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Carbon trading: unethical, unjust and ineffective?

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  • Simon Caney
  • Cameron Hepburn

Abstract

Cap-and-trade systems for greenhouse gas emissions are an important part of the climate change policies of the EU, Japan, New Zealand, among others, as well as China (soon) and Australia (potentially). However, concerns have been raised on a variety of ethical grounds about the use of markets to reduce emissions. For example, some people worry that emissions trading allows the wealthy to evade their responsibilities. Others are concerned that it puts a price on the natural environment. Concerns have also been raised about the distributional justice of emissions trading. Finally, some commentators have questioned the actual effectiveness of emissions trading in reducing emissions. This paper considers these three categories of objections � ethics, justice and effectiveness � through the lens of moral philosophy and economics. It is concluded that only the objections based on distributional justice can be sustained. This points to reform of the carbon market system, rather than its elimination.

Suggested Citation

  • Simon Caney & Cameron Hepburn, 2011. "Carbon trading: unethical, unjust and ineffective?," GRI Working Papers 49, Grantham Research Institute on Climate Change and the Environment.
    • Handle: RePEc:lsg:lsgwps:wp49
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    Citations

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    Cited by:

    1. Diniz Oliveira, Thais & Costa Gurgel, Angelo & Tonry, Steve, 2021. "Potential trading partners of a brazilian emissions trading scheme: The effects of linking with a developed region (Europe) and two developing regions (Latin America and China)," Technological Forecasting and Social Change, Elsevier, vol. 171(C).
    2. Spash, Clive L. & Theine, Hendrik, 2016. "Voluntary Individual Carbon Trading," SRE-Discussion Papers 2016/04, WU Vienna University of Economics and Business.
      • Clive L. Spash & Hendrik Theine, 2016. "Voluntary Individual Carbon Trading," SRE-Disc sre-disc-2016_04, Institute for Multilevel Governance and Development, Department of Socioeconomics, Vienna University of Economics and Business.
    3. Lu & Pollitt, M. G. & Wang, K. & Wei, Y-M., 2023. "The Incremental Impact of China's Carbon," Cambridge Working Papers in Economics 2349, Faculty of Economics, University of Cambridge.
    4. Stiglitz, Joseph E., 2019. "Addressing climate change through price and non-price interventions," European Economic Review, Elsevier, vol. 119(C), pages 594-612.
    5. David Brown & Marion MacLellan, 2020. "A Multiscalar and Justice-Led Analysis of REDD+: A Case Study of theNorwegian–Ethiopian Partnership," Global Environmental Politics, MIT Press, vol. 20(1), pages 11-37, February.
    6. Hennlock, Magnus & Löfgren, Åsa & Sterner, Thomas & Martinsson, Peter, 2018. "Emissions Trading Subject to Kantian Preferences," Working Papers in Economics 718, University of Gothenburg, Department of Economics.
    7. Khaqqi, Khamila Nurul & Sikorski, Janusz J. & Hadinoto, Kunn & Kraft, Markus, 2018. "Incorporating seller/buyer reputation-based system in blockchain-enabled emission trading application," Applied Energy, Elsevier, vol. 209(C), pages 8-19.
    8. Mei Lu & Michael G. Pollitt & Ke Wang & Yi-Ming Wei, 2023. "The incremental impact of China’s carbon trading pilots," Working Papers EPRG2316, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    9. Dominic Roser & Christian Huggel & Markus Ohndorf & Ivo Wallimann-Helmer, 2015. "Advancing the interdisciplinary dialogue on climate justice," Climatic Change, Springer, vol. 133(3), pages 349-359, December.
    10. Chang, Ching-Chih & Chang, Kuei-Chao & Lin, Yu-Lien, 2024. "Policies for reducing the greenhouse gas emissions generated by the road transportation sector in Taiwan," Energy Policy, Elsevier, vol. 191(C).
    11. Mattauch, Linus & Hepburn, Cameron, 2016. "Climate policy when preferences are endogenous – and sometimes they are," INET Oxford Working Papers 2016-04, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.

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