Cap and trade not the solution, climate scientist says

December 15, 2009

Fighting climate change is a huge investment opportunity but not through emissions trading and investors should instead put their money into renewables which will power the economy in the future, says a leading environmental scientist and cap and trade expert.

As yesterday’s walkout by African nations showed, getting anyone to agree on anything at the U.N. Climate Conference is easier said than done. The use of markets to address pollution is no different. Supporters of cap and trade — the system which allows companies or groups who meet their emissions targets to sell their remaining carbon credits — are out in force, but so are the groups who say the scheme prevents less responsible companies from breaking their bad habits.

Scientist Payal Parekh, from International Rivers, has come to Copenhagen to lobby on the need to reduce greenhouse gas emissions and to highlight the failures of the cap and trade system. She said: “We are working here to ensure that we get ambitious reductions in carbon dioxide and other greenhouse gases so that we can make a smooth and efficient transition to a clean and green economy. This means that we really need to set up a system that rewards innovators as opposed to allowing dirty industries to continue polluting.

“Cap and trade favours dirty industries as opposed to innovators. The reasons for this are that in cap and trade systems that are up and running, most notably in the European Union, polluters are given rights to continue their dirty habits and there are also loopholes such as offsets which allow them to not have to make their emissions reductions at home but instead push them off on to developing countries.”

Proponents of the buying and selling of carbon credits believe that it is vital world leaders reach a deal on emissions targets by the end of the Copenhagen Conference. The head of the Asian Development Bank, Haruhiko Kuroda, recently told Reuters that failure to reach a deal could cause the collapse of the carbon market.

“Cap and trade is vitally important because without a price on carbon there isn’t a clear signal to the market place as to what it is the market should be recognizing as real value going forward. It is possible to put a price on things without a cap and trade scheme … but it will be immeasurably more difficult,” said Fiona Wain, chief executive officer of Environment Business Australia.

You can hear more of Wain’s views on the importance of a cap and trade system in the clip below.

Parekh disagrees, arguing that cap and trade merely moves pollution around rather than providing a sustainable solution to climate change. She is calling for ambitious emission reduction targets and the closing of loopholes that allow these cuts to be made abroad.

“We would like to see a cap that is ambitious and in line with what the most recent science is telling us. So that means we need reductions from developed countries of 45% below 1990 levels. And we would like to also see that developed countries have to meet these emissions reductions at home so the negotiations should exclude or severely limit the use of offsets,” she said.

In the clip below, Parekh argues that instead of cap and trade, investors should place their money in renewable energy sources.

3 comments

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Posted by GoodKarmaToday | Report as abusive

I agree that Cap and Trade is not the answer; investment is that answer. Green investment has the potential to create huge returns and a new wave of green collar jobs. While the market is still small, there are already thousands of companies who are taking advantage of this opportunity and reaping the benefits because of it. Take the website http://www.greencollareconomy.com for example. They have a directory of thousands of companies who are seeing great ROI and are adding people to the workforce. There is also a slew of resources for people and business owners who want to do more research. I suggest readers take a look and learn more about this growing trend.

Posted by fwdthinking | Report as abusive

The light bulb was invented fairly recently and most power plants are also fairly new. New dirty power plants are being make even today simply because its cheaper and easier to crate dirty power plants than to create green power plants. Another problem is the “NIMBY’s” (not in my back yard) These people do not want wind turbines in their town because they are ugly.

We do need laws that put a price premium on dirty power plants so that the scale can be tipped in favor of green energy. We also need some anti NIMBY laws because we can’t roll out millions of wind turbine towers if people can say they don’t like the way it looks or whatever their complains are.

You don’t like that wind turbine? Well I don’t like smog, acid raid, pollution and I really don’t trust big business to ever do the right thing, unless they have to.

Posted by TheSanDiego | Report as abusive