The EU Emissions Trading Scheme - Essay Example

The “EU Emissions Trading Scheme” turned into a failure, because the energy consumption went down and with it the demand to obtain permits. On the other hand, industries attempted to increase their turnover by selling unused permits to other companies. What is more, green energy projects have been spotted producing the desired effect.

The author is asking what would be an adequate price for the carbon emissions. NASA climate scientist observes that for him proposing the right cost will determine if we as humans can cope with the irreversible climate changes that we have caused. The author comments that there are numerous ways to put a value on carbon. One of them is to calculate what will be the cost per tonne to diminish the emissions. Another approach is “the social cost of carbon”. This method estimates the damage price to the atmosphere for a lifetime. The World Bank conducted experiments with this method as well as the Dutch government and the UK treasury. However, all variable are taken into consideration the estimation tremendously vary from 35 GBP to 140 GBP per tonne.

Another technique is the “shadow price of carbon”. This one estimates factors like willingness to pay for the reduction of carbon emissions. All those approaches have their advantages and disadvantages. Unfortunately, all of them share a common shortcoming which the author calls “the paradox of environmental economics”. What is done is that people put a price on the catastrophic and harmful carbon dioxide. They put a price on killing the environment. This is the market solution failure to the environmental issue.

Governments have to spend and invest more money in renewable energy and this should be done as an economic stimulus. For example, the UK has spent more than 20% of its gross domestic product to enhance the financial sector and only 0,0083% on green projects. The price mechanism to control carbon emissions is an imperfect and unworkable solution. The author is asking rhetorical questions if we could find a doable one. He hasn’t found it yet, but he is open to suggestions and commentaries.

In this article, the author tries to show that “carbon trading” is the biggest trading commodity. Unfortunately, carbon trading does not offer a feasible solution to the problem of global warming. I agree with the author that governments should invest more in renewable resources than collect money from heavy industries which produce damaging emissions. However, there is no proper solution for this environmental issue. Non-governmental and non-profit organizations have appealed for a long time that immediate actions must be taken for reducing the carbon dioxide in the atmosphere. Government should receive financial incentives to apply the green agenda.

Trading emissions made some companies acquire monetary benefits out of polluting the air less. What happens is that companies that have successfully met the emission target and have a surplus of carbon units might want to sell those to companies that fall short. So instead of following the proper way of obtaining the permit and paying extra, companies swap carbon certificates with no additional price involved.

An action welcomed by most countries was the commencement of the Kyoto protocol. With this, the world was divided into two – countries that make the effort and change the existing infrastructure to pollute less and those which do not have the resources to do so. The developed countries are the largest polluters. Therefore, they had to pay a higher percentage for the emissions. For each tonne reduction of carbon dioxide, the countries should receive stimulus credits and subsidies.

The article presents an intriguing and honest perspective on the inadequate ways of coping with carbon dioxide emissions. Carbon pricing and trading are ineffective, however, as much as specialists try to propose an effective way, as difficult it is to apply any of them.