In his 2013 State of the Union address, President Obama committed to fighting climate change, and referred to a bipartisan market-based solution. This is essentially a cap-and-trade system, not unlike the failing Emissions Trading System (ETS) implemented in the European Union (EU) in 2005. As the EU seeks ways to reform the ETS, and the U.S. considers implementing a similar system, it is important to identify the failures of market-based solutions to climate change.
On February 19 the EU voted to reform the ETS despite civil society’s critique that the ETS has increased carbon emissions and diverted attention from our collective need to transition away from fossil fuel dependency to alternative energy sources. In a joint declaration, over 125 civil society groups identified key structural flaws in the ETS and called on the EU to abolish the system in order to open space for truly effective climate policies.
A serious flaw with the ETS is the use of offset projects which allow Western companies or governments to buy carbon credits from a project in the south instead of reducing emissions at source. Isaac Rojas, Friends of the Earth Latin America and the Caribbean, states that "offset projects ... [have] actually increased emissions while causing land grabs and human rights violations, community displacements, conflicts and increased local environmental destruction." But, in spite of growing evidence of the problems, offset use in the ETS grew by eight percent in 2011 alone.
Unfortunately, the EU ETS failures will now be exported to other countries. China plans to link a similar national system to the EU ETS, and Brazil, South Korea, Australia, the state of California and the province of Quebec are looking for ways to implement the model.
In their declaration in February, the civil society organizations conclude: "It is time to look at the facts and figures and stop fixating on ‘price’ as a driver for change. We need to scrap the ETS and implement fair climate policies that work for the climate by making the necessary transition away from fossil fuel dependency."
As the U.S. administration looks for ways to address climate change it is important that President Obama also reminded Congress in his State of the Union that he did not have to wait for Congress to act. Truly there are several ways that the president could make more of an impact than any cap and trade system would make.
First and foremost, his administration has the authority to deny TransCanada’s request for permission to build the Keystone XL pipeline to carry toxic tar sand oil across several U.S. sates to polluting refineries in the Gulf of Mexico (see related article here).
Secondly, through the Environmental Protection Agency (EPA) President Obama could regulate power plants. The EPA has power and tools to regulate new and existing power plants and industrial plants that emit greenhouse gasses including methane, nitrous oxide and soot. This has been true since the Supreme Court ruled in 2007 that greenhouse gasses are pollutants.
Thirdly, the Obama administration could curb natural gas exports. An immediate way of doing this would be to direct the U.S. Trade Representative to withdraw from negotiations on the Trans Pacific Partnership, which would open exports of natural gas from the U.S. to Asian countries. Additionally, the Department of Energy can reject licenses for oil and gas industry to expand their export of liquid natural gas to countries with which we do not already have free trade agreements.
Finally, and perhaps most importantly, the administration could instruct the climate team at the State Department to negotiate a global climate deal in good faith. It would make a huge impact in our global community if the United States returned to the negotiating table ready to compromise in order to reach international consensus for a strong and equitable 2015 climate treaty.