Academic journal article Social Alternatives

The Hidden Dangers of an Emissions Trading Scheme

Academic journal article Social Alternatives

The Hidden Dangers of an Emissions Trading Scheme

Article excerpt

Emissions trading schemes are at the heart of international and domestic attempts to reduce human greenhouse gas emissions from power generation. Yet, they have significant drawbacks. They provide the impression of serious action, but their environmental integrity is undermined by hidden industry and government corruption. Furthermore, they are not designed to achieve the fundamental structural changes required in the electricity generation sector. Finally, their tedious technicalities and legitimisation of pollution work against public participation and activism. By contrast, emissions standards for power generation could force fundamental change and harmonise with key climate movement goals such as phasing out coal.


Policy options in the climate change debate are normally treated as an issue of rational policy making. Current policy debate is typically restricted to the respective merits of a carbon tax or emissions trading scheme (ETS) (e.g. Gittins 2007; Humphreys 2007; Denniss 2009). Regulatory standards rarely feature on the public agenda, and if they do, are often dismissed as an outdated command and control approach (Beder 2006, 9).

Stationary energy, primarily from power stations, is the largest source of greenhouse gas (GHG) emissions in Australia (DCC 2009, 5). Governments have significant responsibility for reducing emissions in this sector because they set the policy parameters and make decisions on long-lived energy infrastructure. An ETS is the main mechanism in the Kyoto Protocol for tackling climate change, and has been chosen by the Rudd government as the centrepiece of its climate change strategy.

Yet, it seemsthere are hidden reasons why governments and corporations have endorsed an ETS as the key response to climate change. I highlight how an ETS allows government and industry to create an illusion of action while simultaneously obscuring how businessas-usual for the major polluters is being entrenched through concessions whose full implications are either hidden or poorly understood. I also show that even if an ETS were implemented properly, it is ill-suited to achieve significant emissions reductions from the stationary energy sector because its primary focus is economic efficiency. By contrast, emissions standards regulation can be designed to accomplish substantial and rapid reductions with far greater certainty. Finally, I analyse an ETS and emissions standards in terms of their effects on the development of a climate change social movement. I find that an ETS with its tedious technicalities and its legitimisation of pollution undermines public activism, whereas regulation has the potential to enhance social activism by harnessing moral suasion and aligning with movement goals such as phasing out coal.

Economic Instruments

Economic instruments such as a carbon tax or ETS have been promoted by corporate-funded think tanks as market-based solutions to environmental problems (Beder 2001, 1). They are based on the concept of 'market failure' - the idea that environmental problems only arise because the market does not value the environment and fails to include 'external' factors such as pollution in the price mechanism (Beder 2006, 125). The remedy rests on an ideological assumption that environmental damage can be compensated or paid for if the market prices pollution or assigns property rights to environmental values such as the atmosphere or waterways (Beder 2006, 192-93).

A carbon tax is a price-based measure levied on the carbon content of fossil fuels. It aims to reduce the quantity of pollution by raising the price of polluting activities. An ETS is a rights-based measure that establishes a market for pollution by distributing tradeable pollution rights to eligible firms within an institutional and regulatory framework (Beder 2006, 157). An ETS is supposed to limit emissions by restricting the number of pollution permits to a predetermined amount. …

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