Can carbon trading work?

These thoughts are motivated by the guest blog of a good friend in Australia in the Brisbane Courier Mail, Dave Sag on carbon trading.

Can money be better spent in Pakistan than Australia? In terms of CO2 reduction effect, most likely yes, due to wage & currency differences as well as the reality that cheap programmes can divert many more people easily from destroying forest than in a rich country (where such activities have more or less ceased). Will lack of education, corruption or politics derail such efforts… in some cases, almost certainly. That’s where oversight becomes important.

With respect to reliable base-load power…rich countries are still struggling with the idea that they might have to manage demand rather than only solve the supply problem. We need to be much more serious about this, much faster – in aspects from lighting to insulation, correctly oriented new housing, low-energy flat screens, smart ‘standby’, and all the rest. The real question is: what can we get our base-load need down to? Then distributed solar, wind etc starts to look a lot better. A village-wide energy footprint is a lot easier to manage than that of a country.

Do we need carbon trading? I am pretty sure we do – for the REDD category, and other categories of activity where few $$ from rich countries can have a big effect in a poorer country (e.g. by financing better fuel alternative to wood). Try plotting CO2 versus GDP/capita on to get an idea of what we need to do. The left hand-side is where it is most likely cheap to have a big impact on CO2.

Lastly, can we trust carbon trading? Can it work as a tax credit? It can work if externalities like CO2 pollution and deforestation are valued in an economic way, i.e. if the alternative is that you get heavily taxed for your current dirty practices. As to trust – as Dave says:  “… even the voluntary carbon market is amongst the most regulated and scrutinised industries on Earth”. It will take time to get this right, but it doesn’t mean we shouldn’t try. Dave’s company: Carbon Planet.

9 thoughts on “Can carbon trading work?

  1. I saw your comments in the Courier Mail Green Blog and have read your article but still have these questions. Although as you say it is inly a Blog there is still a need for some scientific facts to be presented to back statements made by Guest Bloggers especially those who have a vested interset in the outcome of the proposed ETS. No actual scientific proof has been offered by the Government to back their claim for and ETS or for that matter any of the bloggers for an ETS. Are we supposed to take at face value that what the Government of the world are saying is true when we all know that Government the world over lie through their teeth to put across a populous idea to make themselves look as though they are actually doing something. As for spending the money in Pakistan or wherever that would go over like a lead ballon to see our taxes going to prop up some corrupt nation instead of spending it in our own country, Australia. People the world over and especially here are waking up to the fact that we are being conned.


  2. Well, it doesn’t take much effort to find material on the facts. Even Dave’s own website has this page: . The IPCC site is here – and the IPCC wikipedia page here – There are many books such as . And so on.

    The real question is not whether there is evidence for climate change, but probably whether any particular economic instrument, such as an ETS, or something else, will have the desired effect on society’s behaviour, causing an intended reduction in carbon footprint. But doing nothing seems like a poor option.

    Spending money in certain places in the world can certainly have more ‘bang for the buck’ than Australia, although I agree that it only makes sense if the money actually does get spent as intended. This is possible, but not always. It has to be on targetted projects, no on ‘propping up corrupt nations’, and indeed many such projects exist.

    If Australia, as a profligate CO2/capita generator would spend any serious money on the carbon question or climate change, it would be refreshing.


  3. Anyway, thanks for the information and the links. Us backwards folk here in Australia did not know what the IPCC was and all this science is really far too confusing and complex for this nation of boozers and farmers.

    I did have a look however at some of the links you provided on your own blog. I saw the wikipedia entry for the IPCC and am quite confused.

    I might have missed it but I cannot seem to find any evidence that man’s carbon emissions cause climate change. All I can seem to find is highly selective graphs and data based on nothing more than flawed computer models.

    *I know they are flawed because of what Tim Stockdale of the European Centre for Medium-Range Weather Forecasts in Reading, UK had to say…

    [quote]Model biases are also still a serious problem. We have a long way to go to get them right. They are hurting our forecasts.[/quote]

    There also seems to be some disagreement on whether the Earth is getting hotter at all. Last week the IPCC were still talking about temperature rises of 6c and yet Mojib Latif [An author for the IPCC] predicted that in the next few years a natural cooling trend would dominate over warming caused by humans. The cooling would be down to cyclical changes to ocean currents and temperatures in the North Atlantic, a feature known as the North Atlantic Oscillation (NAO).

