Tag Archives: cap-and-trade

The Limits of Cap-and-Trade

On Friday night, the U.S. House of Representatives passed the country’s first cap-and-trade system intended to reduce carbon emissions. The bill, which passed by a narrow 219-212 (largely party-line) vote, still must be passed by the Senate, where it faces strong opposition. The House bill would reduce U.S. carbon emissions 17 percent below 2005 levels by 2020, and 83 percent below 2005 levels by 2050. The legislation introduces a cap-and-trade system for carbon emissions and by mandating energy producers increase production from renewable sources such as wind and solar.

While this is a positive development, there is certainly room for concern. Indeed, environmental groups are divided on how to respond to develops in the United States. Many have celebrated the development, but some, including Greenpeace and Friends of the Earth, have criticized the bill for being too watered down and having too many compromises to effectively address the challenges of global climate change.

The real question is will this work? The European Union has been developing its cap-and-trade system for years, with little real success. Most countries have failed to meet targets (those that came close did so largely because of economic downturns, such as Germany’s progress as a result of the collapse of industrial production in the former east). And the European Union was forced to retool its approach after it became clear that most member states were gaming the system, over-estimating their baseline emissions to make meeting reductions easier.

Meanwhile, there’s a blame-game going on. Australian doesn’t want to establish targets for reductions until the United States does; the United States doesn’t want binding international targets unless China is a part of the system, and China wants to measure reduction levels in different ways. Indeed, the question of fairness in reducing carbon emissions remains unresolved. As Roberts and Parks point out in thier book, A Climate of Injustice: Global Inequality, North-South Politics, and Climate Policy (a great read, by the way), there are at least four ways one could measure emissions, each with different implications for fairness:

  1. Total Emissions: just add up the total carbon emitted by a country and establish reduction targets based on this figure. This measurement would benefit the industrialized countries, since their target levels (as a percentage reduction fo current emissions) would be higher.
  2. Per Capita Emissions: divide current emissions by population, then establish reduction targets. This approach is favored by countries which large populations, like China and India, for obvious reasons.
  3. Efficiency of Emissions: divide current emissions by GDP, resulting in a measure of emissions per unit of production. This approach is favored by developed countries with large economies, like the United States, for obvious reasons.
  4. Historical Responsibility: measures total carbon emissions over the past fifty (or so) years. Because carbon emissions remain in the atmosphere for fifty years or more, gasses that were released in the 1960s are still contributing to climate change. This measure forces those with the greatest historical responsibility for emissions (like the United Kingdom and the Untied States) to pay for those emissions as well.

The different systems of calculation have real implications. If we look at total emissions, China is the world’s second largest producer (with approximately 5.1 billion tons of carbon dioxide emitted in 2005, just behind the United States at 5.8 billion tons emitted). China should be a party to any effective international agreement addressing carbon emissions. But if we look at par capita emissions, China emits just 3.9 tons per person, placing 91st overall and falling well behind countries like the United States (19.6 tons per person), Australia (18.4 tons), Russia (10.8 tons), Spain (7.9 tons), France (6.2 tons), and Iran (6.0 tons). Based on this measure, China could easily claim that their emissions do not rise to the level of those in the developed world (of even much of the developing world), and it is therefore justified in continuing to increase its emissions.

Questions of fairness need to be addressed. But even setting those thorny questions aside, it remains unclear whether or not a cap-and-trade system could even work to reduce greenhouse gas emissions in time to avert catastrophic climate change. (For a great parody of the cap-and-trade system, visit the folks at Cheat Neutral).

A bleak picture indeed.

Five Stories You Might Have Missed

It’s been a relatively quiet week in domestic U.S. politics. Congress continues to spar over the Pelosi-CIA briefing debate, and observers continue to speculate about who President Barack Obama might nominate to replace Justice David Souter in the U.S. Supreme Court. Congress also moved forward with passage of a cap-and-trade system to address greenhouse gas emissions (though the legislation still has a long way to go before it becomes law). The most interesting story of the week came on Wednesday, when former Vice President Dick Cheney and President Obama gave “dueling speeches” on the topic of torture and U.S. national security.

But while it was relatively quiet in the United States, it was a busy week globally. Here are five stories you might have missed:

1. The campaign for elections to the European Parliament, scheduled for June 4, are beginning to heat up. The European Parliament is selected on the basis of nation-wide proportional representation elections, which means that national politics often play out in interesting ways at the European-wide level. Thus, observers are looking to the results of the election in the U.K. as a forecast for Gordon Brown’s political future, which has been challenged in recent weeks by the ongoing corruption scandal. In Italy, the vote is being cast as a referendum on Silvio Berlusconi’s aggressive anti-immigration platform. And in France, the campaign is centering on the question of Turkish membership in the European Union.

2. The German presidential elections took place on Saturday, with incumbent president Horst Köhler narrowly winning re-election and handing Chancellor Angela Merkel a symbolic victory ahead of her own re-election campaign. The German presidency is elected by the upper house of the country’s parliament. The position has little real authority, with executive power being vested in the office of the chancellor. However, a challenge from Merkel’s coalition partners threatened to see Köhler defeated, creating a political challenge just four months from the country’s next general election.

3. A trade agreement currently being negotiated between China and Brazil aims to see the countries use their own currencies rather than U.S. dollars in transactions. The move, seen as part of China’s broader strategy of moving the U.S. dollar out of its status as the global reserve currency, expands on a previous currency swap agreement between the two countries. In separate negotiations, China agreed to expand imports of Brazilian chicken and beef and to provide up to U.S. $10 billion to Brazil’s government-controlled oil company in exchange for guaranteed oil supplies over the next decade. China overtook the United States as Brazil’s largest trading partner earlier this year. 

4. The government of Nigeria launched a new military offensive in the Niger River Delta last week, hoping to defeat armed opposition forces in the area. The move marks a decisive shift in the politics of the delta. The previous Nigerian administration had opted for a more diplomatic approach, emphasizing negotiations with the Movement for the Emancipation of the Niger Delta, an umbrella group emphasizing autonomy for the Warri region. According to observers, however, the new Nigerian government headed by Umaru Yar’Adua is opting for a military-based approach to the crisis. The oil-rich region houses operations by leading international oil companies, including Royal Dutch Shell, ExxonMobil, and Total. The conflict has led to a sharp decline in Nigerian oil exports, and observers fear that this may lead to a spike in global oil prices.

5. Former South Korean President Roh Moo-hyun committed suicide on Saturday. Roh rose to power as a human rights lawyer representing student and union activist in the struggle against the country’s military government in the 1980s. He was elected president in 2003 on a strong anti-corruption and political reform platform, earning him the nickname “Mr. Clean.” However, after his party suffered a series of electoral defeats, he resigned from office in 2008. Shortly after Roh’s resignation, accusations of corruption in his administration began to surface, including charges that a South Korean tycoon paid his wife $1 million while another family member received $5 million from the same tycoon. Roh killed himself after losing face as a result of the scandal. However, such accusations have not been uncommon in South Korean presidential politics, and two of the four presidents who preceded Roh have been jailed on similar charges. Nevertheless, observers fear that Roh’s suicide may increase political tensions in South Korea.