Until changes in their governments, both the USA and Australia were unwilling to sign up to the Kyoto Treaty on climate change. But things are changing. In both countries, cap and trade bills have been proposed by their administrations (see A changing climate at the White House). In the USA, President Obama’s bill would see the imposition of carbon quotas aimed at achieving a reduction in greenhouse gas emissions by 2020 of 17 per cent, with emissions trading allowing an efficient means of achieving this. In Australia, Kevin Rudd’s Labor government plans to introduce quotas and emissions trading in 2011 to achieve a 25 per cent reduction in greenhouse gases by 2020.
But are there lessons to be learned from the European Emissions Trading scheme? The following articles look at some of the issues.
Cap-and-trade off Houston Chronicle (23/5/09)
US climate change bill passes key hurdle Telegraph (22/5/09)
Obama climate change bill defies Republicans to pass key committee Guardian (22/5/09)
Cap and Trade Debate CNN (video) (22/5/09)
Historic emissions trading scheme bills tabled Sydney Morning Herald (14/5/09)
A pattern behind fire and flood Sydney Morning Herald (25/5/09)
Interview with Australian Climate Change Minister, Penny Wong ABC (21/5/09)
Can Copenhagen achieve much? ABC PM programme (includes link to audio) (20/5/09)
Plunging price of carbon may threaten investment Independent (9/2/09)
EU ETS emissions fall 3% in 2008 Environmental Expert (18/5/09)
European investors call for carbon trading revamp businessGreen (20/5/09)
The carbon scam 21st Century Socialism (19/5/09)
Economy and the environment: growing pains Guardian (17/5/09)
See also
European Union Emissions Trading Scheme Defra: emissions trading
Questions
- Discuss the merits and problems of cap-and-trade systems for reducing carbon emissions in an efficient and effective way.
- Is the price of carbon a useful indicator of the success or otherwise of cap-and-trade schemes to reduce greenhouse gas emissions?
- In what ways does the current recession (a) aid, and (b) hinder the introduction of tougher schemes to tackle global warming?
In a major break from the policy of the Bush administration, President Obama has announced that the US government will regulate greenhouse gas emissions. The US Environmental Protection Agency has found that CO2 emissions pose a ‘threat to public health and welfare’. This finding allows regulation to be imposed.
At the end of March the Democrats in the House of Representatives released a draft climate change Bill. Central to this would be a system of tradable permits. ‘Under this program, covered entities must have tradable federal allowances for each ton of pollution emitted into the atmosphere.’ (See 4th article below.)
U.S. in Historic Shift on CO2 Wall Street Journal (18/4/09)
Obama to regulate ‘pollutant’ CO2 BBC News (17/4/09)
US says CO2 is a danger to human health Financial Times (18/4/09)
House releases draft climate change bill Power Engineering International (31/3/09)
U.S. Carbon Emissions Trading Core of Clean Energy Bill Environment News Service (31/3/09)
Environmental Capital (see also) Wall Street Journal (31/3/09)
Who’s going to get the carbon pollution credits? Christian Science Monitor (14/4/09)
Questions
- To what extent is the EPA ruling compatible with the bill proposed by the Democrats?
- Is a ‘cap-and-trade’ system (i.e. tradable permits) the best way of dealing with climate change?
- What lessons can the USA draw from the European Emissions Trading Scheme in designing its own tradable permits scheme?
The ‘tragedy of the commons’ refers to the overuse of common land. If people can freely graze their animals on such land and have no responsibility for maintaining it, then the land will be overused and everyone will suffer. The problem is that the benefit of using the land occurs to the individual whereas the cost is collectively incurred.
There are many modern examples of the tragedy of the commons and the articles below look at some of them. Perhaps surprisingly, not all cases of the use of common resources end in tragedy; some common resources are used sustainably. A more thorough analysis must involve deeper questions of human motivation and behaviour.
IT’s tragedy of the commons Datamation (IT Management) (8/4/09)
The Tragedy of the Commons TechFlash (7/4/09)
Encarta’s failure is no tragedy Guardian (7/4/09)
How Self-Interest Destroyed The Economy The Huffington Post (23/3/09)
What does The Pirate Bay ruling mean for the web? Telegraph (17/4/09)
Tragedy of the Commons The Manila Times (23/3/09)
Questions
- Explain how the tragedy of the commons arises and give some examples other than common grazing land.
- How and why does the tragedy of the commons occur in information technology? Consider the benefits and costs of the ‘fix’ to the problem advocated in the first linked article.
- Does the case of Wikipedia (see the third linked article) disprove the proposition that common resources will be overused?
- To what extent is free access to content (music, newspapers, videos, books, etc.) a tragedy of the commons? Is the only solution to devise an effective charging model that rewards content creators?
Peak oil is an important concept for the oil market. Peak oil is the moment in time at which the maximum extraction rate of oil is reached. From this moment on, production will decline. Basic economics tells us that the oil price will tend to rise from then on (unless demand were to fall faster), but the complexities of the demand and supply for oil dictate that there will not be a simple inverse relationship between the supply of oil and the price. In the articles below George Monbiot interviews Faith Birol, the Chief Economist of the International Energy Agency and the Asia Times article looks at the extent to which world economies rely on oil for energy and other needs. Oil prices may be low at the moment and the market may be awash with excess oil and not enough demand for it, but this is a short term phenomenon; there is little doubt about the long-term direction of the price.
When will the oil run out? Guardian (15/12/08)
Be careful what you wish for Asia Times (15/1/09)
Questions
- Write a short paragraph explaining what is meant by peak oil.
- Using diagrams as appropriate, explain the changes that took place in the oil price in the last six months of 2008.
- Analyse the likely impact on the UK economy of arriving at peak oil output in (a) the short term and (b) the long term.
- Discuss when peak oil is likely to arrive.
EU leaders at a Brussels summit have agreed a plan to cut emissions. This will involve the 27 EU countries cutting greenhouse gas emissions by 20% by 2020 compared with 1990 levels. The aim is also to try to raise renewable energy sources to 20% of total energy use. The package has become known as the 20/20/20 package, but scientists have already argued that these measures may not be sufficient to prevent serious climate change.
Fiddling with words as the world melts The Economist (18/12/08)
Climate deal is far too little too late Guardian (15/12/08)
EU leaders claim historic agreement on cutting pollution Guardian (13/12/08)
Climate change: EU leaders reach compromise deal on emissions Guardian (12/12/08)
World needs ‘climate revolution’ BBC News Online (11/12/08)
EU climate package explained BBC News Online (5/12/08)
EU leaders reach new climate deal BBC News Online (12/12/08)
Questions
- Identify two external costs that result from climate change.
- Using diagrams as appropriate, illustrate the impact of the EU climate change deal on the market for electricity.
- Discuss the extent to which the EU climate change deal will lead to an increase in the supply of renewable energy sources. How quickly are these changes in supply likely to take effect?
- Examine two other policies that national governments could implement to reduce carbon emissions.