (faster’n Doc Holloway can pull a gun) to buy something I decide to spice it up a bit for the cashier. I tell my sister quite loudly, “You’re not using that credit card are you!? It’s probably reported stolen by now!” Oh, does she hate it when I do that, which is why it’s so much fun to do. And it provides a moment of levity for the cashier.
But, when I’m alone at the cashier I have to be more creative. If I’m paying the bill with a piece of paper with a fairly large assigned (temporary) value and they hold it up to the light to check it I tell them not to worry; I did a good job printing it last night. But usually I’m not paying a big bill, so if I pull out, say a twenty, I employ a different line. I tell the cashier it’s really a two hundred dollar bill; they just can’t see the extra zero; but I assure them that it’s really there. Sometimes I tell them that that twenty dollar bill turns into a two hundred dollar bill at midnight.
Now here’s the thing. You, and the cashiers, and certainly I know that the foregoing is all a buncha bull poop. Now, the absolutely worst that could happen is that someone doesn’t find those shenanigans funny (such as my sister). But, usually the cashiers get a hoot out of it. Quite a few play along, handing me change that they assure me changes at midnight too.
Did I just write, ‘Now here’s the thing?’ Well, here’s the real thing. What if the foregoing wasn’t a description of just jokes that were being played by me? Just how well would it work if the cashiers really believed me? Handed me back change based on the magical, fictional values of twenties that would morph into two hundreds at the stroke of midnight? What is hard earned money worth then? Or, on the other hand, what if you’re not using magical money? You’re using real money? But buying things that don’t really exist except in magic. You can’t see it, touch it, hear it, taste it, or smell it. But, I assure you, if you give me good money for it it’ll magically turn into something at midnight. In the future. Now, what I was playing was an obvious joke. Well, sans that penultimate word; this scheme is too. I doubt it’ll lead to laughter though. More like tears.
The Chicago Carbon Market … Crashed.. Because the free market saw it as a fraud…
I’m all for letting the free market decide what is truly worthy of money spent.. No Government prop ups and watch what happens to the crap…
“Using free market platforms like the ECX to combat climate change could provide the basis for the introduction of a mandatory emissions cap and trade scheme worldwide.”
Gotta love the way they use “free-market” and “mandatory” in the same sentence !!
jai says…
“looks like surf is up in Hawaii. . ”
wow.. like that’s NEVER happened before !! .. roflmao
you really do make some very STUPID comment jai !
Uhuh.
A mandatory free market!
“I like this idea, I will hold my breath for 30 seconds for only $100.”
And I have a piece of coal in my hand. For $50, I won’t burn it this winter.
The Michael Milken solution to saving the planet.
FANTASY LAND:
Carbon Credit “Free” Market is SO YESTERDAY, Gbenga. Edinburgh needs to get with it!
“EU carbon permits, which have plunged 88 percent since 2008, would need to trade at 10 times their current value of about 4 euros ($5.28) a metric ton to prompt utilities to switch to cleaner natural gas from coal, according to a Bloomberg fuel switch calculator.”
[Source: EU Should Move Beyond Carbon Market to Shut Coal, IEA Says, Mathew Carr & Sally Bakewell, June 10, 2013, Bloomberg News: http://www.bloomberg.com/news/2013-06-10/eu-should-move-beyond-carbon-market-to-shut-coal-power-iea-says.html%5D
TOMORROW LAND:
But, that isn’t stopping good ol’ Rudd:
“CANBERRA, July 16 (Reuters) – Australia’s government moved on Tuesday to scrap its carbon tax and bring forward an emissions trading scheme …that will be linked to the European carbon market … The conservative opposition has promised to scrap the carbon price altogether if it takes power, with opposition leader Tony Abbott dismissing the ETS as a ‘so-called market in the non-delivery of an invisible substance to no-one’.”
[Source: James Grubel, Reuters, June 16, 2013, http://www.reuters.com/article/2013/07/16/australia-carbon-idUSL4N0FM05620130716%5D
VOTE CONSERVATIVE! It MAKES SENSE!
I’m having some trouble understanding the game so I have some motivation speculation.
I have it as a given that this is a scheme whereby those families that own 99% of the western world can get another Log removal of whatever is left from us working sods. I just can’t see how trading smoke translates to profit, unless it’s a game of last person left holding the imaginary air gets to keep it, or if it is a way to drive up prices by creating an artificial scarcity (like Enron did with the rolling power outages in California a few years back).
I suspect that whatever the game is, the real winner in this will be China as they will continue to grow their economy as the rest of the great powers vie to out-shrink each other.
And who wins QUOTE OF THE DAY today?!!!
JAI MITCHELL!
“… move along people. . .nothing to see here… .” [Jai Mitchell]
Preeee-cisely. #[:)]
If we are to engage in battle with nature over the climate I respectfully ask we have an end-game plan, that we clearly identify our goals, state the conditions that define our success, and method disengagement. We should define rules of engagement that are acceptable to all sides in the ensuing conflagration, and the extent of collateral damage to innocent non-combatants that are acceptable. If our success is defined as arresting climate change at some condition or range of acceptable variation we must give all nations a say in what that climate shall be.
Or maybe we should just say WTF are we thinking? This is crazy!
dp: Nicely stated. Couldn’t agree more.
[LOTS of excellent comments above, every, er, well, JUST about everyone, (cough)!]
Great battle strategy analogy.
Enron was fraud, fraud, fraud. How could anyone believe that this scheme could possibly be different?
The carbon market crashed already. They’re trying to dress it up and put it back out there. Free market? Mandatory? When are they going to learn?
When THIS bubble bursts, it’s going to make one heck of a KABOOM!
Free market as in forcing or subsidizing businesses to produce or purchase a product.
A mandatory “free” market with quota’s to artificially prop up the price.
STRASBOURG/LONDON, July 3 (Reuters) – The European Parliament after months of bitter debate backed a plan on Wednesday to boost carbon prices, throwing a lifeline to the EU Emissions Trading System (ETS) and the bloc’s push for greener energy.
EU politicians in Strasbourg voted 344-311 in favour of temporarily removing up to 900 million permits from trade, tackling oversupply that has sent carbon prices to record lows.
To avoid this, the EU-ETS allows firms with high emissions to buy the permits of other companies on platforms such as the ECX. By creating a market, it gave firms a financial incentive to reduce their carbon emissions.
and then removes 900 million permits from trade, creating an artificial shortage, trying to penalize firms for using the very mechanism the EU_ETS created.
Barely in business and the politicians are already playing games, trying to rig the market. Imagine what it would be like if the market was worldwide and there was serious coin involved. The dutch tulip mania and the south seas trading company will seem tame by comparison.
Eli Rabett says:
July 15, 2013 at 6:47 pm
You said the operative word, Eli–“opinions”.
Very little in science is based on opinion. Science is generally a lot more precise than that. And because of this wonderful precision, we can generally agree that politicization of science isn’t beneficial.
Except to those holding the “purse strings”, of course. And this is potentially the biggest purse out there.
If it happens, the rest of us are going to take a drubbing.
Free market in political tripe.