Since we will not get a chance to discuss the carbon market in class , the following article should help provide a general view of where we are.
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The world’s only global carbon market is in need of a radical overhaul
The CDM was set up under the Kyoto protocol to get developing countries to do their bit to reduce carbon emissions. The mechanism allows projects that reduce greenhouse-gas emissions in poor countries to earn a carbon credit (a “certified emission reduction”, or CER) for each tonne of carbon dioxide avoided. The credits can be sold to firms in rich countries which are obliged under Kyoto to cut their emissions. The idea was to encourage carbon saving where it was cheapest (ie, in developing countries), increasing efficiency.
The trouble is that the supply of credits has far outstripped demand. The one-billionth CER was issued on September 7th. But the largest greenhouse-gas emitters either did not ratify the Kyoto protocol (America) or were not obliged by it to cut emissions (China and India). That has left Europe as the main source of demand for credits, and the CDM has become a sort of annex to Europe’s cap-and-trade scheme, the Emissions Trading System. But the euro crisis has reduced industrial activity (cutting pollution) and European firms were anyway given overly generous carbon quotas under the cap-and-trade scheme. So carbon prices have collapsed, falling from $20 a tonne in August 2008 to below $5 now (see chart).
An oversupply of permits to pollute is an endemic problem. A recent report by Thomson Reuters Point Carbon, an information provider, found that supplies of a different emissions right under the Kyoto protocol, called an “assigned amount unit”, outstripped estimated demand by over a thousand times. (Excess supply is not the only problem the CDM faces, though; the UN panel also calls for a clearer separation between the executive board and the operational secretariat.)
Joan MacNaughton, the vice-chair of the panel, says there is a strong case for having something that links the many regional and national carbon markets that are cropping up, including in Australia, New Zealand, China and, from next year, California. But for the CDM to provide that link, countries will have to reduce their greenhouse-gas emission targets drastically, thus providing a boost to demand. At the moment there is little sign of that happening.
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Sep 15th 2012
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11 comments:
I found this article to be incredibly disheartening. It is upsetting that America did not choose to ratify the Kyoto protocol. We are supposed to be a model for other nations to look to for guidance, and it seems like we dropped the ball regarding the Kyoto protocol and cutting back on our carbon and greenhouse gas emissions. It is a great idea in theory to have credits allocated to different companies and countries in order to reduce the amount of harmful gases released into the atmosphere. However, the consequences of not abiding by the carbon credit system do not seem to be strict enough. Also, with carbon credits going at such a low rate ($5) it seems that it would be rational, although not ethical, for a company to buy all the carbon credits they could ever need, and simply keep polluting at an alarming rate.
This article like many similar environmental articles reflects the lack of action by those capable to make positive and effective change towards the ever increasing problem of global climate change. The Kyoto Protocol is in essence a good sounding idea, however, major progress has yet to be made. Many developed countries are helping developing countries to reduced their carbon emissions, in turn they are receiving carbon credits in their countries. However, doesn't that defeat the purpose? Carbon emissions effect us all, by reducing carbon emissions in one country, just to have more in another country is counterproductive. The idea in theory may be a smart one, as having a cap on carbon emissions may actually make a change in CO2 levels as there is a cap. However, currently there are no severe consequences for exceeding the carbon credits assigned to a certain country. The Kyoto Protocol is cookie cutter treaty which in essence sounds great and has the potential to make change, however, once again the pursuit of economic growth and economic surplus by developing countries tend to cast environmental issues aside if they don't mesh well with their economic agenda. THere was a time in the 20th century where you could pursue economic growth with little care for the environment. BUT, now the global population is double what it was in the 20th century, as such resources are being consumed at a much faster rate. To reflect today's society, carbon credits and an actually effective environmental protocol need to be enforced as we are reaching a tipping point of no return. Eventually we will realize "..only when the last tree has died and the last river been poisoned and the last fish been caught, we will realize we cannot eat money."
The lack of enforcement seems to be the issue with the progress towards a better sustainable living for tomorrow’s generation. On a smaller scale there aren’t enough agents outside in the field enforcing small scale construction projects that hurt the environment and on a grander scale the Kyoto Protocol. Although, less developed countries are being helped to receive these credits, they are not among the biggest contributors to the pollution problem. Countries like America, China, and India need to take CO2 emission seriously. These countries are the example, the blueprint, of what other countries want to be like. We are showing them it’s okay to be anthropocentric at the environments cost and that truly is not an example I would want to teach my old child, let alone a whole country.
