While most people are still prudently changing light bulbs and recycling coffee cups to fight global warming – or at least their gnawing conscience – policy-makers have long moved on to more drastic techniques to cope with the environmental drama.
Under the Kyoto treaty – which came into force in 2005 – industrialized countries agreed to reduce their greenhouse gas emissions by an average 5.2% compared with 1990 levels between 2008-2012. As some countries are unable to meet this norm, an international carbon emission trading market was created. Companies investing in projects, such as energy efficiency schemes that reduce emissions in countries such as Russia and China are awarded a credit for each ton of carbon dioxide saved. These can be sold to countries such as Canada, Japan and EU member states that need to reduce their emissions under the protocol.
Back in the economical boom years it seemed like a smart pragmatic theory to view global warming not as a natural, but rather as an organizational disaster and tackle it as such. British economist Nicholas Stern even called climate change “the biggest market failure in history” and carbon trading was supposed to fix that.
Yet, there is also a flipside of the coin: now that environmental values are being incorporated within the economic realm, they are also moving along with regular economical cycles. Thus in concordance with the current economic recession, the price of the EU allowances for carbon emissions has fallen by half since mid-2008. Intended to price fossil fuels out of the market, the system is instead turning them into the rational economic choice: As the economy stagnates, polluting becomes dirt-cheap!