Kyoto Goes Bust

Reason Foundation senior analyst Shikha Dalmia comments that the Kyoto protocols carbon trading scheme has collapsed, with a glut of emissions credits flooding the market.  Prices of per ton of CO2 emissions credits dropped from 31euros to 12euros in just three weeks, finally resting at 9euros.  This is not because of drastic reductions in emissions, but rather due to the design of the artificial carbon market.  Countries and companies are allocated credits based on their own predictions of future growth, and predictably everyone grossly overestimates so that they do not have to buy credits.  Yet even if all European countries met their emissions targets, it would only reduce global average temperatures by 0.1 degrees centigrade by 2050.  She concludes that

Emission-trading has flopped. But if the best idea that environmentalists have put on the table won’t avert Armageddon, it might be best for countries to eschew collective action altogether. They might be well advised to concentrate, instead, on maximizing economic growth and generating the resources necessary to deal with the threat – when and if it materializes.