We have to understand that as great of a nation as we live in, some changes are still not going to happen. Yes we are supposed to be a model for many nations across the world, but many countries are doing better than us right now. COuntries like Canada and Australia have lower Gini coefficients than we do; for a nation built on freedom and equality, we are not doing an extremely great job. Green house gases are a major problem, if not taken care of we will end up without an ozone layer along with multiple other problems. This is where we should take time to understand the atmosphere of other planets like Mars and Venus; in my opinion these planets could have supported life in the past, but something went wrong creating the conditions that are currently present. Some measures are being taken in our country. We see many of the vehicles being produced now actually have 4 cylinders, instead of the common 6 or 8. IN order to please both the environmentalists and performance enthusiasts, cars are given turbos, which rely on air suction rather than gas. New cafe standards are requiring companies to have a higher mpg rating overall, which leads to companies making even more environmentally friendly vehicles. Even companies like BMW are reintroducing their smaller engine vehicles back into the US market. In order to stop people from buying cars that produce too much carbon from taking too much gasoline, gas guzzler taxes have been imposed on top of the regular vehicle price
This article was very interesting. The idea of giving credits to companies from different countries in order to promote carbon saving makes sense. Both companies and the environment should find this beneficial. The problem is that major carbon contributors are not following the protocol. If well developed countries like America did ratify the Kyoto protocol or if the majority of countries are held accountable to follow the protocol we may see different results. The point is to reduce carbon emissions worldwide and not to focus on developing countries in which carbon saving is cheaper. Well-developed countries may be more efficient but they do contribute for the majority of carbon emissions.
I agree with the very last sentence of this article where it is said, “countries will have to reduce their greenhouse-gas emission targets drastically, thus providing a boost to demand. At the moment there is little sign of that happening.” It is a brilliant idea if countries were to reduce the greenhouse-gas emissions but this is a problem countless countries have been trying to deal with for the past few years, and it doesn’t seem to be working. I believe that innovation is taking over the need for environmental issues, for example if we were to try to reduce the emissions from cars, we would have to go straight to the source and somehow change the mindset of the car companies into not just coming up with more environmentally friendly cars, but also somehow getting them to realize the damage cars are doing to the environment so that they can change the way they manufacture cars, or how many different models come out each year making people buy more and more cars. It is an idea that also would probably not work in the business world, because you could never expect car companies to reduce their production rate with the excuse that it would help the environment. But the source f the problem is the companies themselves, because if there is nothing being produced, then there is nothing for people to buy.
Tania Leal
I'm surprised we haven't found better ways to preserve our carbon/gas and found new methods of "clean energy" yet. Once again, the U.S. has put their foot in their mouth and promised something that they couldn't follow through with. The credits seemed like a great idea but of course what good are credits when the credits hold no value as seen in the article above? It is always said in class, that we may never run out of our resources but we can deplete parts of the world's supply and Europe looks like they will be a victim. This article alone can start a riot if people bothered to read the news and cooperate. The last line stated that if we reduced our emission targets perhaps we wouldn't go through this crisis, so where are the conscientious business owners? A Keynesian approach would call for innovation and in this case, the government needs to get off of their carbon-emitting thrones and start focusing on our allocation of resources before another global feud begins.
This article was interesting; however it addressed solutions for the short term of climate change. Giving credits to low Carbon countries is an excellent idea in the short run. The U.S. produces extremely high amounts of CO2. So my problem with this idea is how come we can use as much as we want, but are monitoring and giving credits to foreign countries. To me we need to start finding solutions in the long term. I believe this only solves global change temporarily. We need to figure out how to solve it in the long run. Credits are a great start to this never ending battle it seems that worries me about our future and my kids future. This topic needs to be on the forefront of our policy makers as well as the population of the world and our president. If we can solve this “crisis” by finding long term solutions, then I believe we have done are part in society. I think one incredible solution now is to switch to natural gas and make the switch price come earlier than predicted. This will allow for a smooth transition and we will decrease our emissions ten fold. We need to start thinking about these solutions and how we can benefit the future not just ourselves today.
Nicholas Brodeur
Pace Uiversity
There will always be new methods of getting around the issues we face to benefit our nation as much as possible. While these credits will help reduce carbon emissions, it is not an effective route to fix the problem. Yes developing countries pollute, but not nearly as much as we do, so why should we basically be able to use them to benefit us? Yeah it may benefit them as well but our motive of this method is so we can put less effort into cutting our own carbon emissions. Developing countries need help with money and population growth prevention currently and this may only yeild their progress of fixing those problems. Our country needs to not worry about what is cheapest because first of all the other countries are struggling way worse than us and second it will not fix the problem in any way. If we keep applying bandaids to our problems, the issue will only become even more destructive and incredibly difficult to fix. We are going to pollute the same or even more due to this simply put because we will save money and pollution will be decreased somewhere else. This method will not last and when it comes time to actually decrease our pollution emissions, we will be screwed and wont even know where to start. This is just a loop hole to get us out of decreasing our carbon emissions and in my opinion will not solve the problem but will actually make the problem more difficult to deal with in the future.
I think selling carbon credit or trying to measure value for carbon is complex and I do not know how accurate I would expect poorer countries to be about their carbon usage.
Also droping prices shows a decreasing demand for these certificates. It seems like a poorly executed attempt to create incentives for poorer countries to create less carbon. Richer countries are struggling with their own carbon usage problems and I do not see why they would have incentive to protect property that is not theirs.
This article point out the inefficiency of the Kyoto protocol, the protocol is a good idea but IN order to be effective, it has to be signed by the most polluting countries also or else its impact is extremely limited. As the article points out, the US Did not ratify the treaty and neither china nor india are obligated to cut their emissions. The only polluters that accepted to sign the treaty are europeans country and they were given overly generous quotas.The CDM system is a great one since the polluters should pay à High cost and those who pollute less should be recompensated, but the system is prevented from being truly efficient because europe's quotas are not strict enough and the biggest polluters are literally excluded from it
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