According to his argument, the EU ETS isn't working because companies aren't being required to do anything. The caps are too high, carbon certificates have up to now been free, and options exist for investing elsewhere. All of this points out structural problems with the system as implemented and need to be applied to making a system work. I don't think even those in favor of emissions trading would agree with the problems Smith points out. (as the first commenter points out).
The point that the Clean Development Mechanism (CDM) gives a way out for companies in the scheme to choose to do nothing substantial towards reduction of emissions is well taken. Even if these methods are used, they must be held accountable that the emissions really have been reduced. Economic development, while admirable, isn't the goal of an emissions trading scheme. While it is admirable and desirable for less-developed nations to get access to funds and technologies that pollute less than the ones that are more easily available, it shouldn't be used as a sop for taking action. It seems that he eventually equates this trading of credits between industrial nation polluters and non-industrial nations to be the entire "point of the system is to provide opportunities for Northern
companies to delay making the costly transition to low-carbon
He concludes on this note:
Waiting yet more years to learn further lessons from the next round ofAnd certainly, straight up and up emissions regulations without a trading scheme could be deployed. And perhaps such a simple policy implementation is desirable. However, it will still incur costs or quite possibly put emitters out of business if they cannot keep up with lower regulations. And given the grand success at increasing CAFE standards over the last few years, is it really likely that regulation isn't going to be gamed any more than a market system that allows those with inexpensive emissions solutions to help those with less flexibility?
ineffective emissions trading is a luxury we don’t have. However
politically unfashionable it may be, and however inimical it is to the
business community, there is an urgent need to return to the tried and
tested means that do deliver real results in terms of emissions
reductions, such as stricter regulation, oversight and penalties for
polluters on community, local, national and international levels, as
well as support for communities adversely impacted by climate change.