In lieu of an abstract, here is a brief excerpt of the content:

  • Perspectives on Carbon Trade
  • Mary Finley-Brook
Carbon Markets: An International Business Guide Brohé, Arnaud, Nick Eyre, and Nicholas Howarth. Sterling, VA: Earthscan, 2009. xxviii + 307 pp., figures, tables, bibliography, index. $58.50 hardcover. (ISBN 978-1-8440-7727-4).
Carbon Trading: How It Works and Why It Fails Gilbertson, Tamra and Oscar Reyes. Uppsala, Sweden: Dag Hammarskjöld Foundation, 2009. 104 pp. $0.00 digital. (ISSN 1654-4250).

As geographers and others increasingly engage with research on the topic of climate change, an emerging literature explores complex human-environment consequences from international mitigation policies (e.g., Bumpus and Liverman 2008; Baldwin 2009). Greenhouse gas (GHG) emission trade has emerged as a cornerstone of many mainstream mitigation efforts. Current research, including the pieces under review, demonstrates carbon market impacts are uneven within and between countries, thus suggesting an important role for spatial and geographic analysis.

While the authors of the two works under review agree carbon markets are not a panacea, they present widely different perspectives on the current impacts and future potential of GHG emission trading. Nicholas Howarth, an Oxford University geographer, joins carbon trade consultant Arnaud Brohé and researcher Nick Eyre to propose carbon markets create a foundation for sustainable economic development and international cooperation. Tamra Gilbertson and Oscar Reyes, researchers with Carbon Trade Watch and the Transnational Institute, argue these same markets delay and disrupt the structural changes necessary to achieve equitable development and mitigate climate change. Both sets of authors have formidable experience with economic and environmental policy and develop sophisticated arguments backed with extensive research. Viewed together, these two books outline the main arguments for and against carbon trade and the positives and negatives of market-based environmental governance more broadly. Both books cover the history of emissions markets in the European Union and the United States. Brohé et al. address Australian, Japanese, [End Page 209] and other carbon trading schemes in industrialized countries. Gilbertson and Reyes analyze impacts of Clean Development Mechanism (CDM) projects in Brazil, India, Indonesia, and Thailand.

Brohé et al. view carbon markets as tools to reduce climate change mitigation costs and involve the private sector in efforts to curb GHG emissions. The authors expect emissions trade to stimulate innovation and entrepreneurship. They also note carbon markets fit with the desire of policymakers and regulators to develop norms and standards to determine GHG emission limits and specify allocations. Indeed, the rules and the governance structures of existing carbon markets are highly complex. A strength of Brohé et al.'s book is the clear and concise presentation of the nuts and bolts of prominent international, national, and sub-national trading schemes. The authors also provide an overview of climate science and review economic theories guiding environmental markets. Ecological, institutional, and theoretical background makes this an accessible, cross-disciplinary text.

Brohé et al. recognize the success of emissions markets is contingent on many factors, including the degree to which politicians create distortions to exempt certain industries or achieve other objectives. They warn policymakers need to act swiftly to stop the current manipulation of rules in compulsory and voluntary markets and avoid grave and expensive future consequences. Identifying shortcomings with both norms and implementation, Brohé et al. describe five core criticisms of carbon trade under the CDM: poor geographical distribution of projects, dominance of large projects with limited or negative social benefits, insufficient financial support for new technologies, high transaction costs, and questionable environmental integrity. Nonetheless, the authors suggest CDM exchanges can be improved and could pave the way for a more effective cap and trade process. However, they suggest if we do not fix carbon trading systems and practices we may be planting the seeds for a future subprime crisis in GHG emissions markets.

Gilbertson and Reyes remain pessimistic about potential for environmental markets to significantly reduce GHG emissions. These authors share Brohé et al.'s concern about the rapid growth of poorly regulated voluntary markets and the inclusion of carbon trading in speculative futures markets. They suggest earlier pollution markets functioned poorly and policymakers continue to make the same mistakes (e.g., overallocation, loopholes, industry exceptions, perverse incentives, 'banking' of credits, etc.). Yet the authors do not believe underperformance in carbon markets...

pdf