Carbon Markets in a Climate-Changing Capitalism by Gareth Bryant (review)

The world is likely not on track to achieve the considerable carbon emissions reductions required to avoid the worst impacts of climate change. Carbon markets, imposing a price on the carbon content of fossil fuels, are feasible and durable tools to control carbon emissions, despite political challenges (Rabe 2018). Through carbon markets, such as carbon taxation or cap-and-trade programs, policy makers aim to internalize the negative externalities of fossil fuel usage and to redistribute revenues to lowcarbon innovation and communities that have been impacted by climate change.

Carbon Markets in a Climate-Changing Capitalism argues that the fossil fuel industry has exercised excessive influence over the European Union Emissions Trading System (EU ETS); this influence inhibits the beneficial role of the world’s largest carbon market in addressing the climate crisis. Carbon emissions in the EU during the last decade showed a decline, but the environmental benefit of the EU ETS should have been higher and more dispersed than now, according to Bryant. He argues that adequate regulatory intervention by governments over carbon emissions and fossil fuel industries is needed to maximize the effectiveness of carbon market policy. This complementary measure is expected to mitigate the limitation of the EU ETS, obsessively relying on dominant economic discourses.

The book contextualizes the relationship between capitalism and climate change. Capitalism—a political-economic system characterized by capitalization, property rights, and voluntary exchange—has resulted in a drastic change in climate and environment beyond nature’s resilience capacity. Simultaneously, a changing climate has enabled capitalism to respond to global warming and social pressures on the industry. This response can be made by altering its value chain to be climatefriendly or by bolstering capitalism’s dependence on fossil fuels and creating additional damages to nature.

Bryant’s concept of “climate-changing capitalism” may help researchers better understand and evaluate competing climate policies. Using this lens, the book suggests three contradictions and tensions embedded in the EU ETS. First, capitalism produces climate change unevenly. Though a small number of companies and governments contributed to a large proportion of emissions (the twenty biggest emitters contributed half of emissions in the EU ETS during 2005–2012), the responsibility for reducing emissions was distributed across many other actors of the EU ETS (including more than 3,500 companies). Carbon commodification that separates emissions from installations led heavy emitters to internalize emission inequalities.

Second, carbon markets depend on fossil fuel use. From a financial sector standpoint, market viability and interest hinge on stringent emission caps and high carbon prices. However, governance issues (e.g., the inflow of international carbon credits, an oversupply of carbon allowances) and once-low European carbon prices (less than €10 per metric ton of CO₂ emissions between November 2011 and February 2018) promoted the exit of financial investors from the market.

Third, capitalism constrains climate change responses. Owing to the inertia of policy implementation and limited resources, EU governments and related stakeholders tend to privilege a carbon market–based approach over climate policy alternatives because there is an existing, legitimate institution. Instead of transformative climate policies, the EU ETS members have preferred to reform the system itself (via, e.g., market stability reserve and revised free allocation rules) while undermining the diverse debate on climate policy.

A weakness of Bryant's book lies in its focus on the fossil fuel industry, demonstrating a slight anti-industry bias. Bryant firmly criticizes some heavy emitters for lobbying the EU, seeking favorable treatment, and trading carbon allowances and offset credits. Furthermore, he claims that those emitters were reluctant to expand renewable energy supplies by exploiting the EU ETS, delaying the transition to a low-carbon economy. These arguments warrant further investigation and updated evidence. For instance, while Bryant used 2015 data in judging practices of RWE, the company reduced its emissions by one-third from 2012 to 2018, and even declared in 2019 its intention to achieve carbon neutrality by 2040 (RWE AG 2019). Another company, E.ON, also provided 100...