Carbon Trading is not an Appropriate Response to Climate Change

Carbon Trading is not an Appropriate Response to Climate Change

Introduction

Global climatic change is one of the leading issues affecting several countries around the world. The United Nations and other global organizations on the environment adopted the Kyoto protocol that gave birth to carbon trading among other environmental programs (Dou, 2017). Carbon trading was touted to be the most effective ways of addressing the historical problem of carbon emissions that harm the environment in various ways. However, the implementation of these protocols and arrangements has failed to ensure these programs can work and deliver on reducing greenhouse emissions (Barragán-Beaud et al., 2018). Carbon trading has failed to reduce greenhouse emission in a variety of ways as illustrated in this paper.

Overview and Benefits of Carbon Trading

Currently, it stands out clearly that carbon trading is ineffective in its role and discourages economic development (Nai, Luo & Yang, 2017). Various countries and entities need to understand the importance of the Kyoto Protocol and subsequent carbon trading program that is in place. The Kyoto protocol was a United Nations-led international agreement that occurred in 1997 in Kyoto Japan with the main objective of addressing climate change and reduction of greenhouse gas emissions. Some of the objectives of these meeting were moving away from the use of fossil fuel energy sources to renewable sources of energy (Goulder et al., 2017). Countries were to commit to reducing greenhouse gas emissions by 2008-2012 to 5.2 percent below the known levels of 1990. The Kyoto protocol set greenhouse targets for both industrialized and developing countries to address climate change.

The major objectives of carbon trading were reduced greenhouse gases emissions by governments limiting companies to certain levels. The government was the chief implementer of the carbon trading program in the effort of achieving reduced levels of pollution on the environment (Goulder et al., 2017). Carbon trading was seen as a way of revenues for developing nations through selling carbon credits to countries with more fossil fuels. Developing countries were to benefit from this program because their capacity to emit massive amounts of carbon to the environment was slightly low compared to industrialized countries. Carbon trading is said to support free-market system without interfering with set government regulations except to regulate against fraud and force. Finally, carbon trading was known to be encouraging the use of alternative sources of energy that has a limited effect on the climate.

Carbon Trading is not an Appropriate Response to Climate Change

The carbon trading regulations are set to raise energy costs thus making the cost of living to be expensive without addressing climate change issues (Dou, 2017). The strategy is meant to ensure and reduction of greenhouse emissions at the expense of people’s taxes to address these issues. It is clear that the recent attempt to enact the cap and trade regulations in the United States by the senate it was clear that the costs of energy would have to go high leaving many people in dismay (Barragán-Beaud et al., 2018). After the Senate hearing that was held by Committee on Environment and Public Works, senators suggested estimated that the average cost of energy would be between $800 and $1,300 by 2015 and later increasing to $2,500 by 2050.

Carbon trading is touted not to be effective in protecting the environment against greenhouse gases. Increasing the cost of energy implies that people in the United States and Europe are supposed to reap benefits through environmental protection as well as reversing the ever-increasing trend in pollution (Kanchinadham & Kalyanaraman, 2017). After adhering to the implementation of carbon trading in various countries, especially in Europe, most of the advocate and scientists opposed the program because its target reduction on environmental pollution was not significant, about 0.07 degree Celsius by 2050. It is even difficult to obtain the absolute mean degree of surface temperature given that the target is about 0.07. It is the worse form of legislation because the carbon emissions have been turned to commodities that are bought and sold; it is simply giving incentives to emit more carbon to the environment (Goulder et al., 2017). Europe has seen carbon emissions going up irrespective of the carbon-trading regime and legislation being in place since 2005.

The legislations have failed several in various countries the carbon trading have been tried globally. Having a close look at Europe, carbon emissions are going up steadily irrespective of the legislation being in place since 2005 (Barragán-Beaud et al., 2018). Studies from various organizations and researchers indicate that 12 out of the 15 European Union countries took an active role in the 1997 Kyoto Protocol. The program advocates for the reduction of greenhouse gas emissions and this was the precursor of carbon trading that has also failed to yield-reducing carbon emission to the environment. Instead, many countries in the European region have been reporting increased greenhouse emissions contrary to the set objectives and goals after implementing the carbon-trading program. Emissions for European countries increased by 2.1 percent overall in various European countries compared to the United States where the increase in emissions was about 1.3 percent (Ermolieva et al., 2010). President Obama set targets for reducing greenhouse emission by engaging key stakeholders and Congress to develop programs to reduce greenhouse emissions by 14 percent by 2020 and 83 percent by 2050.

Carbon trading was noted that be a good program to ensure the western region was able to reduce carbon emissions by a significant percentage. Many economists have argued that the program cut American jobs without leaving any effectiveness on environmental protection. Complying with carbon trading program implies that many companies in the United States will have to reduce their production processes and this will cut jobs for many Americans. Like cap to trade program, carbon-trading advocates for reduced production across various industries and this hurts jobs and affected companies will have to compensate fired workers. The other way of achieving effective implementation of carbon trading is through buying carbon allowances for companies to keep on with their production processes. It implies that companies will devote more of their internal resources to allowances and this will affect profitability and jobs for many people (Goulder et al., 2017). Previous research that was done by Charles River Associated estimated that about 1.2 million to 2.3 million jobs would be lost under a carbon trading scheme.

