How do carbon markets work?
HTML-код
- Опубликовано: 26 июн 2024
- In theory putting a price on carbon emissions should incentivise businesses to stop polluting. So why have carbon markets failed to achieve their goal of reducing global emissions? Read more here: econ.st/3mi51Eo
00:00 - Has putting a price on emissions worked?
00:27 - Where do carbon markets come from?
01:42 - How does ‘cap and trade’ work?
03:22 - Why aren’t carbon markets reducing emissions?
04:15 - What are the loopholes?
05:24 - What are the solutions?
Find The Economist’s most recent coverage on climate change: econ.st/3zCt2uW
Sign up to The Economist’s daily newsletter to keep up to date with our latest stories: econ.st/3gJBH8D
What’s the cheapest way to decarbonise?: econ.st/3iSDtVm
Listen to our new podcast on tackling climate change: econ.st/3Fcx2pA
Read more about how carbon prices can be used: econ.st/3AXBjdS
Listen to our money talks podcast episode on pricing pollution: econ.st/3kOIEXB
What is the role of green investment?econ.st/3zLVz0I
A great example of how to distill a complex subject into something clear and understandable.
Very informative video. It really simplifies carbon markets to the core fundamentals!
Lol will western countries share clean carbon tech with 3rd world ? Lol I think not so empty talk don’t matter what greta yells if I can’t convince the poor Philippine family across the world, it simplified nothing it assumed Europe actually can decide , Europe can-go back to the Stone Age and carbon will still increase if u can’t convince the developing world
yeah its all china's problem
Every times i watch economist's video
I get amazed
I get lots of knowledge
Thanks
For Economist team
agent
The costumer is the one who pay it all in the end. All those companies have to do is to raise their commodity's price.
Exactly
Unfortunately commodity prices have not reflected the actual cost of environmental degradation. They need to increase, and the increased income can be either used to buy Carbon Credits or pay the actual costs to regenerate the environment. We have been living on ‘borrowed’ environment for the last 200 years - time for pay-back!
Yes, but it also incentives them to find better solutions that cause less emission. If they find another way that doesn't raise the price as much, they'll switch to that instead.
The final intention is to reduce consumption. Higher prices should help get there. If that is going to create a situation that is even better for the companies, and worse for the consumers is another story. That's economists' territory, not environmentalists'.
Sales will still go down, because buyers drop out looking for cheaper alternitives.
We love the video! Very informative and straight to the point, the graphics are very catchy. We hope the video reaches as many people as possible, we would go ahead to add your video to one of our playlists to inspire climate solutions. -Team PlanetCents
Worth watching! Clarified and organized, just amazing.
As a natural precaution we must balance goods and services sectors in terms of resources and time for economic wellbeing.
Thank you! This was super clear and informative!
This needs to become the most important thing we pay attention to! Terrible that they had this great idea, yet didn't regulate the polluters.
Absolutely right.
It was never the intention to regulate the polluters.
agent
You're the best, and you will remain the best !!!!!! Thank you for this complete analysis of carbon markets.
Really informative video, thanks a lot!
A very likely experience waiting for commoners if the world reaches consensus on tightening carbon emission is inevitable significant inflation. A very high percentage of goods that a commoner - especially in developed countries - use in daily basis come from developing economies especially China. It is actually impossible to ignore the fact that China and alike countries produce so much for itself and the world that their production activities singularly drive the commodities price like copper and iron ore. I’m not against preserving the world but I would encourage everyone of us to ponder the consequence and the price we pay. As we can recall from the history that most of the blunt regulations only make things more expensive just like the example laid out earlier, the following inflation won’t hurt the rich as much as it does to us the commoners.
but the example used in the video shows how regulations stopped acid rain - would you prefer no regulations and acid rain?
Excellent explanation, thanks.
Would carbon tariffs from major western economies be effective in addressing well known foreign deregulated carbon markets or could this have an undesired economic/environmental effect?
Thanks for the informative video!
