ABSTRACT
NO: Carbon markets are theoretically flawed and practically ineffective
The case for carbon markets and greenhouse gas emissions trading has emerged out of welfare economics and the field of neoclassical economics more broadly. But the arguments in favour of emissions trading rest on questionable definitions of market externalities; an insufficient theory of economic incentives; a questionable approach to ecological processes; and on unreliable assumptions about market structures/dynamics. This essay argues against carbon markets as an adequate way to address climate change by exposing the limitations of neoclassical economic orthodoxy as a justification for emissions trading and by offering evidence of the weak efficacy of emissions trading in practice. Over decades of practice, experiments in carbon markets have led to very little substantive change in the emissions profiles of industrial sectors and nations where trading schemes and carbon offset markets operate.