Economists warn that carbon trading will have a hidden regressive tax that many people are unaware of (Clarkson, Li, Pinnuck & Richardson, 2015). One of the major aspects of this program is increasing the prices of fossil fuels in the effort of encouraging renewable energy consumption. The higher costs of energy will not only hurt industries but also American consumers. The increased prices of various fossil fuel products such as heating oil, gasoline and electricity, poor people in the western region are likely to suffer the most from the regressive taxes imposed (Duma & Nistor, 2012). During campaigns, American presidents promise to return revenues to vulnerable families, communities and business but it is blatant that the government is not ready to redistribute resources of many taxpayers when implementing such an exploitative program (Dou, 2017). Carbon trading should punish a corporation engaged in massive emissions of carbon to the environment and not American households.

In the United States, carbon trading is seen as one of the most dangerous programs that seek to hurt the economy. Extreme environmentalists and their liberal allies have been footing for climate change for several years but they have not declared carbon trading as the ultimate solution (Eyre, 2010). Most of the environmental organizations and clubs in the country are in support of carbon trading because to some extent it will reduce environmental impact by manufacturing organizations. Most of the environmental groups and organization have found various faults with these proposals arguing that it contradicts with the Climate Security Act of 2007 in the United States, thus criticizing its focus and effectiveness (Barragán-Beaud et al., 2018). The carbon-trading program should garner support from environmentalists and government for it to be effective and able to reduce carbon emission that raising, as far as climate change is a concern.

Carbon trading is likely to force market forces from working more effectively. Most of the western countries practice capitalism with free-market forces of demand and supply determining the prices of various products and services (Nai, Luo & Yang, 2017). The implement of carbon trading imposes a scenario where carbon trading is likely to distort some of the free market forces and independence of various businesses in place. With environmental legislation, some organizations such as Shell and Exxon Mobil have invested in advanced technologies that capture and store carbon thus reducing carbon emissions. The implementation of carbon trading is an incentive that is likely to distract the process of various organizations from the implementation of market-based solutions from curbing carbon emissions (Kanchinadham & Kalyanaraman, 2017). Organizations will find it cheaper to funnel these resources to carbon allowances while increasing emissions because the process will by far cheaper and ineffective than market-based solutions.

From the previous analysis, the European region is increasingly emitting carbon and related gases to the environment in the presence of carbon trading (Nai, Luo & Yang, 2017). It implies that manufacturing and production processes have increased in the region instead of reducing when following carbon-trading recommendations to the letter. Some countries like the United States feel they are pushed to a situation of competitive disadvantage with other countries because of the reduced production of various products. Currently, the United States and many countries in the western region are buying carbon trading but industrial giants such as China and India are not. Western countries are likely to cause high unemployment levels for their people as well as reduce their net production while the global climate is worsening (Eyre, 2010). The strategy will give China and India a leeway of becoming global production giants without addressing climate change issue.

Recently, a United Kingdom-based newspaper reported that biggest organizations known for emitting massive carbon to the environment are cashing in money for carbon credits to improve their balance sheets (Clarkson, Li, Pinnuck & Richardson, 2015). It implies that carbon trading is opening doors for massive corruption and fraud cases that never been seen in a developed environment. Many organizations have resorted to focus on corruption and fraud in the effort of meeting increased production rates to improve profits for their shareholders. With high rates of corruption and fraud, leading countries like the United States will lose the chance of attracting investors to their economies (Duma & Nistor, 2012). Previously, the united states have witnessed organizations engaged in creative accounting in the effort of hiding losses thus opening a window for leading economic agents such as the wall street following the trend. Extensive considerations over the carbon have been made by market-wide participant because of its hidden agenda of killing lucrative industries in the world (Barragán-Beaud et al., 2018). The failed Enron supported the cap and trade initiative and this allowed them to hide substantial resources that were later found in employee’s pockets.

Carbon trading is one f the leading aspects that are meant to cripple the country’s economic vitality and productivity. The United States is likely to suffer bust on its federal budget even more with the implementation of carbon trading programs (Ermolieva et al., 2010). During the global economic recession that started in the United States, the government used a trillion-dollar stimulus bill along with other taxpayer-funded money to see the economy on track and working again. The environmental program is likely to put the United States in jeopardy of improving economic performance and sink it further to other cases of recession in the future. The budget office reported that the United States will face undue pressure on a fragile budget if the government considered implementing carbon trading to the letter (Kanchinadham & Kalyanaraman, 2017). The federal government is likely to face serious challenges with higher energy costs and this will result in loss of federal government tax revenues thus fail to finance its budget effectively.

Carbon trading is based on faith but not experience or practicality of achieving its objectives in various markets or countries (Duma & Nistor, 2012). Industrialized countries were supposed to buy carbon allowances from developing countries because of their inability to meet production capacity like that of the developed countries. Market and environment analysts argue that the program was likely to cause a threat and human civilization needs because it is not based on historical experience as well as understanding the real climate problem. President Trump noted that the climate conditions and laws are myopic and doomed not to meet their objectives because of the lack of facts and sincere (Clarkson, Li, Pinnuck & Richardson, 2015). Economists proved the document wrong because of its vagueness of presenting critical ideas as well as implementing what is obvious and fundamental.

Conclusion

The climate change issue is one of the most compelling problems that the world must have to come in terms with. The increased use of fossil fuels and greenhouse gas emissions is one of the major problems that have increased the need for government and environmental organization to root for this course (Nai, Luo & Yang, 2017). The Kyoto protocol of 1997 gave birth to various environmental legislation and restrictions such as carbon trading to help reduce environmental impact by fossil fuels. The implementation of carbon trading has achieved less than what many people touted it to be. The European region has not been able to achieve a more meaningful reduction in greenhouse gas emission and instead, there is a net increase in the polluting gases (Barragán-Beaud et al., 2018). The failure of carbon trading is wake up call for governments and environmental entities to focus on alternative ways of addressing such issues as they appear.

References

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