Why carbon pricing doesn’t work

November 2021

At the COP26 meeting in Glasgow a great deal of time and effort has been put into carbon pricing as a way to cut emissions. The UN likes this approach too. I don’t.

Five reasons why carbon pricing doesn’t work

1. It has zero impact on huge parts of the climate problem

Human-made emissions of CO2 are only a part of the problem. Climate change is also the result of societies emitting methane, nitrous oxide and several other gases, all of which have a much greater warming effect. Putting a price on CO2 doesn’t cut these emissions at all. Nor does it slow the emissions which are now happening because the planet is warming – from underneath the melting permafrost, from the forests that are dying, from fumaroles beneath warming oceans, or from fermenting wetlands. They don’t stop fertiliser or landfill emissions either. Critically, carbon pricing has absolutely no impact on the huge and growing level of wildfire emissions.

2. The burden falls disproportionately on the poor and historically innocent

Historically, the rich world has emitted most of the CO2 that’s trapped in the atmosphere. Today, some of the biggest emitters are in the poor world, as well as China. Putting a price on carbon now penalises billions of those who did not cause the problem, as well as those who are least able to pay. For everyone though, carbon pricing is unfair. It makes the end-consumer pay for the atmospheric destruction that has been caused by the small number of people who lead the fossil fuel industry. For decades, these people have continued to extract and sell fossil fuels, knowing how destructive this is.

3. Logically, the cause of a problem cannot be the solution

Carbon pricing is a framing mechanism. It suggests that climate change is a failure the market can correct. It is not. Societies produce carbon emissions because they choose to. They don’t want to stop doing this because it will be disruptive. So they invent lots of ways to maintain the current system – green financing, responsible consumption, CSR, low-energy light-bulbs, net-zero targets, recyclable shopping bags, yet-to-be-discovered technologies, electric cars, renewable energy – which make people think there can be change without real change. Carbon pricing is just another sleight of hand, a distraction to make you look elsewhere while your children are robbed of their future. Besides, not everything has a price.

Looks like a gold mine to some

4. Trading in carbon promotes emissions

Linked to the idea of carbon pricing is a carbon market, where it’s possible to buy and sell carbon credits. That’s like having a murder market – where people can buy or sell the right to kill. Carbon pricing allows people to sell the right to burn carbon. It means people can earn an income from doing the thing society is trying to stop.

5. If carbon was priced correctly, it would bankrupt the system

What’s a tonne of CO2 worth? By planting trees to absorb CO2, it currently works out at $5 a tonne. But trees eventually die, and release their CO2 back into the atmosphere. They are only a temporary store. Besides, there’s not enough land available to offset historic emissions this way. Trees also take decades to grow, which is far too long when there is less than 10 years to avoid a catastrophe. Trees are not the answer.

The other way to cut the concentration of CO2 in the atmosphere is through carbon capture. New technology in Iceland prices a tonne of CO2 at $1,000, with an expectation that this will eventually fall to $100 a tonne. Other estimates suggest CO2 should be priced at $400 a tonne.

Since 1750, humanity has put more than 2 trillion tonnes of CO2 into the atmosphere (Wait! Don’t count those!). It adds another 38 billion tonnes each year (with the other gases on top). Properly priced, even at $100 a tonne, societies face a bill hundreds of times bigger than the world’s GDP. It’s not possible to price emissions properly without bankrupting the system.

Finally, historic attempts to introduce carbon pricing haven’t worked because too many people object to the inflationary effects it has on the cost of food and fuel. That’s one of the main reasons carbon pricing is supported by the fossil fuel industry. They know it doesn’t work and that it means business as usual.

So what will work?

Strictly regulating what’s emitted and helping people through an economic transition. More about that here.


Rabbit appearing from hat: janjf93

Pollution: Chris LeBoutillier