In the process of discussing the collapse of prices in Europe’s carbon emissions permit market, and how that phenomenon illustrates some of the advantages of a cap-and-trade system over a straightforward carbon tax, Bradford Plumer at TNR notes one of the underpublicized upsides of the economic crisis: we’ll see less pollution.
Getting back to the EU, Plumer explains:
Back in 2005, prices dropped to zero because the EU set the cap too loosely and handed out more permits than companies even needed—that was a real flaw, and it got patched up. But this time around, permit prices are plummeting because a global recession has scuppered economic activity across Europe, and companies are polluting less. They’re also using more natural gas and less coal. None of that is a concern per se. Carbon emissions are, after all, going down. In fact, this might be one advantage of having a cap-and-trade regime instead of a carbon tax. During recessions, emitting carbon becomes cheaper under a cap (because fewer people are doing it), so companies can postpone decarbonization projects until the economy starts booming again and they can spare the extra funds to do so.
None of this is terribly surprising if you think about it for a few minutes. But it does underscore a political problem with carbon emissions limits specifically, and with action on global climate change generally, that has at least temporarily abated: the ancient argument that the economy (in either developed or developing countries) can’t afford to Go Green. That’s particularly true if, as Plumer suggests, governments aggressively promote (and subsidize) alternative energy sources and efficiency measures that further reduce the price of shifting away from fossil fuels.
This is not to say, of course, that opponents of action on carbon emissions won’t make the same old arguments with even greater force, claiming that it’s no time to “burden” industries with ambitious “green” goals. But at the moment, the same old arguments make even less real sense.