Yes they would be effective. The problem is it is too easy to call them a tax. And the word "tax" is incredibly unpopular. For that matter a carbon tax generally would be much more economically efficient than cap and trade. But again the word "tax". Of course you could make the tax revenue neutral. For example reducing income taxes in exchange for your new import tax or a generic carbon tax. But this is too much political indirection for most people to understand. This is probably the highest impact and most difficult political problem in the first world. And not just related to climate change. The barrier to lowering and raising taxes to increase economic efficiency as opposed to adding or removing revenue or changing progressiveness is so high that we have incredibly market distorting tax and regulatory policies.
@@peterisawesomeplease The idea is fundamentally wrong. Emissions are not rich people's right. SME's should be able to survive for any so called progressive future.
The western economies engaged in these tariffs will be less competitive and will lose market shares to deregulated countries when exporting.
Ha🤣China has established their carbon market trade centre, but we enjoyed a higher price level in UK because their export price rose as well.
In the way in which the video suggested, yes. I imagine the difficulty would mainly be in calculating these emissions in foreign countries. Tariffs always have a downside but in this case at least they have a clear, targeted and genuine purpose. It's also worth considering that industrialisation takes emissions and that once countries are developed they are then better able to reduce emissions
brilliant video! very informative! thank you!
Excellent video! I also believe the solution to climate change will come from making greener solutions more profitable. Carbon markets, and border taxes are the solution.
Lol will western countries share clean carbon tech with 3rd world ? Lol I think not so empty talk don’t matter what greta yells if I can’t convince the poor Philippine family across the world
@@jasonjin5253 Yes, the third world countries need development. Clean carbon tech will cost a lot of many.
Fabulously clarity. Well done Economist
I am certainly going to use this for my class, which is struggling to understand the European Green Deal (who isn't!).
It should be linked to Taxes and tariffs
Should pressure on countries be based on total emissions or per capita emissions?
Could these countries get taxed more, for how much carbon they have?
So basically you want to make raise the cost of living by adding another expense....
Carbon market depends on Energy policy of the individual Governments. Varies from country to country for its overall conditions of the Economy. Suffering of people due to Co2 emissions help Governments to take action seriously and immediately.
I realized I was much wiser after watching this one video than reading and watching few other information sources. Thanks Economist and thanks Vijay!😊
A global carbon price could be determined and enforced using distributed ledger technology.
For instance, Électricité de France (EDF) are exploring a carbon credit and offset market utilising Hedera Hashgraph: a public 'trust-less' distributed network.
it is not that easy
On the one hand, China is required to accelerate the reduction of carbon emissions. On the other hand, China's high-tech industry is blocked and the export of solar panels is prohibited. In fact, China has stopped overseas coal power construction since the beginning of this year and has limited power in order to reduce carbon. As the strongest developed country in the world, what has the United States brought to the earth? Accusing and encircling China, overprinting the US dollar, plunging the world into inflation, continuing to increase the amount of US debt default, requiring Samsung and TSMC to hand over confidential documents, violating the proliferation of nuclear weapons, and intervening in multinational politics and seeking interests through numerous overseas military bases
True. That is why China is exercising its own carbon neutral policy. On one hand, the US and Westrn countries welcome the goods produced by China due to its quality and competitive price. On the other hand, they are accusing China for polluting the world. A bit like I hitchhike your car every day to go to work and I am complaining that your car is polluting the world. So funny and unfair
Wow. This is interesting. Thank you Bay.
Great explainer👍🏻
Amazing Documentary❤️❤️❤️
Indias industrial sector grown very fast and showing tremendous reformative great upleading revolution today ...
AS a responsible gov we need to focus on the cabon emissions problem which grows day by day with the growth of the indias large-scale industrial estate.....
Government need to set limits , penalty and permit based sysytem for carbon emissions.......
soo that we can tackle this carbon emissions problem with better solution created by industries on its own .....😮😮
India already set goals for zero carbon emissions mission for 2050 ...
