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

‘made in the usa’ – a short history of carbon trading 57[and] you can expand that to say that it doesn’t matter who ownswhat; in a private enterprise system, the same results would occur.’The important thing is to create property rights and reduce impedimentsto bargaining so that ‘affected parties themselves can decidewhether to restrict activities through private trading of rights’. 93 Ina perfect market, pollution rights would gravitate into the hands ofwhoever could squeeze the most money out of them. 94But where are you going to fi nd a perfect market? They don’t exist.No. And nobody knew that better than Coase himself. As he rightlystressed, a perfect market is only a figment of the imagination. Butthe conclusion he drew was that, in the real world, the state and thecourts would have to lend a hand in giving rights to pollute to thosewho could make the most out of them.Coase’s successors, such as the economist J. H. Dales, 95 modified pollutiontrading theory further. While continuing to emphasise the importanceof giving polluters rights to pollute, they avoided Coaseantalk about ‘optimising’ pollution through trading. It should be up tothe government, they said, not an imaginary ‘perfect market’, to setthe best overall level of pollution. 96 In their hands, pollution tradingbecame merely a way of finding the most cost-effective way to reachan emissions goal that had been set beforehand.And when did all this begin to be put into practice?The first major emissions trading programme was adopted in 1976by the US Environmental Protection Agency. It allowed new pollutingplants to be built in exchange for ‘offsets’ that reduced air pollutionby a greater amount from other sources in the same region. A1979 policy allowed polluters to meet emissions targets through anycombination of on-site emissions reductions. Then, in the 1980s, academicsadvocated market fixes as cost-effective alternatives to regulationsthat would have required more technological change. A backlashagainst the environmental regulation of the 1970s encouragedbusiness to team up with some Washington-based NGOs to formulatetrading legislation. 97In the increasingly strident neoliberal political climate of the 1980sand 1990s, pollution trading became more and more fashionable. 98Finally came the Clean Air Act Amendments of 1990, which set upa national sulphur dioxide trading programme to save power plantsmoney in the effort to control acid rain, as well as encouraging statesto use emissions trading to reduce urban smog. 99 That paved theway for later US trading programmes in water pollution, wetlands