Carbon Trading Scheme in US (voluntary)

By: Moly, David, Crystal

Basic Information

What is carbon trading scheme? it is a system that control the emission of

carbon dioxide where government, companies, individuals can purchases credits to offset their consumption of carbon dioxide.

What is the Market Failure

• Companies all over the globe are exposing too much pollution to the environment and engaging in practices that are not sustainable.

WHAT CAN WE DO?

Proposed Remedy

• Voluntary Carbon Trading Scheme in the US– Chicago Climate Exchange (CCX)

What is Chicago Climate Exchange?

• A voluntary GHG emissions cap and trade scheme based in the North America.

• The Chicago Climate Exchange is the first US exchange to create a market for carbon credit trading

• CCX started trading in October 2003, prior to the commencement of trading in the European Union through the ETS system

Reason to participate in Voluntary trading

• Future insights/ expectations: - Carbon trading may become mandatory, - want to develop an understanding of the

system. Be Eco Friendly • “Green Fashion”: they want to appeal to

environmentally sensitive. • Environmental concern

Does the proposed remedy work?

• Positive Externality: - researchers have money to do their research - less pollution? - Easily enables sliding reductions in carbon

emissions - Encourages reduction of carbon emissions by

those companies who can do so at the least cost.

Does the proposed remedy work?

• Negative Externality: - do people really care about the

environment? - The process is non- transparent, it’s highly

political, manipulative. (Jeffrey Sachs -- economist)

Does the Proposed remedy internalize the externality?

• No; there is not strong enough of an impact on emission reduction to have completely internalized the externality

Proposed solution

• Education• If trading is voluntary = decrease in price of Carbon Credits• Transparent Process • Gradually make carbon trading mandatory

Does the Solution Work?• Education: raising awareness for

environmental issues

Does the Solution Work?

• If trading is voluntary, decrease the amount of money that the carbon credits are worth

Does the Solution Work?

• Make the process transparent

Does the Solution Work?

• Gradually make carbon trading mandatory

• If trading is mandatory, increase the amount of money that the carbon credits are worth

Model

Cost with CCX

Sources• Wikinvest Carbon Trading Article

Ahttp://www.wikinvest.com/concept/Carbon_Trading• US Carbon Report http://uscarbonreport.com/• Anupreeta Das, US Exchanges Explore Carbon Trading Market , 2007/ 11/ 07

http://www.planetark.org/dailynewsstory.cfm/newsid/45190/story.htm• Chicago Climate Exchange – Wikipedia http://en.wikipedia.org/wiki/Chicago_Climate_Exchange• Global Warming- Chicago Climate Exchange http://www.global-greenhouse-warming.com/Chicago-Climate-Exchange.html• Lesile Berliant, Preparing for a US Carbon Trading Future

http://www.celsias.com/article/preparing-us-carbon-trading-future/• US farmers experiment with Carbon Trading Scheme

http://www.abc.net.au/worldtoday/content/2007/s1941730.htm• Bright Green Blog http://features.csmonitor.com/environment/2008/12/05/un-defends-carbon-

trading-scheme-from-us-criticism/