Soo we need to create structure like Cap and tread model system for carbon emissions industries ....
Soo that industries take there sector with zero cabon emissions model system .....😮😮😮😮😮😮😮😮
I believe this carbon economy will be much like the forex. Pit countries against countries with carbon monitoring of all energy plants which countries will hack rendering it useless.
Forex pits countries against countries?
@@RPDBY Yes! Exactly my point. The countries will be competing against each other for lowest carbon output to get most carbon credits to fund their gov's. Inevitably, there will be cheating and a massive amount of people will be thrown into horrendous poverty.
Learnt something new. so well explained.
quite insightful.
Very clear video and super interesting, thank you
A tad unfair to blame china when historically it's been the USA and Europe who have emitted way more and also China's emissions provide goods the world over, China produces what the world is buying, the firms are American.
Great piece. But China ''challenge'' is more one of leakage emissions. U.S. should definitely do more!
I used to be a big fan of cap and trade but increasingly I think a mix of taxation and mandates is the way to go. This is particularly effective with fossil fuels, we know exactly how much carbon is in a fuel so it is really simple to tax it. Similarly if we ban a technology it is really simple to police that.
You're literally begging for them to dominate & enslave you further.
@@i_got_worms7106 I'd rather they taxed pollution rather than my income. Also there are so many products that are more expensive, less efficient and offer no benefit to the customer that the world wouldn't miss if they were banned. As a voter in a democratic country it is me that is exerting control over the minority who think it is ok to pollute.
Wouldn't really high and sudden changes in permits prices induce higher costs for companies, lower profits and therefore an expected crash in the market?
Not an expert, but curious about it
Yes but that would be a very poorly implemented cap and trade scheme. The purpose is to go relatively gradually, e.g. reduce the cap moderately each year and provide information about that reduction in advance so companies can plan and accommodate.
It makes sense to lower other taxes, ie if there is to be a higher carbon tax on foreign imports then lower tariffs/excise duties.
The yellowvest protests in France would not have occurred if such offsetting had occurred too.
Tax bads, not goods (in both sense of the word)
I would expect there exist far better methods. What's important to remember is that USA is not a country. It's a federal union of states. That's why Texas have laws against abortion while most other states doesn't.
USA has been the leading / top 3 producer of coal every year since 1880.
Coal/Oil/Gas/iron is something USA has been top 1,2 or 3 in ever since they became a significant nation in this world.
Why would or should the USA back down on the actual things that made it great to begin with?
DOVU (DOV coin) is leading the way in using distributed ledger technology to track carbon credits. Going to be huge in the next few years.
super interesting -thanks for making this
If you go to the northern and western parts of China, you will notice how many trees China has planted in the past decade. Unfortunately, this is rarely mentioned in the western press. But this is a really important and practicable solution that more countries should follow.
Agreed!
Superb video. Thank you Vijay.
A thought, if all Chinese goods were taxed on their carbon at point of import would this not go someway to motivating China to work toward lower carbon?
agent
Podrían subtitular sus videos eligiendo el idioma como español
Cooling towers of nuke power plants only emit water vapor, but are mistakenly shown as a polluter.
การค้าในอนาคต จะพบกับหลักเกณฑ์มากมาย ปัญหาด้านมาตรฐานสิ่งแวดล้อม หลักการสากลจะกำหนดเงื่อนไขให้ประเทศที่ล้าหลัง ต้องปรับตัวอย่างสูง ถึงขั้นเสียเปรียบ
How do you track emission? If you cap CO2 do you encourage other worst forms of pollutions?
Worst forms of pollution are already highly regulated
How is this fair? Who gets to decide the price/standards to pay? We are not all on equal level in terms of development, as some of the EU and NA even Aus/NZ.
It doesn't need to be fair
The market is forced by the harm they cause. A Carbon tax at £100 would mean you couldn't build coal but only gas
And the most efficient boiler and gas capture generator.
