Carbon swap bank to fight climate change

Australian researchers have suggested that nations should abandon the concept of carbon emissions trading in favour of a carbon swap bank, which is outlined in the journal Interdisciplinary Environmental Review.

It is thought that this swapping approach would get around some of the major obstacles to carbon trading, namely the accurate measurement of a nation's emissions and the regulation and enforcement of emission controls internationally.

According to Carolyn Currie of Public Private Sector Partnerships, in Sydney, Australia, a carbon swap bank would allow direct deposits of sequestered carbon to be added and withdrawal of emission rights to be made. The process would not work like an investment derivatives market but would be facilitated by direct swaps between a supplier of carbon sequestering technologies and methods, and those of the carbon polluter.

Researchers think that carbon swapping might lead to genuine reductions in the amount of CO2 entering the atmosphere and provide an effective mechanism for reducing climate change.

Carbon emissions trading was introduced as an economic environmental solution to climate change. The original motion of the Copenhagen treaty was to mitigate rising global average temperature by allowing nations that reduced their carbon emissions to trade with other nations and so motivate all nations to find ways of cutting pollution.

However, there is often an imbalance when implementing economic and political solutions to scientific and engineering problems. Various proposed bills in the US and Australia faltered because of a failure to force those industries that produce the greatest tonnage of CO2 pollution to alter their technologies.

Carbon trading has been criticised as nothing more than a financial vehicle with an uncontrolled offset market, and distortion of permits and taxes. It has been seen as an excuse for companies to avoid reducing emissions.

Emissions trading can also result in perverse incentives whereby a polluting firm given emission permits has no incentive to reduce emissions further because future emissions permits might then be restricted. Similarly, regions such as the EU could protect the industries within member states by allocating permits to reduce international competition from outside such a region.

There are five main advantages to a carbon swap bank over other carbon emission controls, according to Currie:
1. The macroeconomic significance of avoiding the free market flaws of volatility in price
2. Mitigation of the uncertainty that an emissions trading scheme will actually induce significant changes in technology
3. A likelihood that changes will not be confined to the domestic economies of developed nations
4. The cost of a carbon trading permit may be significantly higher than carbon swap arrangements, when corruption of the permit process and the profiteering evident In the EU are taken into account
5. Changes towards sequestration and emissions reduction can be identified and monitored, and progress to lower carbon cap can be nationally assessed by listing all specific projects aimed to sequester carbon and reduce emissions.
Developed nations are recoiling from the implementation of carbon emissions trading schemes, and the carbon swap arrangement may be the next trend.

Some benefits for governments could include positive effects in forestry and agricultural sectors, and reduced emissions based on the concept of increasing productivity in the sequestering sector. The arrangement could also help towards preserving non-renewable resources for future generations.

The carbon swap band would require no international agreements. According to Currie, there would be no detrimental effect on national industry or competitiveness, and it would move away from the financial mechanism of carbon trading.

The carbon swap bank arrangement is portrayed by the Interdisciplinary Environmental Review as a solution to climate change economics. Only time will tell whether it proves an efficient tool for reducing overall CO2 emissions.

Author: Marianna Keen | Climate Action

Image: akeg | Flickr