More needed than carbon trading

Submitted by AWL on 4 December, 2019 - 6:21 Author: Misha Zubrowski

The opening of COP25, this year’s major international climate conference, in Madrid (2-13 December), has been marked by strong words by UN secretary general António Guterres. However, action to live up to these words is unlikely to be forthcoming from the conference.

Guterres said “the point of no return is no longer over the horizon… It is in sight and hurtling toward us”. He noted that the world has the scientific knowledge and the technical means to limit global warming, but “what is lacking is political will”.

“Political will to put a price on carbon. Political will to stop subsidies on fossil fuels. Political will to stop building coal power plants from 2020 onwards. Political will to shift taxation from income to carbon. Taxing pollution instead of people.”

COPs, “Conferences Of the Parties”, have taken place annually since 1995. More-or-less every country is a signatory to the foundation treaty and no country has yet opted to withdraw from it, although the USA is withdrawing from the Paris agreement.

Theoretically, all countries have equal weight in COPs’ decisions, which are made by consensus. In practice, of course, international uneven power dynamics do not disappear upon entering the conference.

Under the landmark Paris agreement (of COP21, Paris, 2015), nations committed to limiting global warming to no more than 2°C above pre-industrial levels — with 1.5°C as an aspiration. The vast majority of nations have now ratified that deal.

Current individual commitments to emissions cuts by national governments — “nationally defined contributions” — in this agreement fall far short of what is required to make it meaningful. Altogether, as they stand, they would lead to an estimated temperature rise of over 3°C by the end of the century.

Though the overall deal is legally binding, nationally defined contributions are not. That is, they all promise that they think an — insufficient — goal is a good idea, state plans which would fail to achieve even that, and refuse to promise to stick by these concrete if insufficient plans. Indeed, many of the biggest polluters are not set to meet their nationally defined contributions.

The main areas of contention this year are to be:

1) what are to be the “carbon trading” rules, Article 6?

2) Should targets should be set for 1.5°C or 2°C?

3) Should countries in the global north increase financial contributions to climate finance to those in the global south? And funds to cover loss and damage?

4) Should countries step up targets around the world?

5) Should the remit of COP expand to include greater concern for oceans?

The answers to 2-5 are, of course yes, at the very least; even with these the decisions would be insufficient.

Generally the countries pushing for greatest reductions have been those with the lowest emissions, those in the global south.

With the resurgent climate movement, and the publishing of the IPCC’s paper last year, the urgency and pressure of tackling climate change — and recognition of the height of the necessary response — has been raised.

Debates around Article 6 and carbon trading are widely seen to be the most important area of debate (see here).

Carbon markets have been around since 1997. The idea — according to proponents — is that rich countries could meet their targets by buying carbon credits that were awarded to projects which reduced emissions in the developing world. By this, rich nations buy themselves time, poorer nations get money to help them towards a green future.

Even its champions recognise that the mechanism had basic flaws – with too many easy credits devaluing the system. The 2008 financial crash led to the outright collapse of the carbon market.

To make Article 6 watertight, under the logic of carbon trading, some parties are pushing for certain changes. To not count older emissions permits from the legacy, broken system; to rule out double counting of emissions savings on the end of the buyer and seller; and to properly account for airlines.

Article 6 is supposed to contain three mechanisms for carbon trading.

First, for selling carbon credits measured comparative to their own Paris climate pledges between countries. Countries which set particularly low targets, or did particularly well compared to their targets, can sell this “overachievement” to those which have fallen short. This component of the agreements potentially incentivises under-ambition and gives an easy get-out clause for failure.

Second, to establish a new climate market, governed by a UN body, for trading public or private supposed “emissions reductions” anywhere in the world. This could be reforesting, or an emissions-saving upgrade to a factory. A factory which is very polluting can find another stream of revenue by reducing this somewhat: a source of income unavailable to less polluting factories or industries.

The third mechanism is less well defined, to date, but is for “non-market approaches” such as development aid.

In theory the future carbon trading system is supposed to be structured in such a way to go beyond a zero-sum game, and lead to net decreases.

Previous systems have failed to do so, and have often been worse than useless. Proponents of carbon trading put this down to incorrect initial pricing for carbon, or to corruption. Even such advocates recognise that if Article 6 isn’t done correctly, it could have the same effect.

The problems run deeper than that. The first two mechanisms — the only currently substantiated — have clear problems, as noted.

Central to carbon trading schemes is the evaluation and quantification of the emissions, and the emissions reductions. The meaningful ability to do this is only even theoretically possible on a large scale, and to a high level of approximation. It requires a lot of knowledge about the baseline and changes in emissions, sequestration, and many other factors.

Capitalist markets are premised on and encourage hiding and lack of transparency — even dishonesty — about the details of production. There is no reason to think that carbon markets would be any different; and in fact, being a completely “artificial” market, in many ways makes this much worse.

On top of this, markets forces — especially on the level discussed — are a very slow force in transition.

This is without considering the wider problems of markets beyond environmental considerations.

Carbon trading should be abandoned in favour of rational, scientific, transparent and democratic approaches.

The Paris agreements more widely are seriously insufficient, and are premised on the idea of involving carbon trading systems.

Much of this reflects the impossibility of attempts to square the circle, of tackling climate change while leaving intact international capitalism, along with a system of competing neoliberal states and globally mobile capitalism.

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