When it comes to emissions trading, business managers and engineers tend to make different choices

17.02.2016

Whether or not a company invests in climate protection depends on whether business mangers or engineers are responsible for emissions trading-related decisions. This was one of the key findings of a new CliSAP study.

The researchers explored how companies actually engage in emissions permit trading.
Despite the criticism leveled at it, emissions trading is the EU’s primary climate protection instrument.

Currently, there is exactly one political mechanism for reducing carbon dioxide and other greenhouse gas emissions: emissions trading. First introduced in 2005 and the target of criticism ever since, it is nonetheless the EU’s crucial climate protection instrument and has made the EU the “role model” when it comes to a possible future global system.

Anyone can check online how many certificates a company has bought and used. But this information says nothing about how individual firms engage in emissions trading. To get to the bottom of the matter, the Hamburg-based researchers had to ask the companies themselves.

Miguel Rodriguez Lopez, Anita Engels and Lisa Knoll did precisely that for the pilot phase of European emissions trading from 2005 to 2007, investigating questions such as: Which department is responsible? When during the year are emissions permits bought or sold? Which technologies are used in order to reduce CO2 emissions? They then evaluated 1,270 questionnaires from Germany, Great Britain, Denmark and the Netherlands.

Sociological research uncovers gaps in emissions trading

Their main discovery: decisions about emissions trading are made differently, depending on whether the technical or financial departments are responsible. Engineers are more likely to try to optimize production to reduce CO2 emissions, whereas business managers tend to buy emissions permits in order to continue producing large amounts of carbon dioxide.

According to economic theory, the price and number of permits alone should be enough to reduce CO2 levels. But clearly there are other factors involved, for example, who makes the decision to purchase the permits.

The conclusion that Rodriguez Lopez and colleagues therefore arrived at: there should be more focus on those responsible for making these decisions – and the information on emissions trading needs to be presented differently to the different target groups. Business managers need to learn to include long-term investments climate protection measures in their short-term purchasing decisions. Further, it’s important to take these aspects into account with regard to other countries. For example, China has also decided to introduce an emissions trading system based on the European model, which will give them the opportunity to learn from Europe’s mistakes and to do it better right from the start.

 

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Photo: Coal power plant in Datteln (Arnold Paul/via Wikimedia Commons/CC-BY-SA-2.5), detail