Carbon trading won't be enough: International Energy Agency

Filed in archive markets on July 12, 2010

While a lot of attention has been put on carbon trading, the latest International Energy Agency report is telling politicians that they're going to have come up with other solutions to tackle climate change because they can't rely on carbon markets. It says carbon trading is not going to stop climate change and there are good reasons for that.

The report says: "While such policies (e.g. carbon trading) are likely to be an important driver of change, they are not necessarily the most effective way to deliver short-term investment in the more costly technologies that have longer-term emissions reduction benefits. Moreover, a truly global carbon market is likely to be many years away."

Instead, it says governments need to provide regulations, tax breaks, voluntary programs, subsidies and information campaigns.

The report says that governments need to invest up to five times more to cut emissions. At the same time, there has to be an exit strategy for government to reduce its funding as the technologies start making money.

The alternative, says the report, is to be hostage to be rising oil prices.