A lesson in eco-nomics
I blogged the other day with some links to a couple of stories about attempts to link environmental outcomes with economic incentives. This story from the Guardian yesterday illustrates how important it is that such attempts are done properly if they are to have the desired effect.
In sum, the EU’s carbon trading regime is in disarray. It seems that countries were given too many pollution allowances to hand out to polluters, which actually reduced the incentive to reduce emissions:
Under the scheme, power stations, refineries and heavy industry across Europe, which together account for approximately half of EU carbon dioxide (CO2) emissions, were given a limit on how much CO2 they could emit.
Operators reducing their emissions to below the limit could sell their unused allowance to other companies taking part in the ETS.
Those polluting over their limit had to buy allowances from others, with the scheme intended to create incentives for industry to reduce emissions and improve efficiency.
However, figures from today’s assessment showed that countries across Europe were given too many pollution allowances or permits by their governments, reducing incentives to cut pollution.
Only six countries - Britain, Ireland, Spain, Slovenia, Italy and Austria - issued permits reducing rather than increasing the limit on annual average greenhouse gas output compared with real output last year. Germany emerged as the worst performer.
These kind of schemes can work, but only if they are done properly!
May 16th, 2006 at 4:33 pm
Edward Demming’s first rule was: “Drive out fear.”
While we are still sitting on our hands or having another review the EU is not afraid to make a start and to learn from their mistakes in the first 15 months of operation. While they are climbing the learning curve we are …….
And I didn’t hear you protesting when a recent evaluation of the EECA (budget $79 million over 5 years) said: “Action to date has been insufficient to produce a substantial improvement in energy efficiency and renewable energy uptake at the national level.”
So what are we going to do after 4 years of ineffective action? Well, have another review of course. Nero would be proud.
May 16th, 2006 at 11:48 pm
Need to examine how the allocations are made… If national governments have a say in fixing their country’s quota, it will naturally tend towards this result, because they won’t want to surrender a competitive advantage for their countries.
May 18th, 2006 at 9:30 pm
EU Emissions Trading: Emissions trading scheme shows economic incentives can work for the environment
Commenting on the figures for emissions in the EU-25 for 2005, released by the European Commission today, Satu Hassi, Vice-Chair of the Environment Committee (Greens/EFA, FIN) said:
“The lower than expected level of EU emissions last year proves that economic instruments can be effective in combating pollution and confirms that the Emissions Trading Scheme fulfils its main aim of reducing emissions. Putting a price on polluting means businesses will find ways to produce less emissions.
“However, the recent plummet in prices in the emission market has revealed the initial over-allocation of allowances. The EU must learn from this mistake and the issuing of allowances for the second trading period must be much lower if the scheme is to survive and function effectively. Member States should also partially auction allowances, which would provide more reliable price signals to the market and therefore reduce price fluctuations. Auctioning would also reduce windfall profits and generate revenue which could be invested into energy efficiency and renewables.
“Europe is progressing towards the achievement of its Kyoto targets. Emissions trading has proven its effectiveness as a vehicle for reducing greenhouse gas emissions. This is important because the better the EU system works, the more useful it will be as an example for global emissions trading.”
May 18th, 2006 at 10:28 pm
As if flaws in the scheme reducing the incentive to reduce emissions wasn’t bad enough, even worse is that power firms could make billions of windfall profit because of it:
http://news.bbc.co.uk/2/hi/science/nature/4961320.stm
I imagine the whole thing has been a massive rort with various lawyers lobbyists and corrupt politicians all managing to skim off some of the money as it changed hands.
May 22nd, 2006 at 2:43 pm
FOR IMMEDIATE RELEASE
Canterbury ACT on Campus member Stanley Climbfall has been banned from a Left wing blog for debating tax cuts.
Stanley calls on all who support the Right to continue the discussion and show that oppression of the people does not kill the liberal vision. Lefties are also invited to participate and further build on their arguments.
“We cannot allow people to be misinformed by shutting down debate. Statements such as “Stan, you seem to put a lot of faith in tax cuts. The problem here is that it’s by no means proven that they have the results you suggest.” and “I’ve always found it hilarious how ready people are to believe fix the economy and everything else will magically fix itself. It sounds kind of like salesman talk.” will only allow economic ignorance to continuously plague the blogosphere. If we want people to understand what ACT and National are advocating we need to fight the suppression of differing points of views.” Stanley said.
Site owner Andrew Brehaut attacks the Maxim Institute by labelling their core responsibilities as “guns and gay bashing”. He calls Rodney Hide and Heather Roy residents of “Toad Hall”. The relevant link is http://brehaut.net/blog/2006/05/19/core-responsibilities-are-guns-and- gay-bashing/
ENDS
May 22nd, 2006 at 5:17 pm
why is this relevant to frogblog or emissions trading schemes? I consider what you have done to be spam, since I presume you have cross-posted this elsewhere
also, aren’t you being far too precious?
Stan doesn’t seem to have been “banned” there are two posts from Stan after his two posts were deleted. Also we only have your word that Stan’s posts were deleted for “debating tax cuts”, perhaps his posts were deleted for being offensive.