A Critical Conversation on Climate Change ... - Green Choices

116 development dialogue september 2006 – carbon tradingUnless the groundwork for fundamental change is laid beforehand,corporations may simply not respond to high prices. They may redoubletheir pressure on the government not to reduce its allowancehandouts. Or they may just pay the fines for not being able tofind enough allowances to cover their emissions. In Los An geles’sRECLAIM programme, many polluters continued operating oldequipment, didn’t have enough allowances to cover the resulting pollution,and simply incurred multi-million dollar fines. 191 In the end,local government had to bring wayward electric generating facilitiesback under conventional regulation that allowed them to pay a feeper tonne rather than buy credits. Only then was catalytic reductiontechnology retrofitted into 17 generating facilities. With the tradingprogramme in a shambles, no assessment of whether it had savedmoney was even attempted.Emissions trading’s blindness to the long term is also damaging inother ways. For example, emissions trading is incapable of taking accountof the society-wide economic benefits that can result from lettingstiff costs fall on heavily-polluting industrial sectors rather thanallowing them to buy cheap pollution permits as a way out. Suchcosts can lead to savings associated with well-known side benefitsof non-fossil technologies, such as relief from the damage caused bypollutants other than greenhouse gases, destruction of land due to oildrilling and coal mining, water pollution, and so forth, but also toinnovations that lower the prices of products from cleaner competingsectors. 195 Michael Porter of Harvard Business School argues thatinnovations spurred by stringent environmental regulation that imposesextra costs in the short term may enhance competitiveness toa greater degree in the long term than merely maximising static efficiency,gaining access to cheaper inputs, or increasing scale. 196What’s more, individual and societal goals are themselves likely tochange as costs come down as a result of new technological and socialpatterns becoming ‘locked in’. 197 That could mean less demand for thethings that today only fossil fuels can provide. Such a shift in goals isunlikely to occur within the previous locked-in fossil-dependent system.Again, emissions trading can’t help select for it.‘Emissions trading doesnot stimulate competitionto maximise environmentalperformance. It simplyauthorises some tradingaround of obligations thegovernment has created.’ 198David M. Driesen, 2003It sounds as if environmentally superior technologies such as solar power are notgoing to benefi t much from emissions trading.No. Emissions trading might even slow down their development.Once produced on a large enough scale, photovoltaics would becomea far cheaper source of electricity per unit cost than fossil-fuelled technologies,199 and cheaper still if other parts of the technological and politicalcontext were changed – if subsidies were shifted from nuclear