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.
Since carbon is a non-commodity, trading in it is anything but a “market” – it is a shell game – and the money made in trading it is straight off the backs of the people – especially lower-income people – who must pay higher energy costs because of it.
Shameful, and there is no good rationalization for it. It’s nothing but a sleight-of hand, thoroughly disingenuous and dishonest scheme for der Fuehrer’s crony capitalist buddies and like-minded fraudsters and market manipulators elsewhere.
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.
Not one single sentence showing that the EU-ETS actually achieved any meaningful reduction in carbon emissions.
@Janice Moore –
Yes, let’s hope that Rudd and Gillard & Co. get their pancreases, thymus glands and pineal bodies well kicked in Australia’s September election.
No matter how much you sugar-coat a lump of feces, it’s still feces. So it is with the feces that is carbon trading, in any way, shape or form
If it were shown that Carbon emissions had a net negative external effect on general welfare, societal welfare could be increased with a cap and trade scheme. If the net externality is positive, in other words if value of the agriculture stimulation outweighs the cost of slightly higher temperatures or if slightly higher temperatures are a good thing, then such a scheme could have very significant negative social costs. If the externality of CO2 emmisions is net positive the ideal solution is a negative carbon tax, a “burn and earn”, rather than a cap and trade program. A burn and earn program would add even more social benefits if it were financed by a tax on food, though this would be a tough sell to the ladies down at the church.
Yup, Chad, It still STINKS.
Good point, David Hoffer — likely the only “evidence” is some stinking model projection — AGAIN.
Too bad about Richard Courtney, hm? What he did (gave out A.’s e mail) was wrong, but, A. was very generous and R.C. was only banned for two weeks. I HOPE YOU POST AGAIN, Richard Courtney. M. Courtney hasn’t said anything about his dad that I’ve seen.
You, too, Cement Head and R. J. Salvador!
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.
Stopped reading at that. They don ‘t understand that “free” and “mandatory” are antonyms.
Or worse, they do.
Either way, nothing good could possibly follow.
thingodonta says: July 15, 2013 at 6:50 pm
…
I would agree with you if the “market” didn’t require legislation to give it effect … in which case the market would likely decide that it is all too much of a bother.
Chris Riley, your post makes EXCELLENT sense.
The sad truth, nevertheless (and I realize you know this, too, just wanted to SAY it), is… D’oh!bama and the Chicago Thugs (along with artificially expanding market share for their “green” energy buddies) want to RUIN the U.S. economy (the One did not attend a church where the pastor bellowed, “God, damn America!” from the pulpit because he disagreed with him;
and, in other lands, if ruination is not the intended goal, giving all the energy market to politicians’ “green” energy investor cronies is. And what crony, er, country is building much (most?) of the “green” energy products? China.
Thus, simply taxing fossil fuel industry products to the point that their price is far beyond a demand level that would let them break-even (much less make a profit) is ALL the Envirostalinists and their insane-but-useful partners, the Holy Church of Climatology, care about.
HOWEVER…. if we in the “free world” can elect GOOD GUYS to Parliament, Congress, etc… — WE CAN TURN THIS THING AROUND!
So, bottom line is — what you said is what we need to be telling all our Good Guy elected officials!
J.J.!
I finally (I hope!) caught up with you. I should have said this on the thread where you wrote it, but was waaaay, down on the stack, so bagged it. THEN, wished I had, so…. I am FINALLY telling you, re: the malfunctioning temperatures at Kettle Creek (?), Wash., U.S.A., NICE SUMMARY of that bogus temp. record: (paraphrasing:
“120 deg. ‘SUSPECT’
121 deg. ‘SUSPECT’
132 deg. ‘OKAY.’
CAGW in a nutshell.” [J.J.]
I sure hope you see this “WELL PUT!” Brevity = wit, so true.
Too complex. It won’t gain mainstream political traction.
