Carbon Markets: The Policy Reality

Critical Currents no. 7, 2009

This thesis evaluates the efficacy of carbon markets by assessing the impacts of the EU ETS and its links with the Kyoto Protocol’s flexibility mechanisms, the CDM and JI, on the socio-ecological, economic and political dimensions of climate change. The analysis of the relationship between the causes of climate change and the pollution movements, financial practices and policy debates that constitute these markets is developed by progressively introducing Marxist conceptions of the appropriation, commodification and capitalisation of nature, which organises the thesis in to three parts. The first part develops a critical understanding of the social relations, institutions and actors that produce climate change by appropriating carbon in capitalist economies. Mapping the organisation of capital and carbon to create a database of companies in the EU ETS reveals a concentration and centralisation of emissions among a relatively small number of publicly and privately owned corporations and large-scale power and manufacturing plants. The second part considers the processes that equalise differentiated relationships between installations and emissions, and offset projects and emissions reductions, in commodity form. Case studies of carbon allowance and credit networks associated with energy utilities RWE and E.ON illustrate the potential for the largest polluters to exploit unevenness in the production of climate change by trading transformative for marginal climate actions. The final part examines dynamics of accumulation and contestation in carbon markets in terms of the extent to which the capitalisation of carbon can support the expanded reproduction of capitalism. The crisis of the carbon market accumulation strategy and consolidation of the EU ETS in contestation over its reform are explained as outcomes of the contradictions faced by states in managing marketised environmental policy. Overall, the thesis argues that the EU ETS and its links with the Kyoto mechanisms have worked to entrench the production of climate change, necessitating a more efficacious and democratic approach to climate policy that directly targets the biggest corporate and state polluters.

Frontiers in Environmental Science, 2024

This review article provides a comprehensive multidisciplinary and in-depth analysis of how the idea of Global Carbon Markets (GCM) has evolved from the Kyoto Protocol to the Paris Agreement and the post-Paris Agreement period (2015-2022) and why no real consensus has been reached after 25 years of negotiations, based on the categorisation of different arguments from different authors. We apply a semi-systematic review to 32 scientific articles, special reports, and relevant websites to analyse the failure in reaching international consensus on GCM. We apply three dichotomies, market vs. non-market-based approaches, top-down vs. bottom-up and national vs. international level. There are two striking findings. First (out of the articles that can easily be placed along all three dichotomies), there is an overwhelming majority of articles combining market-based, top-down, and international level explanations. This is however countered by a second finding, namely, that there is also a clear historical trend which is unlikely to change away from top-down and towards bottom-up approaches since the Paris agreement, combined with a movement towards more non-market-based and national approaches.

Steffen Böhm (SB): Larry, you and your colleagues have been at the forefront of the critique of carbon markets for almost a decade now. You have published a great number of books, pamphlets, newspaper articles, blog entries as well as academic articles, all of which you have made available on the Corner House website. 1 Many people from around the world, North and South, have downloaded these contributions, making it one of the key resource centres presenting critical thought on carbon markets. Let me congratulate you for making all of your work available free of charge; it's been invaluable for researchers like myself. Do you have any ideas about the number of people who have downloaded your papers as well as the other material you have made available over the years? Larry Lohmann (LL): It's hard to say because of the unreliability of the devices that count 'hits' on websites, but wherever I go I'm amazed at the number of people who have made good use of our website and the websites of our colleague organizations. SB: Do you find, when talking to people about carbon markets, that they know by now the basics about how they work, or do you think there is still a lot of ignorance and lack of information and knowledge about what carbon markets actually are? I'm asking because I must have formally presented and talked about the book I co-edited, Upsetting the Offset: The Political Economy of Carbon Markets (Böhm and Dabhi, 2009), more than 20 times over the course of the last two years. This has involved audiences ranging from undergraduate to PhD students, policy makers to business people, and a wide variety of academics, of course. But I'm still getting a sense that most people simply have no clue about what carbon markets are, how they function, who makes money and how, and what their implications and impacts are for people, politics and the environment. Do you think this is still a bit of a niche subject, or do you feel that there is now a broad understanding of carbon markets also amongst non-specialist audiences? LL: You could almost say that carbon markets are designed not to be understood by ordinary people. One of the functions they have come to assume – partly by intention, partly not – is to conceal a lack of effective action about climate change. What is even more striking is the extent to which carbon markets are misunderstood by people that....

SSRN Electronic Journal, 2000

We argue for the creation of a carbon liabilities market to address climate change. Each period, countries would be made liable for their share of responsibility in current climate damage. Because liabilities could be traded like …nancial debt, robustness to strategic manipulations and e¢ciency ensue. Moreover, this decentralizes the choice of the rate by which countries discount future bene…ts and damage. Rather than being based on an expected discounted sum of future marginal damage (as with a carbon tax or tradable emission permits) our proposal relies only on observed realized damage and on the well-documented emission history of countries.