Carbon is the next gold

Consultants and financiers scramble to stake their claim in the trillion-dollar carbon market

By Victoria Schlesinger

Illustration by Christian Northeast

With so much attention on the design of a carbon market, the environment might seem like the birthday kid missing her own party. But there’s a reasonable explanation: Whether the government gives away or auctions allowances makes no difference to the atmosphere. As long as the annual cap on CO2 emissions is put in place and reduced each year, we’ll be working toward our target of lower emissions. “Allowances are about how you spread and divide up this pool of value,” said Janet Peace, senior economist for Pew Center on Global Climate Change. “So the cap isn’t affected by how you divide it up, as long as you have a cap.”

Still, no one believes a cap-and-trade system alone can solve a problem as vast as climate change. Even a market booster like Cameron doesn’t think so. “The carbon market will produce innovation, it will find bigger markets for technology, but it can’t be expected to do everything that’s necessary to make the transformation,” he said. We also need, Cameron added, incentives to increase energy efficiency in commercial buildings and homes; higher fuel efficiency standards while we research electric- and hydrogen-powered cars; and major government investments in clean energy research and development,  “But it’s without question the most significant policy lever we’ve got. It best fits the problem we have. It deals with the diverse range of decisions that have to be made every day all over the world. It does help overcome unnecessary barriers between human beings in solving the collective action problem. And it will create wealth worth having when it’s done."

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Damn straight - James Cameron rocks!

Is it supposed tobe COOL to buy the right to pollute? I'm new here, but have heard of this idea before and always assumed it was some sort of a joke, like the ancient idea of buying indulgences so one could sin. Does this actually make sense to anyone besides maybe someone like the former managers of a company called Enron which brought rolling black outs to California?

@Siver Bear - dude you spent too much time as an altar boy as a grom. By creating a market for co2 emissions, coupled with legally binding targets, countries and companies have start paying the true price for their activities. As a result investment, at scale, will be channeled to reduce GHG emissions and generate cleaner energy. Companies that adapt will still make a profit and only now in conjunctiuon with the environment. Wealth can still be created, only now it's wealth worth having.

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