ECX doing well, Chicago Climate Exchange (CCX), well, not so much!
http://www.nytimes.com/cwire/2011/01/03/03climatewire-chicago-climate-exchange-closes-but-keeps-ey-78598.html?pagewanted=all
I see the Aussies are going to scrap their carbon tax and move to a market mechanism:
http://www.nytimes.com/2013/07/17/world/asia/australian-leader-scraps-tax-on-carbon-emissions.html?_r=0
p.s. I really hate quoting the New York Times, sorry!
CRS,DrPH we don’t know what will happen in Australia at the moment Labor will I hope lose the next election the carbon tax is a joke at $27 a ton it will not be changed till next april if labor wins it will be too late for a lot of businesses we will not be producing any thing
EU researchers find that EU has great, great ideas! Did I mention that the economy in the EU is doing great, just great? /sarc
The EU “carbon market” is of course a parody of a market. The ultrastate will use more of this so he can consume more of society’s output without having to call it a tax.
The end result will, one way or the other, be Greece.
The Aussie carbon tax (CT) was supposed to be enshrined in law and not able to be repealed (By the LNP opposition who, with Gillard as PM, were likely to win. This does not seem likely now). Seems that was a lie too ALP. Rudd (Erless) is simply taking advantage of the low EU ETS credit price of ~4 euros/t, as apposed to AU$24.15/t, claiming that a linked ETS (Dropping the “proice ohn cahbon” to ~AU$6) will save families hundreds of dollars. The trouble is there are far too many Aussies who will fall for this blatant vote bribing as we were told by Gillard in 2010 the CT, that she would not introduce, would not make the cost of living more expensive. Seems that was a lie too!
And the political pantomime continues in Australia.
“Researchers said that changes are needed to ensure the EU-ETS survives Europe’s economic downturn.”
On the contrary, changes are needed to ensure Europe’s economy survives EU-ETS. However, that will not happen.
I love free markets where the state tells you that you have to buy and sell or go to jail.
Exactly. Or move the industry to China.
Of course neither the electricity generators nor the bulk of customers can do that, which leaves French nuclear power sitting pretty. I draw some consolation from the idea of Greenpeace et al crying themselves to sleep over the fact that they are now effectively promoting nuclear power.
The bizarre argument, that conservatives must ‘engage’ or cede the debate assumes the progressive obsession with CO2 is anything more than what the evidence shows it to be: A popular madness.
A truly free market transaction requires freedom at each end and at every stage: choice of product; choice of materials; choice of methods; employment contracts freely determined between contracting adults; a price asked by the producer and accepted by the purchaser. The law common to all is there to deal with wrongs, and not the production of goods, unless some agent is wronged in the producing or consuming thereof.
I should also add – ‘the use of a market produced money in paying for goods’.
Brev.= Wit
“There are many ways to lose money, and they just keep inventing new ones, when old ones work just fine”, I believe Warren Buffet said something along those lines.
Europe is dying, it is a slow managed decline, they can afford to be stupid because of past riches and achievements.
It is such a good idea that even the mafia have invested
Why this “pseudo-rationing” using carbon credits. If the federal government thinks CO2 production is a problem, why not RATIONING, as was done several times in California when we experienced droughts, and was done a couple of times during the Carter and Nixon years, resulting in long gas lines in many places.
I’m sure that actual rationing would make the current administration just as popular as the Carter and Nixon administrations.
Ref Janice Moore 8.24.
You missed Rudd’s reply to Tony Abbott’s “so called market of non delivery of invisible substance to no-one”.
Rudd said “Next thing Abbott will be saying is air is invisible!”
Yeah that’s right – air invisible? My gosh Mr Rudd next Abbott will be saying CO2 is a pollutant.
Meet the new “Free Market”, same as the old “Five Year Plan”.
“King of Cool says:
July 16, 2013 at 5:30 am”
Rudd also claims to be a Kokoda survivor too. This man must be the second coming, no only did he survive a war before he was born, he can see air!!