Twenty years ago, on this day, January 1st, 2005, the EU launched its emissions trading scheme. It will drive down the cost of “decarbonisation” and send long and loud signals to investors, pay for carbon capture and storage and generally Save The World. Oh yes…
The amount of carbon dioxide in the air was roughly 379ppm. As of 2025 it is 425ppm, but check here for daily measures.
The context was that the idea of emissions trading for climate had been around since the early 1990s – an analogy was drawn with sulphur dioxide trading around acid rain in the US/Canada. But there had been a lot of skepticism about whether it would “work” – because powerful vested interests would find way to game the system, by getting exemptions, or free allocations etc, and the price signal would end up simply not being loud enough to drive change among investors, industry or consumers. But the Americans were very keen. And see this –
The EU ETS would likely not have come into existence without the Kyoto Protocol, but the story of that relationship contains its share of irony. Briefly, emissions trading is an American institutional innovation in environmental regulation that was forced into the negotiations on the Kyoto Protocol by the United States in late 1997 in the face of strong opposition from the EU. Resistance to the concept continued until the new American president pulled the United States out of the Kyoto Protocol in 2001, after which European opposition to emissions trading faded.
What I think we can learn from this
The defeat of the proposed European Carbon Tax in 1991-2 was the killer victory (alongside Bush versus targets and timetables for Rio). And emissions trading schemes are a nice-to-have, at best. At worst, they are a tar pit for energy, attention and a great delaying tactic, while the consultants get rich.
What happened next
Europe’s emissions have come down a bit – if you count territorially. If you look at consumption, and embedded carbon, maybe not quite so much…
What do you think? Does this pass the ‘so what?’ threshold? Have I got facts wrong? Interpretation wrong? Please do comment on this post, unless you are a denialist, obvs.
References
Convery, F.J. Origins and Development of the EU ETS. Environ Resource Econ 43, 391–412 (2009). https://doi.org/10.1007/s10640-009-9275-7
(haven’t read it yet)
Also on this day:
January 1 1958 – control the weather before the commies do!
January 1, 1981- “Climate Change And Society” published
January 1, 1988 – President Reagan reluctantly signs “Global Climate Protection Act” #CreditClaiming
January 1 2007 James Hansen – “If we fail to act, we end up with a different planet”