Can countries transform the worldwide energy system using a mechanism fundamentally at odds with expert views on how systems actually change? At the international climate change negotiations in Madrid, we're passing on a go.
At the 2010 talks, a major stumbling block is agreeing on rules for that “market based mechanism” established under Article 6 from the Paris Agreement. Although there are plenty of market-based measures that may be used to address climate change, together with a carbon tax, the mechanism established under the Paris Agreement centres on “the use of internationally transferred mitigation outcomes,” also referred to as carbon trading. In short, carbon trading implies that if it's expensive for meet my emissions reduction target in your own home, I can undertake more affordable reduction measures abroad after which count the emissions avoided abroad towards achieving my domestic target.
As stated in the content 6 “explainer” by Climate Home News, “countries agreed to generate a new global carbon market system to assist countries decarbonise their economies at lower cost.” The present problem, it notes, is the fact that “Countries have tried without success to accept the rules governing this mechanism,” even though “a majority of national plans range from the utilization of carbon markets to achieve cheaper emissions reductions.”
The key feature here's clear: ‘lower cost’, ‘cheaper emissions reductions’. What's simpler to miss are some critically relevant questions? Cheaper to whom? Less expensive than what?
Few would disagree that to achieve the global climate goals of limiting warming to at least one.5C or 2C, there's a massive amount of labor to be done, most famously of which is to fundamentally transform the fossil fuel based global energy system. The Paris Agreement is countries' arrangement to talk about this burden, their contributions being determined voluntarily at the national level. Most agree the contributions put forth to date are grossly inadequate to the task. In a nutshell, there exists a long list of difficult, essential actions as well as an increasingly small amount of time to complete them.
Enter carbon markets, which as noted above, are widely considered to lower the costs of reductions. But do they lower the overall costs from the try to be achieved? Or do they simply prioritise the cheapest actions, leaving the greater expensive work with someone else to do later? If we need to to experience a full group of measures, however the richest actors simply want to perform the cheapest ones, who is going to do what's left? Once the poorest can't, and also the richest won't, the answer is nobody. And this is when we're.
For a better knowledge of the job essential to transform the global energy system, it helps to check out elementary systems analysis and design theory. Among the great minds of systems analysis, Donella Meadows, emphasised that to create change in any system, one has to intervene fundamentally, including most fundamentally, the paradigm that drives the system (here, extracting and burning fossil fuels for energy). Other effective places to intervene would be the goals of the system (Provide energy? Protect the environment? Secure easy profit?); the rules of the system (Extract from public and private property? Both onshore and offshore? Even from protected areas? Are there limits on burning? Can there be liability for damages?); and the information flows (Who're policymakers hearing, victims or profiteers? And who controls what information is open to whom?).
Interventions further out at the parameters (e.g., subsidies, taxes, standards) simply won't do the trick, Meadows stresses.In the situation of climate change, focusing only on emissions is working precisely on a single parameter, a symptom from the system, and carbon trading touches only mildly about this parameter.
Nonetheless, a lot weight has been given to carbon trading – by powerful countries, wealthy banks and single-minded traders eager for a fast return – that it has had on its own wildly disproportionate gravity inside the climate solutions discourse. Obviously, being paid to sit on industry panels every year in luxury hotels by the beach doesn't cause you to expert on the ocean. Rather, it has a tendency to distract you against making the basic observations necessary to understand it.
Here, most importantly carbon trading not just flies in the face of what's been aware of how systems actually change; it is also rather anti-scientific, since it ignores evidence but remains wedded to the own hypothesis. We now know from abundant experience from various carbon markets how these trading systems can be gamed and cheated. We have examples of emissions reduced in one location simply to launch in another; of reductions credits generated when no reductions actually took place; of double counting reductions, once in the county where the action took place and then again in the country to which the loan was traded; as well as over-allocating free carbon credits to the biggest emitters, who, because of such allocations, are in the finish not really instructed to reduce their emissions whatsoever.
We even know of the development of deeply perverse incentives which have resulted in more emissions than would have occurred without any trading plan at all. See, for example, the HFC-23 debacle, where traders were essentially paid ten cents for destroying banana peels once the price of bananas was just five cents. Not surprisingly, people grew and sold lots of bananas, except the “bananas” in this case were actually super-pollutant fluorocarbon emissions, thousands of times more powerful than co2.
All of these real-world experiences have clearly undermined the carbon trading hypothesis at almost every turn, but individuals with vested interests in the hypothesis nonetheless managed to keep it thriving. Now we're told we only need better rules for carbon exchanging order to solve these problems, which is precisely what countries within Madrid are neglecting to agree with. This discord will probably continue, precisely because the players care more about the way the rules may benefit them than in how efforts about this parameter might give the energy system an alleged nudge.
Numerous recent scientific reports frighteningly claim that the worst-case outcomes from ongoing warming are near to becoming inevitable.But the fossil fuel system remains in position due the large wealth it continues to generate for a powerful few.The great news is we're trying to change this.The not so good news is we're attempting to do so with a mechanism that remains popular, not because it's been proven to operate, but since it drives the expectation of significant gain a powerful few. Meadows might think about this greed to be another paradigm fundamentally from the system that needs to change.
Until then, the fossil fuel energy system will maintain its homeostasis, unperturbed by even the most widely subscribed puttering about at the parameters.
Dennis Clare is the president from the Institute for Energy and Climate Strategies and an adviser to small island developing states to whom he served from 2009-2023 like a negotiator in international climate negotiations and the Montreal Protocol.
