Pricing Carbon Emissions
Economic Reality and Utopia
Aviel Verbruggen
- 232 pages
- English
- ePUB (mobile friendly)
- Available on iOS & Android
Pricing Carbon Emissions
Economic Reality and Utopia
Aviel Verbruggen
About This Book
Pricing Carbon Emissions provides an economic critique on the utopian idea of a uniform carbon price for addressing rising carbon emissions, exposing the flaws in the economic propositions with a key focus on the EU's Emissions Trading System (ETS).
After an Executive Summary of the contents, the chapters build up understanding of orthodox economics' role in protecting the neoliberal paradigm. A salient case, the ETS is successful in shielding the Business-as-Usual activities of the EU's industry, however this book argues that the system fails in creating innovation for decarbonizing production technologies. A subsequent political economy analysis by the author points to the discursive power of giant fossil fuel and electricity companies keeping up a façade of Cap-and-Trade utopia and hiding the reality of free permit donations and administrative price control, concealing financial bills mostly paid by household electricity customers. The twilights between reality and utopia in the EU's ETS are exposed, concluding an immediate end of the system is necessary for effective and just climate policy. The work argues that the proposition of shifting to a global uniform carbon tax is equally utopian. In practice, a uniform price applied on heterogeneous cases is not a source of benefits but one of ad-hoc adjustments, exceptions, and exemptions. Carbon pricing does not induce innovation, however assumed by the economic models used by IPCC for advising global climate policy. Thus, it is persuasively demonstrated by the author that these schemes are doomed to failure and room and resources need to be created for more effective and just climate politics. The book's conclusion is based on economic arguments, complementing the critique of political scientists.
This book is written for a broad audience interested in climate policy eager to understand why decarbonizing progress is slow as it is. It marks a significant addition to the literature on climate politics, carbon pricing and the political economy of the environment more broadly.
The Open Access version of this book, available at www.taylorfrancis.com, has been made available under a Creative Commons Attribution-Non Commercial-No Derivatives 4.0 license.
Frequently asked questions
Information
1 Introduction
- to describe the scene of climate and energy policy including carbon pricing and emissions trading,
- to provide an introduction to the EU Emissions Trading System as I see it,
- to clarify economic concepts used in the debate about carbon pricing,
- to refute the argument that the global spread of GHG molecules is an argument for global uniform pricing, and
- to recommend full transparency on the money patches and flows related to particular carbon pricing applications and proposals.
1.1 The scene of climate and energy policy, carbon pricing and emissions trading
- Hagiographic, treating the subject with undue reverence (e.g., Ackerman and Stewart 1988; Baranzini et al. 2017).
- Apologetic, constituting a formal defence or justification of the doctrine (e.g., Ellerman et al. 2010; Hahn and Stavins 2011).
- Indulgent, sympathetic and suggesting remedies for the shortcomings (Ellerman and Joskow 2008; Neuhoff 2008; Passey et al. 2012).
- Independent, cautionary in observing and reporting its emergence and setup (Baldwin 2008; Meckling 2011) or functioning (Parry and Pizer 2007; Marcu et al. 2017; 2019).
- Critical about its pretended and actual performance (Toke 2008; CAN 2018; Rabe 2018).
- Rejecting, dismiss as inadequate, unacceptable, or faulty (Spash 2010; Pearse and Böhm 2014; Bryant 2016).
- Ideas (myths, narratives, discourses, language, paradigms, etc.). Ideas influence the minds of people and purport legitimacy to the actions and positions of societal actors (Lakoff 2010). Biased language imprints faulty beliefs in the minds of people. At several occasions, substitution of appropriate language for flawed or imprecise expressions will be proposed and applied in this book. For example, it is better to say Donations of Permits (to emit volumes of GHG) instead of free allocation of allowances. Often, the essential word ‘free’ is omitted in publications. The neoliberal paradigm has been instrumental in pushing the policy and the public interest to roles subservient to markets and in setting up artificial markets, such as carbon markets. At several occasions, utopian constructions and utopian beliefs are crowding out the link with and the sense of reality. Trained as an engineer-mathematical economist, it took a long time before I started to understand the exceptional power of the cluster Ideas, i.e., discursive power, in the functioning of societies. Masterminding energy companies knew better.
- Interests (positions, power, knowledge, capital, income, etc.). Interests are quantified and monetized in money stocks and flows, when the economic lens is applied. Carbon pricing and trading are evidently focused on money. Societal actors pursue their interests. Some actors (for example climate activists) may prefer non-monetary interests above money, but this is not the case for most actors listed in the centre of Figure 1.1.
- Institutions (habits, norms, rules, property relation, laws, institutes, etc.). Institutions structure the polity of society (Vatn 2005; Bromley 2006). A political scientist would specify many institutions and institutes making modern societies, such as governmental, legal, administrative, communicative, social, economic, scientific, and more.
- Infrastructures (buildings, transport, production, commerce, recreation, etc.). Infrastructures are visible artifacts. They materialize how societies thrive and function. Drastic and urgent change conflicts with lock-in and inertia inherent to large and long-living infrastructures. The energy systems are deeply embedded in all major infrastructures. Dealing with climate change means reducing the GHG emissions of the energy systems to zero, urgently because of the irreversibility of broken ecosystems.
- Indispensable energy and technology transf...