Anti-European ETS--Colby

Claim: The implementation of the ETS model has decreased the likelihood of using cap and trade in other places to reduce carbon emissions.

Reason: The implementation of the ETS model has had broad negative economic effects as a result of using cap and trade.

Assumption: Whatever has broad negative economic effects as a result of using cap and trade also decreases the likelihood of using cap and trade to reduce carbon emission in other places.

In principle, people are not opposed to cleaning up and maintaining the environment. These principles lose their efficacy when environmental reforms have deep personal impacts. The EU Emission Trading System (ETS) was the first multinational emissions trading scheme and because it was the first of its kind, it also had unforeseen economic consequences that affect both businesses and individual citizens. The implementation of the EU ETS decreases the likelihood of other emissions trading programs being implemented in the future because of the negative economic effects.

Although the ETS program is broken down by emissions for individual countries, the true result is that the companies within those countries are the affected parties. It is the German electricity producers and the French cement industry that feel the true effects of the program, not just the countries in general. Businesses are concerned with their own viability and profits because that is how they survive. It would be counterintuitive for them to put environmental concerns first (especially in high polluting industries) because it would lead to their demise. Businesses must resist the implementation of the cap and trade system because it has the potential to severely injure their stability and profitability. Examples such as the incredibly high cost of electricity that has resulted from emission caps will not go unnoticed. Companies will keep these economic impacts in mind as they resist the implementation of cap and trade.

The negative economic effects seen in Europe make non-European companies less willing to participate and force them to lobby against it. For example, the American Petroleum Institute (API), which is funded by American-based petroleum companies, has staged grass root protests and other lobby activities to oppose cap and trade legislation. Soaring energy prices has been the most prominent failure of the ETS and American companies are becoming more aware of what emissions trading would do to the energy sector.

Negative economic effects hurt consumers and average citizens and thus make opposition campaigning easier. The rising price of electricity in European countries that participate in the ETS and coupled with decreases in productivity and employment because of emissions caps also affects the common citizen. These negative effects have become powerful tools to hinder cap and trade implementation. An article from Reuters states: “Cap and trade works by limiting carbon emissions from polluters, which then pass on the extra cost to consumers.” Even legislators are using the high energy prices to oppose cap and trade. Senator John Boozman said that cap and trade “could cost every American family as much as $3,100 per year in the way of high energy prices.”

The negative economic effects from cap and trade in Europe—most easily seen in energy prices—are creating problems for emissions trading implementation in other places. The ETS has left a bitter taste in the mouth of many people and other countries are hesitant to implement a system with so many known problems.