Emissions Trading As Buying the Environment
Just like anything else that involves politics, environmental issues can also be affected by big companies lobbying to get their way. One way that many larger corporations have gotten around having to drastically reduce their GHG emissions has been through a process called emissions trading. By utilizing the unused portion of smaller companies’ emissions allowances, the larger companies have been able to resist pressure to redesign their production methods. Instead of spending money to reduce emissions, they find that it is more profitable to just buy the right to make more.
Emissions trading is not hard to understand. It is based on the principles of simple economics. If one company has something that another company needs, then they sell it to them. In this case, the product is an allowance of GHG emissions. It is simple matter of supply and demand and gives the smaller companies a chance to hold some leverage over their larger competitors.
Emissions trading is one of those things that cropped up because people-especially people involved in the production of goods and services-are natural bargainers. Someone managing a corporation realizes that he will have a difficult time reducing ghg emissions on one particular factory, maybe because that factory is old or simply has to produce a lot more. At the same time, he knows he can reduce emissions significantly on another factory that is newer and is required to produce a lot less. So he reasons that it doesn’t really matter if the limit is five units per factory as long as both factories produce no more than 10 units of emissions. So if he can get one factory down to two units, the other can produce eight and still keep the pair of them under regulations.
Of course, that is a simplified explanation of emissions trading, but that’s how it works in a nutshell. It would be better, of course, if it we could somehow convince all factories to reduce emissions to the very minimum amount we can possibly have and still produce goods, but there are so many variables it simply isn’t possible without closing down a lot of plants. And so allowing them to bargain with their GHG Emissions allowances is one way of softening the blow of the restrictions in the first place. It allows them to find a way to comply, and that is something.
While emissions trading may not be the final answer to eliminating harmful greenhouse gas emissions, it is one positive step the effort to at least gain some control over them. This process allows scientists to work with the government to see what further changes we can make. As bigger companies purchase shares of emission allowance from smaller ones, they should be actively working towards developing manufacturing methods that will reduce emissions all together. The long term point of the policy is to give these companies time to develop cleaner technology, not to allow them to keep up business as usual as long as they have money to trade.
