Oh dear, oh dear oh dear. Our Ph.D. in Elizabethan literature still hasn\’t quite managed to absorb the major point about cap and trade systems for carbon emissions.
Now I\’ll agree that she and her Green pals have some decent points here. If emissions from aircraft cause more warming (due to altitude) than emissions on the ground then there is a case for a multiplier to be added to the cost of aircraft emissions. They\’re also absolutely correct that permits should be auctioned, not given away.
Essentially, the idea is that a cap is set on aviation\’s overall emissions, and the airlines are allocated a certain number of permits to cover them. If they are efficient, and don\’t need all the permits, they can sell them and if they need more, they can buy them.
Erm, by allowing airlines to buy permits not originally issued to airlines, we\’re not in fact capping airline emissions. Which is a good thing because we don\’t actually want to do that.
It doesn\’t take a Nobel Prize winner in physics to work out that the only way this can possibly reduce aviation emissions is if there is a sufficiently rigorous overall emissions cap, and serious limits to the amount of extra permits aviation is allowed to buy from other sources (ie other industrial sectors, or projects abroad).
But that\’s the point. We don\’t want to reduce airline emissions. We want to reduce total emissions. We want to reduce the lowest value emissions in fact, while allowing the higher value ones to continue (in detail, those emissions where the value is greater than the costs they impose).
Indeed, according to the commission\’s own figures, the proposal would mean that by 2020, instead of growing by 83% under a do-nothing scenario, aviation emissions would still grow by an extraordinary 78%. And since the effect of the scheme would be to add only a maximum 9 euros to the price of a ticket, it\’s hardly surprising that it will have almost no effect on aviation demand. By the same date, under the proposals, instead of growing by 142%, demand is still predicted to grow by a staggering 138%. If that\’s global climate leadership, I wouldn\’t want to see climate complacency.
It really does look like Dr. Lucas doesn\’t actually understand the point of cap and trade at all. We\’re not trying to reduce emissions from any one source. We\’re trying to reduce total emissions. And what we\’re doing by cap and trade is using a market mechanism to try and find out which are the valuable emissions which should continue and which are the low value ones which should be curtailed. She is insisting that a specific sector must be curtailed: but the point of cap and trade is to find out which sector should be curtailed.
Essentially, she\’s acting as a central planner: avaiation emissions should be x. But cap and trade replaces that planner with the market. As long as total emissions are under y, we don\’t actually care whether the aviation sector\’s emissions are under x.
Indeed, we can go further. Imagine that CO2 extraction from the atmosphere is successful (Wild idea, I know, but something like Planktos and iron fertilisation of the oceans.) . We then get to a point where we\’re entirely happy for aviation emissions to be above y, let alone x, because we\’re extracting CO2 as well, meaning that total emissions are below y. And the thing is, once we\’ve set our cap and instituted a market in the permits, whether or not this is a good idea will be revealed by the relative prices.
In short, by insisting that aviation be treated as a sector which cannot buy permits from other parts of the economy, Caroline Lucas is showing that she doesn\’t understand the point of a cap and trade market in permits in the first place.