Prelude to Copenhagen: the invisible hand or regulation?

18 10 2009

The UK energy markets, regarded not so long ago as exemplifying the best of the Anglo-saxon model of capitalism, are undergoing transformation. The Committee on Climate Change (CCC), which is chaired by Lord Turner, has published a report calling for tighter regulation. The message could not be clearer: the invisible hand of the market is failing to deliver environmental reform. The CCC has claimed that so long as the market is left to its own devices, reform will be slow and targets missed. It recommends introducing compulsory emissions caps for cars, feed-in tariffs to assist producers of green power and carbon prices to be set by government at a minimum level in order to encourage ‘clean’ power practices.

Source: The Economist

According to journalist Elisabeth Rosenthal, the biggest obstacle to achieving a new global climate deal in the coming months may be how to pay for it. She cites the fact that up to $1 trillion will be needed to assist developing countries like India and Brazil ‘green’ their industrial infrastructure, as well as significant funds to protect the poorest nations from drought, rising sea-levels and natural disaster. Surely, what we can least afford at this time is inaction.

The impact on the wider economy of passing a US climate bill (which is pending in Congress) is also the subject of some consideration in a WBCSD article. Interestingly, the bipartisan Congressional Budget Office has concluded that such a bill would have a minimal impact on the standard of living for Americans.