In March 2010 Fonterra released the results of an 18-month study into the carbon footprint of its major dairy ingredient and consumer products. Fonterra’s work was part funded by the Ministry of Agriculture and Forestry, and was undertaken by the University of New South Wales, SCION and AgResearch.
Over the last thirty plus years the use of transferable permits to control pollution has evolved from little more than an academic curiosity to the centerpiece of the US program to control acid rain and international programs to control greenhouse gases. What explains this rather remarkable transition? How was the approach shaped by economic theory and empirical research?
As concern increases over the impacts of climate change, policymakers are seeking cost effective ways to reduce greenhouse gas emissions, which do not undermine the achievement of development objectives. The carbon market, which equates to over US$100 billion annually, is an important part of this quest as it allows those with high costs of abatement to pay others with lower costs to undertake emission-reducing activities. In this way, the overall costs of reducing emissions at a global level can be considerably lowered. As many of these low cost emission reduction opportunities are in developing countries, carbon projects could be beneficial for development as well as for addressing climate change. Carbon projects could offer a way of tapping into additional funds to finance development programs.
Are there possibilities for the affected communities to be heard and will the international community be able to negotiate an agreement ? Will this agreement be strong enough and not too late to bring about a real solution to dangerous climate change?
The three questions for this discussion group are as follows:
· Does the concern to mitigate climate change provide innovative opportunities to fund development?
· Will this result in development that is more sustainable at a local level? What are the implications for equity and justice?
· How can we ensure that mitigation funding does not crowd out other funding?
The Kyoto Protocol is best regarded as a rather small first step towards controlling the enhanced Greenhouse Effect and preventing human induced climate change. As such the targets have been extremely minimal compared to the 80 percent emissions reductions on 1990 levels stated as needed by 2050 to stabilise atmospheric concentrations in order to stand a chance of avoiding temperature rises above 2oC (Parry et al., 2008). The agreement, ratified in 2001, requires an average 5 percent reduction in carbon dioxide (CO2)-equivalent emissions from 1990 levels by 2008-2012, for a limited range of industrialised countries. Various options and variable targets mean even high per capita emitters need not actually reduce their emissions. For example, Australia, as the highest per capita source of carbon dioxide emission,11990 levels control for minimal reductions, rather than effective means for meeting a set of targets necessary to minimise human enhancement of the Greenhouse Effect. As will be shown, Kyoto’s targets have been framed as part of an economic discourse where priority is given to creating gains from trade, extending the role of markets and protecting the profits of potentially vulnerable polluters. In this debate economic efficiency has been used as an argument favouring the trading of pollution permits. The rhetoric of textbook theory has then been adopted as the grounds for creating new multi-billion dollar international carbon markets. The divorce between the assumptions of economic theory and complex reality has been neglected. Controlling Greenhouse Gas (GHG) emissions involves, amongst other things, understanding the science and its limits, regulating powerful vested interest groups, and addressing the psychological and ethical motives for human motivation. In contrast to orthodox economics, this paper explores these issues and explains regulatory instrument choice, design and implementationis actually committed by Kyoto to increasing emissions by 8 percent over Interestingly then much attention has been focussed upon the efficient means of as integrally entwined with issues of power. Indeed the importance of addressing the topic from a political economy and public policy perspective is clear from the history behind the development of carbon markets.
London and New York are the world’s pre-eminent financial centers. They are essential in processing the financial transactions of the global economy. The circumstances that have given rise to and maintained the preeminence of these centers are well explored in the literature. Less attention has been paid to the importance of these financial centers in organizing the complementary institutions, services, and products of functional and developing markets. This article looks at the role of London and New York, particularly the complementarity of exiting financial infrastructure, in developing a new carbon market. I argue that developing a market from existing financial infrastructure through complementarities is more efficient because it economizes on sunk costs, relies on the marginal pricing of new initiatives, and generally reduces the costs of infrastructure development. Therefore, new markets are best constructed using existing market infrastructure or by developing complementary processes within existent market systems. I investigate three levels of complementarity between (existent and new) markets and within the new carbon market: the complementarity of expertise and information, the complementarity of institutions and services, and the complementarity of market systems. Case studies constructed from expert interviews conducted with banks, brokerages, intermediaries, legal firms, consultancies, and wire services in London and New York are used to support the argument. This paper concludes by commenting on the significance of the financial service centers (geography) where the market is developed.
Mitigating climate change requires the collaborative and international management of a range of socio-economic processes that produce greenhouse gas emissions. Governments in a number of regions are developing carbon markets to mitigate climate change by limiting the production of greenhouse gases. This thesis examines the construction of carbon markets in the United States and Europe to understand what role these markets play in mitigating climate change. Using a relational economic geography framework and institutional theory, I frame the markets into two components: 1) the regulatory structures which give the markets existence and bound their rules of operation, and 2) the financial and service components which operationalized the markets.