Context: I’ve worked in carbon pricing / emissions trading systems for several years before joining FP and I am generally not shy to criticize efforts that have low additionality (indeed, I partially left that role because of impact concerns).
1. It is true that it *used to be true* that reducing emissions in EU ETS sectors had zero impact on European emissions because of the dynamics you outline (the so-called “waterbed effect”). However, this has not been true for several years now with the introduction of the Market Stability Reserve (MSR). Now everything is a lot more complicated, but at least the effect of “no effect” is somewhat mediated.
2. Maybe not from the activist community, but from economists and other policy wonks, there is a lot of attention to the EU ETS and there has just been a recent strengthening of the EU ETS. It is the one thing every economist agrees on.
3. Given Europe’s low share of future emissions and high share of innovation capacity, the fact that actions do not matter much more for Europe (because of the partially existing waterbed effect) is not as damning as it sounds. A lot of actions can still be very important. For example. Germany’s massive support for renewables is sometimes criticized to not have reduced emissions because it was in an EU ETS sector (electricity) at a time when the waterbed effect was still fully in place. While this is true, it kind of barely matters because by far the largest effects of these policies were indirect anyway, changing the global trajectory of solar and driving emissions reductions in sunnier countries unwilling or unable to make the initial investment that Germany and some other made to drive down the cost.
Crucially, though, this waterbed effect does somewhat affect “local” prioritization, e.g. it is an additional reason to prioritize action based on global consequences (e.g. changing trajectory of early-stage technologies) because local emissions reductions matter even less than on emissions ground alone. E.g. one should be even more excited for changing the trajectory on cement vs adding a bit more solar than one should already be.
(No sources here, but I discuss this is more on the recent 80K Podcast)
Thanks for your reply. I mostly agree with many of the things you say, but I still think work to reduce the amount of emission rights should at least be on the list of high-impact things to do, and as far as I’m concerned, significantly higher than a few other paths mentioned here.
If you’d still want to do technology-specific work, I think offshore solar might also be impactful and neglected.
I think the list here is optimized for engineers, i.e. people with backgrounds that are better at working on technology than lobbying, so this is likely the proximate reason it is not on the list (I had no input on the list).
That said, whether working on emissions rights is a top priority after the recent reforms is a question that would require more work (I think it is plausible to say we are close to having maxed out on ambition, and also changes in emissions rights are primarily driven by changes in general climate policy support, it seems).
Context: I’ve worked in carbon pricing / emissions trading systems for several years before joining FP and I am generally not shy to criticize efforts that have low additionality (indeed, I partially left that role because of impact concerns).
1. It is true that it *used to be true* that reducing emissions in EU ETS sectors had zero impact on European emissions because of the dynamics you outline (the so-called “waterbed effect”).
However, this has not been true for several years now with the introduction of the Market Stability Reserve (MSR). Now everything is a lot more complicated, but at least the effect of “no effect” is somewhat mediated.
2. Maybe not from the activist community, but from economists and other policy wonks, there is a lot of attention to the EU ETS and there has just been a recent strengthening of the EU ETS. It is the one thing every economist agrees on.
3. Given Europe’s low share of future emissions and high share of innovation capacity, the fact that actions do not matter much more for Europe (because of the partially existing waterbed effect) is not as damning as it sounds. A lot of actions can still be very important. For example. Germany’s massive support for renewables is sometimes criticized to not have reduced emissions because it was in an EU ETS sector (electricity) at a time when the waterbed effect was still fully in place. While this is true, it kind of barely matters because by far the largest effects of these policies were indirect anyway, changing the global trajectory of solar and driving emissions reductions in sunnier countries unwilling or unable to make the initial investment that Germany and some other made to drive down the cost.
Crucially, though, this waterbed effect does somewhat affect “local” prioritization, e.g. it is an additional reason to prioritize action based on global consequences (e.g. changing trajectory of early-stage technologies) because local emissions reductions matter even less than on emissions ground alone. E.g. one should be even more excited for changing the trajectory on cement vs adding a bit more solar than one should already be.
(No sources here, but I discuss this is more on the recent 80K Podcast)
Thanks for your reply. I mostly agree with many of the things you say, but I still think work to reduce the amount of emission rights should at least be on the list of high-impact things to do, and as far as I’m concerned, significantly higher than a few other paths mentioned here.
If you’d still want to do technology-specific work, I think offshore solar might also be impactful and neglected.
I think the list here is optimized for engineers, i.e. people with backgrounds that are better at working on technology than lobbying, so this is likely the proximate reason it is not on the list (I had no input on the list).
That said, whether working on emissions rights is a top priority after the recent reforms is a question that would require more work (I think it is plausible to say we are close to having maxed out on ambition, and also changes in emissions rights are primarily driven by changes in general climate policy support, it seems).