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More on EU Carbon Prices

Posted in Climate,Emissions Trading by Cheryl Morgan on the January 22nd, 2009

Sandbag has another article up, citing this Reuters article in support of the claim that the Emissions Trading System is proving windfall profits for European generators.

Meanwhile at Knowledge Problem Mike Giberson argues that clean energy projects in the developing world are just another industry and it doesn’t matter whether they get funded or not.

I particularly liked this point from the Sandbag article:

I have long believed that Europe took a wrong turn when it embarked on a unilateral emissions trading scheme that covered industries whose products are priced in a global market. It was always going to result in fierce lobbying and inevitable political compromise. Had they decided to stick with the large sectors like electricity, which cannot move and are not exposed to international competition, they would have been able to proceed with much more ambition and clarity of purpose.

Of course letting some industries off the hook would have infuriated those environmentalists who are are more interested in ensuring that the “bad guys” get punished than in fixing the climate change problem. For the rest of us, however, the issue ought to be “will it work?” If we are going to have masses of new government subsidies and regulations to save the planet, the #1 priority has to be whether those measures will work or not.

The same applies to clean development. Governments in rich countries should be subsidizing such schemes in order to help combat climate change, not just to boost exports. If a collapse in carbon prices means such schemes don’t get off the ground (and developing countries choose to burn coal instead) then we have a problem.

Of course all of this assumes that economies and ecosystems can be “fixed” by government intervention. As Lynne Kiesling points out, that is easier said than done.

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