Rudolph-Brandes-Gymnasium
Bad Salzuflen

Finalist for the region West (Wildcard team)

CLIMATE CHANGE IS COSTLY, BUT SO IS MITIGATION – PHASE X

As we discovered in our research, the European Emission Trading System poses as a great opportunity to fight climate change. However, there are also things to be fixed about it. In the following, we will try to explain to you how the European Emission Trading System works and what ought to be changed.

Since over time the number of outstanding certificates will be decreased, the price for an externality such as carbon dioxide will increase. What you would expect is a gradually rising price in the European Emission Trading System. Even though the system should have become stricter in the different phases, prices are not rising. Journalists call the current system broken or announced it failed. 1

As we identified both problems and opportunities, we came up with a plan to fix the European Emission Trading System. We call it PHASE X.

Since only European factories are bound to the emission trading system, we want to implement a carbon tax system into the European Emission Trading System. Products imported from countries without a carbon pricing plan will be charged with carbon tariffs. Since other countries will try to prevent overpaying, they are also incentivized to create a carbon pricing plan of their own urging a domino effect. Because if we don’t manage to treat all nations the same, the fight against climate change will fail.

Inequality has to be acted upon. When researching, we discovered another issue that states the incoherency of the European Emission Trading System just as much. Since not all sectors are bound to the European Emission Trading System, the price will be not as efficient as it could be. Other sectors get much of their certificates handed out very cheap due to free allocation. In all honesty: It makes no sense to praise market efficiency if you do not treat everyone equally. Therefore we concluded two more demands.

First of all, all sectors have to be covered by the European Emission Trading System. It is just unfair if some sectors get exceptions from what everybody has contributed to.

And second of all, there should not be any free allocation for the same reason. If some sectors get more free certificates than others, markets are not able to determine those places in the economy where it cost the fewest to save upon carbon dioxide.

1 Matthew Sinclair, Tax Payers Alliance, THE EXPENSIVE FAILURE OFTHE EUROPEAN UNION MISSIONS TRADING SCHEME https://www.cei.org/wp-content/uploads/2009/12/matt-sinclairs-ets-study-oct-09.pdf

Their YES! topic

Climate change is costly, but so is mitigation: What policies are most cost-effective?

by Stephan Sommer, RWI – Leibniz Institute for Economic Research

According to UN secretary-general António Guterres, climate change is “the most systematic threat to humankind”. Since the beginning of the Industrial Revolution, rising greenhouse gas emissions have led to an increase in global mean temperatures, extreme weather events, and sea level.

Despite several UN conferences on climate change, governments have only tentatively tackled its causes and consequences. However, there is accumulating scientific evidence that rapid and decisive action is required to limit the consequences of climate change.

A call for action is famously put forward by the Fridays-for-Future movement. Triggered by this movement, the German government has recently agreed upon a new climate protection program that contains a multitude of measures to reduce greenhouse gas emissions.

Specifically, it avails pecuniary measures, such as a carbon tax and subsidies, but also non-pecuniary measures like energy audits and energy standards. The measures directly address the transportation, building, and agricultural sectors. They comprise a mix of penalties and compensations for citizens and companies to incentivize climate-friendly behaviour.

There are at least three potential shortcomings of this program: First, it is debatable whether the measures it contains are sufficient to reduce Germany’s greenhouse gas emissions to accomplish the goals formulated in the Paris Agreement. Second, climate change can only be mitigated if it is tackled globally, which requires moving beyond unilateral action to multinational cooperation. Third, climate protection measures entail costs, which may unduly burden vulnerable segments of society via higher energy bills, requiring an adequate accompanying social policy to address distributional effects.