(Photo Credit: Ant Rozetsky, Unsplash)The European Union Emissions Trading System saved around 1.2 billion tons of carbon dioxide between 2008 and 2016 despite having low prices, according to a new study. These results demonstrate that high prices aren’t necessarily a requirement for carbon markets to succeed.
Public policy researchers from the University of Strathclyde, Glasgow and the University of Pittsburgh published their findings this week in the Proceedings of the National Academy of Sciences (PNAS).
“International carbon markets are an appealing and increasingly popular tool to regulate carbon emissions. They put a price on carbon emissions and make pollution less attractive for regulated firms,” the team led by Strathclyde senior lecturer Patrick Bayer wrote. “However, carbon markets often produce prices which are deemed too low relative to the social cost of carbon.”
The researchers took a closer look at the European Union Emissions Trading System (EU ETS), an initiative introduced in 2005 to help the EU reach its Kyoto Protocol climate targets. Sectors covered by the initiative include energy production and large industrial polluters, Bayer and his colleagues explained.
Using sectoral emissions data and a statistical model that accounted for the 2008 financial crisis, the team estimated that the EU ETS saved about 1.2 billion tons of CO2 over nine years. That reduction represented around 3.8% relative to the total emissions during that period, and almost half the EU-wide Kyoto target.
Sectors covered by the initiative emitted 11.5% less than they would have without the carbon market, according to the study.
Prices in carbon markets were fairly low when the EU ETS began, causing concern among policy-makers and environmentalists who worried that there wasn’t enough incentive to lower emissions, the researchers noted. But the initiative still produced carbon dioxide reductions.
“The appeal of carbon markets is that, once they are established with the right rules, you can connect them to other markets,” Bayer said. “Climate is not concerned about whether emissions are reduced in the UK or Germany or China; so long as they are reduced, that helps to address the problem.”