That tax is then used to build renewables and nuclear
And you can get rid of vat and sales tax
@@TheMagicJIZZ except other non western countries will simply reject it...
@@TheMagicJIZZ The tax should be much harsher on “developed nations”then, since you got a head start by decades if not a century on new comers, back when there was no rule. Otherwise, its just handicapping “developing nations”with rules set by “developed nations” with the most to gain in this situation.
Better 10 minutes video than my 1hour and a half lecture. Thanks.
Never hear a word about deforestation or replenishing the forests with this topic. Plants and trees thrive on C02.
So rich countries will be allowed to pollute by paying for it
Whoever came up with the idea to apply the Cap and Trade schemes that worked for sulfur and NO2 emissions, to CO2 emissions is responsible for the biggest boondoggle in the history of boondoggles. Only a miniscule fraction of the waste gases from combustion was SO2 and NO2. Reducing these byproduct gases meant simply strictly enforcing the methods to scrub these gases out. When you burn/oxidize carbon based fuel you get CO2, there is no way around that and you cannot scrub it out. No catalytic converter exists that changes CO2 back to carbon and oxygen. The idea was dead on arrival and probably only ever was a scheme to give some pencil pushing politician a meal ticket.
It's funny the same people that claim cap and trade is some kind of scam also say the alarm over acid rain was unjustified, specifically because (thanks to cap and trade!!) it's no longer a problem today.
There are other issues with action on climate change: 2050 is 20 years too late. A fractional reduction of emissions is too little; it must be 100% by 2030. Net emissions is meaningless, it must be zero fossil emissions. Imprecision in language is a bane: carbon emissions aren't the problem; fossil carbon fumes are, except now is too late to ignore avoidable methane and worse GHGs. And worst, we lose sight of the goal: avoiding the end of agriculture and fisheries within decades if we fail, bringing on global fossil famine.
Optimal action would look like.
1. Add 5%/year of today’s level to energy efficiency to +40% total by 2030.
2. Taper 1% of today’s level per month fossil emission, down to zero by 2030.
3. Plant 4 new trees/person/year or equal direct air drawdown down to 300 ppmv.
4. Stabilize, fix and grow ecosystems down to 300 ppmv. (But why ever stop?)
5. Cut 100% of avoidable emissions of methane-or-worse CO2e gases right now.
Who gets the money? How is it transparent to all? Who watches the watchers???
A question. How can farmers benefit from the carbon credit earned by Tree cover in Africa
There has to be a balance between carbon costs and economic costs as added expense for products being produced. The wealthy and especially the ultra wealthy don’t understand or refuse to care how these costs affect the middle and lower middle class.
Exactly! We need to have our money spent more wisely. IE not spending nearly 1 trillion on the military.
I think there is a bit of an issue with letting the capitalistic world. Try and fix the environmental issue is LOBBYING which means the politicians we elect work for them rather than us the people who elected them.
Ehh you don't even need lobbying people are just idiots. Take electric vehicle subsidies. They are incredibly economically inefficient compared to closing coal plants. And in general a carbon tax would be vastly more efficient and less economically distorting than cap and trade or our whole web of incentives and disincentives. But carbon tax contains the word "tax" without that word being next to "rich". This means its impossible to get support for. Even if the tax were revenue and progressiveness neutral(we adjusted other taxes to compensate) it would never get support in todays political climate.
Notice the 3rd factory @2:09 shuts down because of the permit costs. You get unemployment and less carbon 😅
really informative video, thanks to the economist, but extremely odd that it focuses on what china can do more but says literally nothing about the US. we don't even have a federally regulated carbon market, just some state run initiatives.
Very interesting.
The massive omission in this video is who pays the carbon price? We all know corporations don't pay because it's their customers who pay. Carbon is in heating, transportation, growing food and many other essential services people need. So the real question is how much are governments willing to impoverish their citizens to try to make them use less carbon when there are no real alternatives available to them?
