ETS hacking

If an emissions trading scheme comes into play, I’m considering setting up a non-profit with the sole purpose of buying and holding carbon credits – so that every dollar donated will effectively reduce the overall carbon cap.

This seems like a good way to:

  1. Get around governments setting inadequate carbon emissions targets and caps. (Which seems much more likely than not.)
  2. Further stimulate companies that produce carbon offsets or are more carbon neutral. (Since they could sell their credits at a higher price).
  3. Offer a better way for individuals to reduce overall carbon emissions when compared to purchasing carbon offsets. (Since buying up credits forces major polluters to reduce their emissions).

Unfortunately, the cynical side of me says that if this approach were to really take off, it will just lead to governments issuing more credits when businesses complain.

Thoughts?

2 thoughts on “ETS hacking”

  1. I think (3) will always happen. You can’t play within the rules and beat the people who help write the rules. 🙁

    ETS in general frustrates me, because it’s so obviously a Correct and Good Idea, and imo is an example where democracy/lobbying fails us. If everyone who educates them on the issue and does not have a personal financial incentive supports ETS, why aren’t they happening?

  2. A significant benefit of a cap-and-trade system over a flat tax is that it stimulates innovative strategies for which there would not otherwise be any incentives. What follow-on effects would a successful non-profit like this have?

    Even the system itself is not yet confirmed. The nature of the effects of cap-and-trade versus BAU and forms of taxing is not easily predicted because each system (such as the very successful NO2/SO2 examples in the US) are highly context-sensitive. The leading economists in the area are constantly arguing about the pros and cons of cap-and-trade under different circumstances and they all use ‘good science’ to determine their conclusions.

    The one factor that I have seen over and over again is that it is very difficult to enforce equity in such a system. Small companies versus big companies, resource-rich countries versus not-so-resource-rich countries. It is easy to lay blame on politicians for not implementing this properly in Europe and not initiating it in Australia but the academic answer is still “sometimes it is good, sometimes it is bad, and it would be very difficult to establish and maintain equity”.

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