    He even added that NAO cycles were probably responsible for some of the strong global warming seen in the past three decades. “But how much? The jury is still out,” he told the conference. The NAO is now moving into a colder phase.

    When we have Vicky Pope from the UK MET office coming out and admitting that much of the ice loss in the Arctic is down to natural climate cycles and not man made warming then I would suggest it is time for some people to take a step back and think some more before they jump into some half baked scheme that will only hurt our economy and provide no additional benefit at all.

    Climate change is real, so real in fact that it has been a part of this world since year one. Long before we woke up and found coal.

    There is still no evidence whatsoever than made made emissions causes climate change. This is the truth and there is no way to get away from that fact.

    We may be backward over here in Oz but at least we have some backbone and are capable of asking questions of those who spend their days trying to deceive us. If only the same could be said of the British, you would not be in anywhere near as half as much as the mess you are in at the moment if you did.


  4. I actually have no problem with skepticism; it is the basis of all good thinking. There is a very interesting list of various kinds of skepticism at for example. The main thing is to a) make some good observations and b) find a theory that best describes most observations, and that best predicts the future. With climate change, both observations (in the long term) and future prediction are hard to get.

    The observation I find most persuasive are the long-term historical CO2 levels from ice cores. The long-term temperature record is hard to reconstruct, but the best evidence is that we are experiencing heating now (you may say: how good is ‘best’ evidence?). Other symptoms of heating such as ocean acidification and ice melting seem to back this up. There is a question of the direction of causality – is CO2 a cause or effect of heating? The basic physics appears to be solid (although again there are detractors). There are certainly weaknesses in the predictive models, and also all scientists’ arguments – not just those who believe climate change is happening. This is the normal situation in science, and we make progress by basing our actions on the best knowledge available at the time.

    On the balance, I would say that the evidence I have seen does support the thesis of climate change; the most likely cause of increased CO2 is human pollution, since we have quantifiable knowledge of that. If it turns out that increased CO2 follows rather than leads temperature change, then I will stop believing in man-made climate change. So far, the evidence for that seems weak.

    I don’t particularly seek to convert you or anyone else; in fact if better observations and theories come along, I may well change my own opinion. All I would say is that everyone should try to get some kind of handle on facts as well as theories and make informed decisions about their behaviour. The only problem with being too purist about scientific skepticism is that if we always needed perfect data and theories before acting, we would have remained in the stone age.

    As for Britain v Australia, I can’t speak for the British, I am Australian.


  5. The science that underpins the greenhouse affect and the consequent warming of the earth by the Enhanced Greenhouse Effect is very well understood. There is no reasonable doubt that by tearing up forests and burning fossil fuels we are causing climactic instability, changing the pH of the oceans, and potentially causing seismic disturbances due to the shifts in ice mass as it melts.

    It’s so well understood that Carbon Planet was able to design a primary school education programme, ‘Operation: Coolenation’ ( see ), that teaches little kids some of the basics of climate science.

    But that is not the point. The point is that Capitalism, this amazing, dynamic, system we thrive in, that increases the overall amount of wealth in the world and that lifts people out of poverty, is due for an upgrade. Capitalism as we know it, has evolved, ad-hoc, in a messy, sprawly, way that doesn’t hesitate to use force to dump costs onto people who can’t fight back, or onto us all. These costs are called externalities by economists, and right now Capitalism thrives on exploiting them.

    Carbon emissions are simple a massive externality right now. It costs nothing to pollute. Carbon Trading makes that pollution cost something and limits the total amount of it allowed. It’s fair, it’s efficient, and it’

    But bringing carbon in from the cold is just the start of a process of economic and social transition. Look at it like Occupational Health and Safety laws. When laws came in against workplace smoking and drinking there was strong resistance from business, but over a generation that single reform meant the nation’s healthcare budget could be spent on better things than insanely high lung-cancer rates.

    All of the economic externalities will be systematically either eliminated, as hopefully in the case of kids in sweatshops, or properly priced, with an equitable funds distribution model at the tail end, and an incorporation of that cost in the final price of the good or service.

