Leo Hickman has a really interesting piece today on The Guardian’s environmental blog. He covers a discussion paper from Dr Grischa Perino of the University of East Anglia. The discussion paper argues that consumers who choose not to fly within the EU will have no impact on total emissions. The reason: cap and trade, specifically the EU ETS.
Bill Frazzetto / CC BY-NC-SA 2.0
The EU ETS is the EU Emissions Trading Scheme. It is a ‘cap and trade’ scheme. The principle is that a cap is placed on the total emissions from the system. Companies within the system receive allowances which they can trade with others in the system. Companies that have low emissions can sell their unused allowances. The EU commission website outlines some of the benefits:
The flexibility that trading brings ensures that emissions are cut where it costs least to do so.
By putting a price on carbon and thereby giving a financial value to each tonne of emissions saved, the EU ETS has placed climate change on the agenda of company boards and their financial departments across Europe. A sufficiently high carbon price also promotes investment in clean, low-carbon technologies.
The point of the cap and trade approach is to reduce the cap over time, thereby causing a fall in total emissions.
Dr Perino’s discussion paper comes to some disturbing and initially counter-intuitive conclusions. Air travel is the most polluting form of travel available to us. Some of the more environmentally conscious among us have chosen, as an act of personal responsibility, to cut their air travel and help reduce emissions. Could it really be that this act of self sacrifice is having no effect?
The answer appears to be yes. Hickman’s post quotes the paper at length but the basic point is this: emissions from aviation inside the EU are included in the EU ETS.
Any additional emissions caused have to be reduced elsewhere and vice versa.
Had you flown, the emissions caused would have had to be offset somewhere else in the cap and trade system. The assertion that choosing to reduce your flights inside the EU won’t reduce emissions is interesting, disturbing even but there is a wider point here.
A cap-and-trade scheme with full coverage would make private contributions to the public good via consumption or life-style choices (green consumerism) impossible.
No cap and trade scheme has full coverage but this is an important point. Cap and trade seems like a positive initiative to incentivise environmental consciousness in industry. A consequence of the system however is that the cap becomes almost a state mandated pollution level. Personal responsibility on a consumer level becomes an irrelevance because the savings you make will be traded away. The emissions you would have caused would have been saved elsewhere in the system.
On a policy level, this means that the cap and trade approach is placing emissions levels in the hands of state regulators and agencies. They are taking away the effect of consumers acting responsibly. This has to be a huge concern given that individual governments and the collective have proved time and again that any action they take on climate change will be too little and too late. At Green Business Watch, we follow green companies and markets because we believe that it will be businesses creating products and services with green solutions to real life consumer needs that will drive the changes needed. Government and intergovernment action is just too slow to get the job done. Cap and trade still produces an incentive for companies to become greener but the rate of that change is determined by regulation. In an environment where individuals are increasingly far ahead of their governments on these issues that doesn’t seem like a good thing.
When two or more governments get together it seems they become incapable of tying shoelaces never mind solving a real problem. Even within single governments, or agencies and well meaning systems there is simply too much lobbying, too many viewpoints. Action is too slow. Limits are too high. Carbon costs are too low.
On a personal level, Dr Perino points out some interesting consequences for consumers trying to make environmentally responsible choices. Environmental consumerism is only possible with an awareness of which activities are and are not in a cap and trade system. If you fly within the EU, your emissions are part of EU ETS. They will be offset by reductions elsewhere in the system.
In trying to make a green choice you may travel by bus instead of flying. The natural assumption is that this would reduce the greenhouse gas emissions involved in the trip. That would be true if you were in the US. Within the EU it is not that simple. The flight is part of a cap and trade system and so the emissions are offset. The bus journey is not. Of course before we go jet setting across the continent feeling good about ourselves we’d have to consider whether the price of carbon within the EU ETS is anywhere near high enough. The cap anywhere near low enough.
As consumers, our decisions may not be quite as simple as they seem. What does seem simple is this. There is something wrong with a system that removes motivation from individuals to act responsibly. If it is a natural consequence of a ‘cap and trade’ system to remove the power of consumers to reduce emissions then that system is over simple. In this specific case it makes it imperative that the real concerns over the EU ETS and its real life impact are dealt with.
