IDEAS home Printed from https://ideas.repec.org/a/taf/cnpexx/v19y2014i5p723-747.html
   My bibliography  Save this article

Diminishing Returns: Carbon Market Crisis and the Future of Market-Dependent Climate Change Finance

Author

Listed:
  • Kate Ervine

Abstract

The current and future costs of meeting climate change mitigation needs in the global South vastly exceed levels of available funding from public sources in the North. As a possible solution to this problem, policy-makers and various observers have pushed increasingly for the adoption of market-based carbon financing strategies, with the United Nations Clean Development Mechanism (CDM) representing the most consistent application of this approach to date. Nevertheless, market-based carbon finance remains highly volatile given its heavy dependence on conditions in the broader global carbon market which remains in the throes of a devastating crisis, earning carbon the distinction of 2011s worst performing global commodity. By demonstrating that it is through carbon's market price that finance-generating investment in the CDM is largely derived, and which also determines the ex post value of CDM projects, this paper argues for the decoupling of climate change finance from carbon's market value. The need to do so is particularly pressing since, it is argued, the current crisis in the global carbon market reflects an embedded crisis tendency in that market, born in part from the political machinations through which it was born and which leaves it prone to persisting crises of oversupply.

Suggested Citation

  • Kate Ervine, 2014. "Diminishing Returns: Carbon Market Crisis and the Future of Market-Dependent Climate Change Finance," New Political Economy, Taylor & Francis Journals, vol. 19(5), pages 723-747, September.
    • Handle: RePEc:taf:cnpexx:v:19:y:2014:i:5:p:723-747
    DOI: 10.1080/13563467.2013.849672
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13563467.2013.849672
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13563467.2013.849672?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alexandre Kossoy & Pierre Guigon, "undated". "State and Trends of the Carbon Market 2012," World Bank Publications - Reports 13336, The World Bank Group.
    2. Nicholas Linacre & Alexandre Kossoy & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2011," World Bank Publications - Reports 13400, The World Bank Group.
    3. Nicholas Linacre & Alexandre Kossoy & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2011," World Bank Publications - Reports 13399, The World Bank Group.
    4. repec:diw:diwwpp:dp1196 is not listed on IDEAS
    5. Alexandre Kossoy & Pierre Guigon, "undated". "State and Trends of the Carbon Market 2012," World Bank Publications - Reports 13335, The World Bank Group.
    6. -, 2009. "The economics of climate change," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Trotter, Ian Michael & da Cunha, Dênis Antônio & Féres, José Gustavo, 2015. "The relationships between CDM project characteristics and CER market prices," Ecological Economics, Elsevier, vol. 119(C), pages 158-167.
    2. Sovacool, Benjamin K. & Griffiths, Steve & Kim, Jinsoo & Bazilian, Morgan, 2021. "Climate change and industrial F-gases: A critical and systematic review of developments, sociotechnical systems and policy options for reducing synthetic greenhouse gas emissions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jinshan Zhu & Hui Yao & Yingkai Tang & Liyong Wang, 2015. "An econometric analysis of sub-national Clean Development Mechanism performance in China," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(7), pages 1137-1153, October.
    2. Keita Honjo, 2015. "Cooperative Emissions Trading Game: International Permit Market Dominated by Buyers," PLOS ONE, Public Library of Science, vol. 10(8), pages 1-20, August.
    3. Nicholas Tatrallyay & Martin Stadelmann, 2013. "Climate change mitigation and international finance: the effectiveness of the Clean Development Mechanism and the Global Environment Facility in India and Brazil," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(7), pages 903-919, October.
    4. Gbenga Ibikunle & Andros Gregoriou & Naresh R. Pandit, 2013. "Price Discovery and Trading after Hours: New Evidence from the World's Largest Carbon Exchange," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(3), pages 421-445, November.
    5. Zhang, Hui & Cao, Libin & Zhang, Bing, 2017. "Emissions trading and technology adoption: An adaptive agent-based analysis of thermal power plants in China," Resources, Conservation & Recycling, Elsevier, vol. 121(C), pages 23-32.
    6. Zhong, Meirui & Zhang, Rui & Ren, Xiaohang, 2023. "The time-varying effects of liquidity and market efficiency of the European Union carbon market: Evidence from the TVP-SVAR-SV approach," Energy Economics, Elsevier, vol. 123(C).
    7. Huang, Wenyang & Zhao, Jianyu & Wang, Xiaokang, 2024. "Model-driven multimodal LSTM-CNN for unbiased structural forecasting of European Union allowances open-high-low-close price," Energy Economics, Elsevier, vol. 132(C).
    8. Till Neeff & Daniela G�hler & Francisco Ascui, 2014. "Finding a path for REDD+ between ODA and the CDM," Climate Policy, Taylor & Francis Journals, vol. 14(2), pages 149-166, March.
    9. Hayashi, Daisuke & Huenteler, Joern & Lewis, Joanna I., 2018. "Gone with the wind: A learning curve analysis of China's wind power industry," Energy Policy, Elsevier, vol. 120(C), pages 38-51.
    10. Sheng, Jichuan & Qiu, Hong, 2018. "Governmentality within REDD+: Optimizing incentives and efforts to reduce emissions from deforestation and degradation," Land Use Policy, Elsevier, vol. 76(C), pages 611-622.
    11. Raphael Calel & Antoine Dechezleprêtre, 2016. "Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 173-191, March.
    12. Rannou, Yves & Barneto, Pascal, 2016. "Futures trading with information asymmetry and OTC predominance: Another look at the volume/volatility relations in the European carbon markets," Energy Economics, Elsevier, vol. 53(C), pages 159-174.
    13. Olli-Pekka Kuuselaa & Gregory S. Amacher & Kwok Ping Tsang, 2013. "Intensity-Based Permit Quotas and the Business Cycle: Does Flexibility Pay Off?," Research Department Publications IDB-WP-450, Inter-American Development Bank, Research Department.
    14. Mazza, Paolo & Petitjean, Mikael, 2015. "How integrated is the European carbon derivatives market?," Finance Research Letters, Elsevier, vol. 15(C), pages 18-30.
    15. Zhang, Xi & Li, Jian, 2018. "Credit and market risks measurement in carbon financing for Chinese banks," Energy Economics, Elsevier, vol. 76(C), pages 549-557.
    16. Ante, Lennart, 2024. "The scope of green finance research: Research streams, influential works and future research paths," Ecological Economics, Elsevier, vol. 224(C).
    17. Jongmin Yu & Mindy L. Mallory, 2020. "Carbon price interaction between allocated permits and generated offsets," Operational Research, Springer, vol. 20(2), pages 671-700, June.
    18. Raphael Calel, 2011. "Climate change and carbon markets: a panoramic history," GRI Working Papers 52, Grantham Research Institute on Climate Change and the Environment.
    19. Coleman, Andrew, 2018. "Forest-based carbon sequestration, and the role of forward, futures, and carbon-lending markets: A comparative institutions approach," Journal of Forest Economics, Elsevier, vol. 33(C), pages 95-104.
    20. Ling Huang & Yishu Zhou, 2019. "Carbon Prices and Fuel Switching: A Quasi-experiment in Electricity Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 53-98, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:cnpexx:v:19:y:2014:i:5:p:723-747. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/cnpe20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.