Canada NAFTA US Congress Florida

Ontario-Qu├ębec RGGI



New Mexico, OR MGA

Illinios NSW Japan

New Zealand

Australian Federal

Aus States South Korea

Source: adapted from Michelle Betsill and Matthew Hoffmann, 'The Evolution of Emissions Trading Systems for Greenhouse Gases', paper presented at the International Studies Association Annual Conference, 26-29 March 2008, San Francisco.

on CO2-reduction projects in the South, creating as it does the possibility of selling credits to the EU ETS. Further efforts to connect different trading schemes so that emissions reductions are tradable among them would provide the basis of a truly global regime and provide incentives for others to join.


We are a long way from realising Michael Grubb's hopes for combining economic efficiency and global justice, or Ted Hanisch's ambition for the full use of flexibility in meeting commitments. The flourishing of market-based approaches to climate change has in fact been driven less by the neat abstractions of economics, or the pragmatic concerns of negotiators, and more (and increasingly) by the inventiveness and greed of financiers. This inventiveness has been put to use in turning a set of discrete regulatory schemes - the EU ETS, the CDM and so on -into a messy, and highly profitable, global carbon market.

What we have seen in this chapter is that the carbon economy could, in principle, play a key role in the transition to climate capitalism. It has been mediated and created by public institutions, and then taken up with alacrity by private market actors. We have seen a set of institutions and mechanisms created that reflect compromises in the battle to protect the climate. Businesses and governments calculated that if some action is to be taken, it is better that it harnesses the power of business by creating new markets and thus new opportunities to make money. The carbon economy is, nevertheless, driven by states and international institutions who have to demonstrate that market mechanisms can serve social and environmental ends in order to be able to justify why they provide a legitimate response to climate change; this has so far proved difficult to do in practice.

There are key questions still to be answered fully. Can such markets in fact lead to the substantial emissions reductions needed to deal with climate change? Can they stimulate the investment in the 'sunrise' industries essential to the transformation of the global economy? Whether or not they will is a question of politics and governance - how the rules might be made, and how struggles will be fought to shape those rules. Will these political struggles enable the carbon market not just to be an opportunity for money-making, but also one for emissions reductions and industrial transformation? We deal with these questions more fully in Chapters 8 and 9.

In the next chapter we will see how an almost entirely private and financial market has developed, not constrained by such public goals. It provides another insight into the construction and day-to-day operation of the global carbon economy, and the extent to which it might bring about a transition to climate capitalism.

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