05.03 Combatting climate change at the supranational scale- carbon trading and carbon credits Flashcards
What is a carbon credit?
A tradeable certificate or permit representing the right to emit one tonne of CO2e.
What is carbon trading?
An application of an emissions trading approach.
What is CO2e?
Carbon dioxide equivalent. As the most prevalent greenhouse gas, all other gases are converted into carbon dioxide equivalents for meaningful comparisons. For example, if methane is 30 times as potent as CO2, then one tonne of methane emitted is counted as 30 tonnes of CO2e.
What is the EU’s approach to climate change?
The EU is promoting “smart, sustainable and inclusive growth” by setting tough targets and standards, including almost completely eliminating CO2 emissions from power generation by 2050 and reducing buildings’ emissions by 90% through passive housing technology, refurbishing old buildings, and removing fossil fuels for heating, cooling, and cooking.
What is the EU Emissions Trading System (EU ETS)?
The EU ETS is a cap-and-trade system where a limit or “cap” is set on the total amount of greenhouse gas emissions that companies can release each year. Companies are then issued a fixed number of allowances, which can be bought and sold on the carbon market as a currency.
What sectors does the EU ETS cover?
The EU ETS covers 40% of the EU’s greenhouse gas emissions, including power, industry, and aviation sectors. However, it does not cover emissions from homes.
What is the target for emissions reduction under the EU ETS?
The target is to be 21% lower in 2020 than 2005 levels.
What is the Effort Sharing Regulation (ESR)?
The ESR covers emissions not covered by the ETS, which accounts for 60% of the total EU emissions, including housing, agriculture, waste, and transport. Each country takes on binding annual targets, which differ according to national wealth.
What is the current target for emissions reduction under the ESR?
The current target is a 29% reduction by 2030, with debates ongoing about increasing it to 40% by 2030 to support the EU’s “Fit for 55” plan.
What are the benefits of the ESR framework?
The benefits include increased EU energy security, reduced energy import dependency, new growth and jobs, and environmental, health, and other benefits tied to green growth.
What are market-based mechanisms for climate change mitigation?
Market-based mechanisms involve creating a market for emissions, such as carbon trading.
What are non-market mechanisms for climate change mitigation?
Non-market mechanisms refer to policies that do not involve creating a market for emissions, such as regulations, subsidies, and incentives.
What is an issue with market-based approaches?
An issue with market-based approaches is greenwashing, where companies make false or exaggerated claims about their environmental credentials.
How does a market-based approach help tackle climate change?
Market-based approaches incentivize companies to reduce their emissions by providing a financial incentive for companies to reduce their emissions, either by avoiding paying fines for exceeding their allowances or earning money by selling their excess allowances. Over time, the cap on emissions is reduced, and fewer allowances are issued, leading to an overall reduction in greenhouse gas emissions. However, market-based approaches have their limitations and require careful design to be effective.
What are some issues with a market-based approach?
Some issues with market-based approaches include the potential for market manipulation, the possibility of high compliance costs for companies, and the risk of allowing emissions to simply shift from one location to another. Additionally, carbon prices may not always be high enough to incentivize significant emission reductions, and the market may not accurately reflect the true social cost of emissions. There is also a risk that market-based mechanisms could undermine more traditional environmental regulations and may not address issues of equity and social justice. Finally, some critics argue that relying on market-based solutions takes attention away from more systemic changes that may be necessary to truly address climate change.