Nice video
Look at per capita emissions. Who will pay for historical emissions?
Very informative but no optimistic.
Fossil fuel producers and importers should be held accountable to compensate for the pollution their fuels create.
Subsidise green firms investing in sustainable technology, lower those barriers to entry.
Thank you for a clear explanation. Border adjustment mechanisms hold a degree of hope. A functioning global carbon market would be a massive shift, perhaps the massive shift, towards a healthy future. We are walking a fine line with carbon price though, too high and there becomes an incentive to lock up farmland for trees. A functioning global carbon market could help build wonderful new large scale industries like seaweed farming, regenerative agriculture and permaculture.
agent
Canada and France collect the most gross CO2 Revenues in the world but only contribute 2% of the CO2. And most of that under pollution remediation. But why should such countries lose competitive advantages in their energy markets when bigger contributors get a free pass. Certain policy would seem to disadvantage (or punish) those who are compliant.
Why it doesn't say that the cost of permits is passed to the consumers so companies can buy as much as they want and pass the costs to us.
Dear sir. That wont happen because of The Laws of supply and demand
KLIMA DAO is genius built on the Olympus' Zeus' genius. We are so earlyY!
The intention behind the idea may be noble, but these things never work. For renewables to be truly viable and preferable, they must provide a better price per kwh than alternatives. If you try to set up rules/systems to attempt to enforce companies to act in a certain way, it just distorts free markets and hurts the consumer/people in the country this is done via 2 means; higher prices (vs. other countries not doing this, lowering purchasing power/living standards), and by causing manufacturing to leave the jurisdiction into ones where goods can be manufactured more cheaply, without these constraints.
A more free market driven approach, where countries don't try to cheat would be one where the economics drive the use of renewables rather than force/policy. This can be achieved through more research/spending on developing these technologies to be more efficient, which would cause private entities to invest in these technologies. Currently this is not the case as the returns are low. Our policy makers throughout the west are obsessed with this totalitarian mentality that everything can be controlled/directed via central planning in a free market. People are ingenious and will simply find a way to bypass everything, and if they don't, free markets basically mean efficiency will be obtained through jurisdiction arbitrage, causing economic harm to the countries enacting these policies.
The problem and reality of the issue with co2 is that it is not pollution!!!
Putin: Fine, I’ll do it myself
I could not concentrate fully as some of the Charlie Chaplin movie kinda scene are actually funny.🤣🤣🤣🤣🤣
“Decarbonizing the world” is really not the message you should end on. Not only is it ignorant, it makes the problem come off like it’s the World’s problem, and polluters really love when blame is shifted off of them carelessly by environmental reporting.
Incentives only work as long as it's technically possible.
This cap and trade won't work for the developing world. Neither will the raising of traiffs on imported goods.
Won't making it as expensive to make items in under developed countries as it is in a developed countries, hurt the under developed countries?
That's why rich countries invest in renewable energy to make it cheaper enough to sell to developing countries.
Politicians have done a poor job explaining it to voters, give way to opponents to easily take advantage of the confusing information
This is not a theory anymore. Carb0nfi created a solution that would technically incentivize companies that would offset their carbon footprints with crypto and cnfts.
speaking as a level 99 republican, this makes absolute sense and we should enforce it globally.
get your checkbook out china!
just impose tax on coal and oil. that is a simple way using the existing taxation system
lol then where do u get ur energy from?
Carbon pricing could create an entire new economy around CO2 offsetting and utilisation around the world. It doesn't need to negatively affect the economy while cleaning up the environment.
why china? aren't the US and Canada releases way more CO² per capita?
Are bhai thumbnail ki pic m vo smoke nhi steam hai cooling tower ki
People should make a list of unnecessary stuff and stop producing them. Stop weapons production, wars, private planes, yachts, cars etc.
High carbon prices have hammered coal burning in Germany in the last five years.
jasmy is onto something
How old is this video? China does have a carbon market. It’s on the Hong Kong Exchange
Keep the tax, it allowed us to buy a car, now we get 20 free fill ups per year. Wonderful helped us our greatly
This video is at the intellectual level of a pre-teen. I'd thought better of The Economist.
