It’s about risk, stupid

Jon Anda, in a recent article in the Financial Times, proves that climate change action isn’t just for environmentalists anymore. A legislated carbon cap-and-trade system is in my mind the no-brainer of the decade.. I have yet to see an argument convincing enough to persuade me otherwise. While it seems that by now each side should have exhausted their ammunition firing back and forth over the wasted ruins of Kyoto, the fires of debate seem to be able to continuously rage on the issue of carbon trading. One of the reasons for this is that it seems is that nobody is really arguing about the same thing. Debates on action to curb emissions blur into a debate on climate change science. Discussion of mechanisms are defeated because of uncertainties about targets. Mr. Anda’s important contribution to this debate is to put the argument for in terms of financial logic. He makes two very important points- one is that carbon trading arguments should have nothing to do with the argument over the validity of global warming science- If anyone has seen the recent climate change action ads with the train, this is like debating whether or not the train is real, or a fictional construct of your imagination, instead of just stepping out of the way. The other point is that the logic for acting to reduce emissions is not based on certainty of the outcome, it is based on the certainty of risk. Arguments for action have been far too easy to refute by simply demanding proof that such action would in fact achieve its objectives, or that inaction is certain to incur costs. The argument therefore becomes very similar to that employed for hedging. Of course, even after Bay St. is has convinced itself of this idea, the government is likely to maintain its current strategy of inaction. All these arguments do nothing to address the real source of change resistance- interests vested in high-emissions capital. It nevertheless seems perfectly obvious to me that of all the alternatives, employing market mechanisms to assign costs to emissions is the fairest way to go about reducing them. But then again maybe this is why the opposition exists.