    That transition has to happen eventually, because resources on this Earth are finite. And the sooner that happens, the cheaper for all of us in the long run, or even in the mid-run as Nicholas Sten and Ross Garnaut both demonstrated in their respective reviews.

    The carbon economy has emerged already, I have no need to pimp it, just to try and explain it.

    Dealing with climate change is first and foremost about dealing with poverty globally by enabling sustainable growth on the back of clean power, equitable funds distribution, payments for environmental services and open society. Who could have a problem with that?

    In fact, we get the solution to climate change for free as part of our upgrade to Capitalism 2.0.


  6. Well good on you for responding so quick and apologies for calling you a Brit. I read your opening sentence and it made me think you were not in Australia.

    But still I did find your original post in the Courier Mail to be quite condescending (a very British trait), your assumption that none of the correspondents had heard of the IPCC and thus talking out of ignorance was quite low.

    You would be surprised at the level of understanding and knowledge that many of thee Skeptics have on that blog.

    But anyway, your response here does you some favours, you are clearly not a member of the lunatic “the sky is falling in” brigade that is doing a fine job of spreading the gospel of AGW.

    But you are wrong, it is very dodgy science and would have been completely ignored had the Governments of the world not spotted an opportunity in AGW for their own goals.

    When the media is bored of repeating the same old end of the world doom and gloom predictions (which they will be, very soon) things will turn around rather quicker than you realise. I predict an end to this nonsense by the end of next year.


  7. Really appreciated the wiki link, Thomas. To summarise that:
    – 3 scientists think global warming is not occurring or has ceased
    – 2 scientists think the IPCC modelling is inaccurate and so the projection of global warming is
    not accurate – i.e. may be higher, may be lower
    – 23 scientists agree global warming is happening but don’t agree it’s caused by human activities.
    – 9 scientists say they don’t know what’s causing global warming.
    – 3 scientists agree with the general consensus around Climate change but think it will not have significant negative (social) impact.
    – 1 scientist is just generally skeptical of the general consensus around climate change.

    The IPCC’s fourth assessment report alone includes opinions of 2500+ scientific experts. That doesn’t count scientists around the world who either agree with the IPCC’s findings or have not made a scientific investigation of their own yet don’t dispute the IPCC’s findings.

    So to find that only only 3-4 scientists (perhaps more but even ten time that is a small number in comparison to the 2500) believe global warming is not happening does absolutely nothing to disprove or negate the IPCC findings. The fact that 23+ disagree that human activities are causing global warming means little to me, as that still means there is a problem – regardless of the cause – which we need to fix (and make sure we don’t exacerbate).

    From my layperson perspective the best I can do is to listen to the overwhelming scientific consensus. That is not a faith-based act. That is taking expert advice on board to try and avoid at the very least uncomfortable isolated humanitarian problems, at worst wide-scale catastrophic humanitarian disasters. In my opinion it’s morally reprehensible to cause any delay to fixing the problem, regardless of how difficult it may be.


  8. As for an on-topic comment, introducing carbon – or rather some unit of environmental value – into the world’s accounting system is an important step (‘profit’ made at the expense of ‘environmental credit’ such as non-renwable resources or CO2 ppm can’t be continued to be view in accounting as profit).

    I agree that it doesn’t necessarily matter where the money is spent to gain ‘environmental credit’ so long as the accounting actually has integrity — and that is harder to ensure where there’s more corruption.


  9. Sorry for joining in late: I’ve only just discovered your blog. Thought you might be interested in Ros Gittins’ column in the SMH on June 16, quoting Hugh Mackay who was comparing citizen behaviour and attitudes to water rationing during the drought, to what they’re being asked to do for carbon reduction (essentially nothing, yet). Good point, I think.
    Personally, I think that not enough is made of global deforestation: sure, any single tree releases as much carbon when it dies as it absorbs when it grows, but the steady-state of a forrest is a forrest, and that’s a *lot* of carbon (not to mention all of the immediate local climate-altering effects).
    Looks as though petroleum is just about to take care of itself anyway: peak oil happened in 2005 according to most respectable analysts.


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