What about a carbon tax made as a percentage on the profit of companies, proportional to the carbon they produce. They would be banned from putting the cost of this on consumers.
Because that would make sense
I understand the ideas: but this is a case of economists trying to do something which in theory sounds great but crushingly fails in reality.
The way these markets are set up; the fact that the permits are based on an expectation all of that places to much power over wealth in the hands of the politician.
Something in many places around the world - if that type of money is involved- these politicians are not able to handle or resist.
We should consider in our economic analysis of urgent problems, that they do not happen in a vacuum and we will fail if we don’t take greed and human error into account.
The developing world is emitting to much co2. We should not be afraid to say that -> but it is also emitting as much in order to produce products we consume.
China is a massiv problem and will suffer the long term consequences of the greed of their wealthy elite destroying the country’s long term environment in order to benefit themselves.
Same with Russia and many former Soviet staates
It is true -> we need to accept this view before we can move on to build models that are able to truly shape policies in a way forcing these rulers to change.
Our biggest power in the west is ingenuity and our consumption-> if we all were to buy truly sustainable products that would dramatically force change in the second and third world.
In theory it don't make any sense either.
i dont think you realise that the Western World's carbon emissions per capita is far higher, if you split countries like India and China into their individual states, their gross summed carbon emissions would be far less than any EU or American country/state. These developing countries rely on foreign outsourcing to help their economies grow. If you cut off their outsourcing simply due to their lenient carbon laws, their economies will perish. It will become a question of poverty or pollution.
This is the best shot we got at tackling climate change.
I am disturbed by this video. The mechanism of carbon market has been advocated for a long time, since the early 1990s by environmentally conscious economists. It was neo-liberal, right-wing people including those who were in the Economist magazine who advocated against on the ground of 'less regulation' and 'smaller government'. I can't be sure if these neo-liberal people are serious this time round? Just opportunism?
I am not old enough to judge the Economist's coverage from the 90s, but if one does believe climate change is happening, as the Economist based on its recent coverage does, then carbon markets are a crucial piece to solving the challenge with a market-based approach. :)
@@vanyabrucker Yes, but Economist magazine is responsible for having promoted market economy and capitalism, advocating for minimum roles for governments, so called 'small governments'. They are a true believer of 'invisible hands'. For carbon markets to function, government's roles are crucial. No doubts. For many years the Economist has been influential to make people think that government is a bad thing.
True economist! Zero prgfit intentions. Just bring balance to the resources. No self interest earnng agenda!
CBAM is not going to make much difference.
Andrew Heinrichs
Chia (XCH) blockchain will provide the answer for carbon credits globally.
Mr. Vijay Vaitheeswaran - You don't have to mispronounce your own name just because people around you mispronounce it all the time!
BRUH 😆
This system would never work for CO2. For S it worked because it is side product. It was possible to eliminate its emission by investing money. With CO2 it's impossible because to produce energy you have to emit it. Thus price of this bonds is fully transferable to customers because everybody is paying the same price for it. If there would be technology enable to produce energy without emition of CO2 it would work. For now only atomic energy is only such competitor but cost of it are so high that for now it has limited influence.
Hi there!
I'm from the UK. Last year, 1/4 of our electricity came from wind power. A new record. Every year, renewables account for more and more of our grid.
While not carbon free, this electricity produced vastly less carbon emissions than if it was produced with fossil fuels.
Carbon dioxide is a side product, energy is main product, and it is possible to produce energy with much less of that side product.
This is a half truth. Wind and Solar produce energy but are unpredictable so you have to run backup power plants. This backup is producing CO2 but for publicity only renewable are counted. If you count CO2 emited to build wind, solar and backup coal or gas power plants you would learn that renewable produce more CO2 than thay save. Thus for now thay are not proper competitors.