🛢💸 The real deal about Carbon Pricing: Difference between revisions

Despite the fact that carbon pricing has been the main and most ambitious undertaking to mitigate climate change since the beginning of our century; it is widely unknown or misunderstood. It must primary be due to both of its confusing different forms, but also its tremendous complexity that never stopped to evolve since it was first implemented in 2005 in the European Union (EU). What this page wishes to propose is not only an accessible description of what carbon pricing is, without getting lost in the economic gibberish; as our goal was to analyse the effects, both positive and negative, that carbon princing is said to have on citizens, companies, governments and of course, climate (through CO2 emissions cut).

source: https://en.wikipedia.org/wiki/Clean_Development_Mechanism</ref>, which are very tricky to evaluate on the long run (a solar energy project or the renewal of a facility to emit less may not always be successful) and may benefit to developed countries getting “cheap” offsets from low-cost projects abroad. Moreover, the risk of fraud is high, in the form of “non-additional” credits: it means that the offset project will have taken place anyway, without the help from an interested carbon emitter. In this case, money is only going from hands to hands without financing anything else than pollution. This would even suggest that a wide part of carbon offsets do not represent actual emissions cuts, allowing companies to skew their emissions reduction easily.  

Exaggerating the carbon benefits of an offset is a common practice too<ref>Take for instance the HFC-23 GHG destruction model that made China built 18 new refrigerant manufacturing plants equipped with HFC-23 incinerators for $100 millions, thus generating $5,7 billions in CDM offsets credits. This type of offset credit has since been eliminated by EU officials (in 2011).

source: https://www.carbontax.org/carbon-tax-vs-the-alternatives/offsets/</ref>; and same goes with what is called “carbon leakage” scam: companies are threatening governments, pretending they will close plants and delocalize in countries with no or less costly carbon pricing systems. Governments are then weakened when it comes to the negotiation of free allowances, but all this claim that carbon pricing could disadvantage companies dangerously has never been proven right in years. EU commissioned reports show no proof of carbon leakage<ref>See those different documents:

===Carbon taxes===

If we dive in the flaws from the more straightforward method, carbon tax, we can see how it compares to emissions trading. First, one could think that carbon taxes are less “citizen friendly” than emissions trading, because they directly impact goods price, but they are harder for companies to dodge, thus less expensive to governments and citizens, while generating more revenues worldwide. In fact, ecologists often favor carbon tax systems on emissions trading: James E. Hansen for instance, an influent former NASA scientist studying global warming since the 70s, advocated for a carbon tax in an open letter to the Obama presidential couple<ref>James Hansen, <i>An open letter to the president and 1st lady from the nation’s top climate scientist</i>, 2009, Grist website.

source: https://grist.org/article/dear-barack-and-michelle/</ref> in 2009, when emissions trading was not even implemented for long enough to discredit it. According to Hansen, emissions trading will allow “business as usual” for emitting industries, thanks to its ultra-liberal dimension; while a tax will appropriately affects all products that use fossile fuels, from cars to food. But as Hansen points out, “the public will support the tax if it is returned to them, equal shares on a per capita basis, deposited monthly in bank accounts”. He asks for absolutely no revenues of this tax to ends up in government pockets, and some says it could allow for a basic income to exist.  

source: https://www.nature.com/news/prove-paris-was-more-than-paper-promises-1.22378</ref>

Nevertheless, according to European Commission, the GHG emissions of all Member States were reduced by 23% between 1990 and 2018; and they might be on-track to reduce furthermore by at least 40% by 2030 and net-zero emissions by 2050 (2015 Paris Agreement commitment). From 2017 to 2018 for instance, emissions declined by 2%, most significantly in sectors covered by EU ETS.<ref>EU Commission website, Progress made in cutting emissions, 2019.

source: https://ec.europa.eu/clima/policies/strategies/progress_en</ref> However, a large amount of CO2 is embedded in traded goods, making countries able to consume more emissions that they actually produce.<ref>Nature website, <i>Prove paris was more than paper promises</i>, several scientists, 2017.

==To conclude==

The assumption that economic growth is always correlated to a minimum of CO2 emissions growth lays at the heart of carbon pricing, since it was never hidden that its goal is to mitigate climate change with the least negative effects on global markets. It seems obvious for European Commission to compare Europe’s reductions (-23%) with its economic growth (+61%); to show what “tour de force” it accomplished.<ref>EU Commission website, Progress made in cutting emissions, 2019.

source: https://ec.europa.eu/clima/policies/strategies/progress_en</ref> Accordingly, studies diverge about the effects of 2008-2009 global financial crisis (loss of economic growth) on carbon emissions. On one hand, emissions decrease in the US were believed to be caused by gas energy transition, but are suspected to be caused by the crisis.<ref>Climate Central Website, <i>Recession caused U.S. emissions drop, study says</i>, Bobby Magill, 2015.