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Who and what are carbon markets for? Politics and the development of climate policy

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  • Matthew Paterson

Abstract

Why have carbon markets been rapidly adopted as policy solutions to climate change in the last decade? Perhaps surprisingly, this question has attracted virtually no attention in the large literature on such markets. The standard arguments given for why carbon markets are good ways to respond to climate change do not explain why such markets have flourished as governance mechanisms in relation to climate. Carbon markets have spread and become taken-for-granted because of the potential they give to certain powerful actors (financiers, specifically) to create new cycles of investment, profits and growth. As a consequence, they make possible a political coalition combining financiers with environmentalists. This coalition has considerable potential to legitimize substantial cuts in carbon emissions in the face of continued opposition from other interests. It is the combination of these two elements - the promotion of specific growth sectors and the construction of a political coalition - that constitutes the principal political virtue of carbon markets. In order to demonstrate this claim, the history of emissions trading is traced and the implication of this analysis is explored for the further building of climate governance centred on carbon markets.

Suggested Citation

  • Matthew Paterson, 2012. "Who and what are carbon markets for? Politics and the development of climate policy," Climate Policy, Taylor & Francis Journals, vol. 12(1), pages 82-97, January.
    • Handle: RePEc:taf:tcpoxx:v:12:y:2012:i:1:p:82-97
    DOI: 10.1080/14693062.2011.579259
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    References listed on IDEAS

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    1. Alexandre Kossoy & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2010," World Bank Publications - Reports 13401, The World Bank Group.
    2. Karan Capoor & Philippe Ambrosi, "undated". "State and Trends of the Carbon Market 2008," World Bank Publications - Reports 13405, The World Bank Group.
    3. repec:wbk:wboper:13404 is not listed on IDEAS
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    Cited by:

    1. David Houle & Erick Lachapelle & Mark Purdon, 2015. "Comparative Politics of Sub-Federal Cap-and-Trade: Implementing the Western Climate Initiative," Global Environmental Politics, MIT Press, vol. 15(3), pages 49-73, August.
    2. Alex Y. Lo & Michael Howes, 2015. "Power and Carbon Sovereignty in a Non-Traditional Capitalist State: Discourses of Carbon Trading in China," Global Environmental Politics, MIT Press, vol. 15(1), pages 60-82, February.
    3. Burke, Joshua & Gambhir, Ajay, 2022. "Policy incentives for greenhouse gas removal techniques: the risks of premature inclusion in carbon markets and the need for a multi-pronged policy framework," LSE Research Online Documents on Economics 115010, London School of Economics and Political Science, LSE Library.
    4. Endre Tvinnereim, 2014. "The bears are right: Why cap-and-trade yields greater emission reductions than expected, and what that means for climate policy," Climatic Change, Springer, vol. 127(3), pages 447-461, December.
    5. Coraline Goron & Cyril Cassisa, 2017. "Regulatory Institutions and Market-Based Climate Policy in China," Global Environmental Politics, MIT Press, vol. 17(1), pages 99-120, February.
    6. Linnenluecke, Martina K. & Smith, Tom & McKnight, Brent, 2016. "Environmental finance: A research agenda for interdisciplinary finance research," Economic Modelling, Elsevier, vol. 59(C), pages 124-130.
    7. Larry Lohmann, 2012. "A Rejoinder to Matthew Paterson and Peter Newell," Development and Change, International Institute of Social Studies, vol. 43(5), pages 1177-1184, September.
    8. Kelly Levin & Benjamin Cashore & Steven Bernstein & Graeme Auld, 2012. "Overcoming the tragedy of super wicked problems: constraining our future selves to ameliorate global climate change," Policy Sciences, Springer;Society of Policy Sciences, vol. 45(2), pages 123-152, June.
    9. Sato, Misato & Rafaty, Ryan & Calel, Raphael & Grubb, Michael, 2022. "Allocation, allocation, allocation! The political economy of the development of the European Union Emissions Trading System," LSE Research Online Documents on Economics 115431, London School of Economics and Political Science, LSE Library.
    10. Federica Genovese & Endre Tvinnereim, 2019. "Who opposes climate regulation? Business preferences for the European emission trading scheme," The Review of International Organizations, Springer, vol. 14(3), pages 511-542, September.
    11. Lo, Alex Y. & Chen, Kang, 2020. "Business participation in the development of a Chinese emission trading scheme," Energy Policy, Elsevier, vol. 140(C).
    12. Murray, Brian & Rivers, Nicholas, 2015. "British Columbia’s revenue-neutral carbon tax: A review of the latest “grand experiment” in environmental policy," Energy Policy, Elsevier, vol. 86(C), pages 674-683.

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