Carbon markets in a muddle?
26th April 2007
Interesting leader in the FT today for anyone who’s active in the ETS or carbon offsetting space - titled Carbon markets create a muddle, it argues that CO2 needs a price, but that taxes are the best way to set it.
Aside from the logistical problems of establishing carbon markets - a problem identified in the piece - it highlights the need for independent verification of both emissions trading and voluntary offset schemes.
A Financial Times investigation today reveals that carbon markets leave much room for unverifiable manipulation. Taxes are better, partly because they are less vulnerable to such improprieties.
The potential for unverifiable manipulation is certainly a problem, but that doesn’t necessarily force us to abandon the market system altogether. With independent verification of carbon trading and voluntary offset systems, these uncertainties can be eliminated.
