I recently took a class at Harvard in (big breath) the International Political Economy of Decarbonization, taught by the fantastic Juergen Braunstein, author of (big breath) Capital Choices: Sectoral Politics and the Variation of Sovereign Wealth. One of the assignments in the class was to write an 800-word op-ed about, well, anything relating to economics, decarbonization, and international politics. I decided to tackle the topic of carbon credits, mostly because the issue was already at the front of my mind. Though my actual, practical approach to the topic is more nuanced, I decided to go all the way with this, just to test my skills. And hey, it worked out: I got an A! So I'm sharing it here now, in hopes that it might spark some discussion, if nothing else.
The idea of carbon credits or emissions trading was a novel concept when it first gained popularity in the 1980s. But at the time, so was the concept of manmade climate change. In the intervening decades, one of those things has emerged as such a powerful influence on human life that no one but Exxon could have predicted it. The other has revealed itself to be little more than a Ponzi scheme that somehow still facilitates a billion dollar marketplace through greenwashing while hindering large-scale decarbonization efforts. The only way to ensure that the planet remains habitable for future generations is for the UN Framework Convention on Climate Change to rescind all flexible mechanisms for Certified Emission Reductions, and close the carbon markets for good.
Since 1980, climate change has caused nearly $2 trillion dollars in damage in the United States alone. Of course, borders only exist on maps, so those numbers don't even begin to factor in the total global ecological impact of greenhouse gasses. Carbon offset schemes such as "cap and trade" were allegedly designed to reduce these problems by turning them into commodities. Decades later, whatever wealth was theoretically generated through these carbon credits has yet to trickle down to the people who are actually being impacted by that (increasingly frequent, and thus increasingly costly) ecological devastation. In fact, emissions trading has been largely ineffective at reducing actual emissions. The only thing these markets seem to be good at is encouraging rampant financial fraud through the creation of intangible assets for an increasingly exclusive group of traders.
Let's take a moment and imagine a world with an international market for murder (yes, bear with me). Anyone can kill anybody else — for any reason, doesn't matter, it's all murder in the end — but it's going to cost them, now that UN member-nations have agreed upon a global cap for killing people based on some arbitrarily-determined social cost of murder.
In this scenario, you could off an ex-lover, for example, as long as you offset that life with a murder credit, which now has a flexible monetary value attached. You can generate additional murder credits by creating more life on the planet; or, if you're wealthy enough to be the kind of the person who deals seriously in tax credit loopholes, you can just make some vague promises not to kill people whom you could have otherwise killed for profit (even if you weren't actually going to kill them anyway). Then you can turn around and sell those murder credits to a multinational corporation like Villains R' Us. You get a million dollars (or whatever the current market value of murder might be, depending on the whims of supply and demand); they get to "offset" their murderous activity, while enjoying that free pass to kill off a squeaky wheel employee who's been trying to unionize the workers.
Do you believe the murder market in this (admittedly ridiculous) scenario would actually be effective at reducing violence overall? Could it successfully end all wars, by making them too costly to engage in, simply by offsetting the act of government-sanctioned slaughter? Even if you lowered the cap on murder limits every year, people could still generate more murder credits. In fact, they would be incentivized to do so, because of the increased demand for murder in relation to the capped supply (it is, after all, a quick and affordably way to boost your bottom line). The lack of secondary markets, and restrictions on who could participate in the murder market would further complicate the matter.
In the meantime, people who live in the murder market world would still be getting killed; their murders would just be offset and legitimized. Even in the best case scenario, someone would still eventually have to pay out for those murder credits — at a time when supply is lowest, making prices even higher.
Carbon credits might not be as immediately devastating as these hypothetical murder credits. But the end result is still the same: a self-perpetuating marketplace that produces no tangible assets, and exists exclusively to create wealth and power for the wealthy and powerful while making things worse for everyone else. Markets in general can certainly have a place in the transition to a decarbonized world — but there are plenty of economic opportunities to achieve that goal without further commodifying the precise problem that's causing our climate to change in the first place.
In the Irish language, a caidhp bháis is a "death cap" — a shroud placed over the face of a corpse, or a term of endearment for the hood worn by the British judges who sentenced so many Irish to death or transportation. This is said to be the source of the modern English slang word "kibosh" — to put an end to something. Whatever the true etymology of the word, I'd say it's well past time to put a kibosh on the carbon credit, or a death cap onto cap-and-trade. Because we simply can't decarbonize when carbon is commodified.