Diminishing Returns: Carbon Market Crisis and the Future of Market-Dependent Climate Change Finance

Kate Ervine

New Political Economy, 2014, vol. 19, issue 5, 723-747

Abstract: The current and future costs of meeting climate change mitigation needs in the global South vastly exceed levels of available funding from public sources in the North. As a possible solution to this problem, policy-makers and various observers have pushed increasingly for the adoption of market-based carbon financing strategies, with the United Nations Clean Development Mechanism (CDM) representing the most consistent application of this approach to date. Nevertheless, market-based carbon finance remains highly volatile given its heavy dependence on conditions in the broader global carbon market which remains in the throes of a devastating crisis, earning carbon the distinction of 2011s worst performing global commodity. By demonstrating that it is through carbon's market price that finance-generating investment in the CDM is largely derived, and which also determines the ex post value of CDM projects, this paper argues for the decoupling of climate change finance from carbon's market value. The need to do so is particularly pressing since, it is argued, the current crisis in the global carbon market reflects an embedded crisis tendency in that market, born in part from the political machinations through which it was born and which leaves it prone to persisting crises of oversupply.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/13563467.2013.849672 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:cnpexx:v:19:y:2014:i:5:p:723-747

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/cnpe20

DOI: 10.1080/13563467.2013.849672

Access Statistics for this article

New Political Economy is currently edited by Professor Colin Hay

More articles in New Political Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().