Part II: Do We Want Regulation, or Not?

The newsletter for professionals cautiously approaching the discussion about climate, but pretty sure they should.

Issue Number : 18

Part 2 in the Series About the Carrot and the Stick

What are three main disadvantages of creating a regulated carbon market? That’s this week’s discussion topic!

COST: Here’s the heavy hitter-cost- and here are some of the costs that occurred to me, but I’m certain there are others I’ve missed.

• Administrative: setting and enforcing rules, monitoring emissions, verifying offsets, and managing the trading of carbon credits...

• Compliance costs for business: monitoring and reporting emissions, purchasing carbon credits, and ensuring compliance with evolving regulations. From the ag production standpoint, we haven’t yet begun to properly calculate the extent of this potential set of costs.

• Increased costs to consumers: Will carbon markets becoming a regulated function of, let’s say’ a government, increase costs for goods or energy?

COMPLEXITY: The intricacies of designing and maintaining a carbon market with clear rules and mechanisms might just be as complicated as not having a regulated market...

VOLATILITY:

• Policy Uncertainty: Carbon markets will be subject to changes in government policies and regulations and will certainly change during inevitable shifts in political leadership or policy priorities.

• Market Manipulation: Like other financial markets, carbon markets can be susceptible to market manipulation and speculation.

• Carbon Offsetting Critiques:The use of carbon offsets themselves constantly face criticism about their real effectiveness. Does that change simply because a market becomes more regulated or has a set of standards?



So, where do you land? If you’re not sure yet, we’ve got one more article in the series on November 2nd!