A consortium of ginormous banks recently pressed for the creation of an integrated carbon market encompassing the United States and other industrialized nations. The move prompted eye-rolling in some quarters, but I’m not really sure why.
The banks stand to make huge sums of money from the implementation of a global cap-and-trade system. Some speculate that carbon will soon become the largest commodities market in the world. Presumably this windfall is what motivates the banks’ sense of urgency.
Or maybe not. Maybe they’re just really, really concerned about climate change, they read a bunch of blog posts about the various policy solutions, and decided cap-and-trade is the way to go. I don’t suppose we’ll ever know what motives lurk inside a banker’s heart, and it’s not clear to me that we should care.
One of the well-known advantages of cap-and-trade systems over a carbon tax is their greater political saleability, and a big part of that saleability comes from the fact that cap-and-trade systems create profit opportunities in some industries. If banks want to hire expensive lobbyists to press for quick — and meaningful — action on climate change, far be it for me to complain.
Two related points:
- Cynicism would be justified if the banks were pushing lame, watered-down climate legislation. But it ain’t so. The consortium is pro-auction and anti-safety valve. If you don’t know that means, don’t worry about it — suffice to say that the banks are pushing for the strongest form of cap-and-trade.
- Cynicism might also be justified if the banks were part of an obstructionist industry finding deathbed religion on climate change, but in fact the financial services industry has generally been quite forward-looking.
Given that we’re soon going to be hearing a chorus of business groups arguing that climate change is too expensive to do anything about, I’m pretty happy to see some self-interested and well-funded parties arguing otherwise.
Photo available under Creative Commons license from unfortunately named Flickr user tEdGuY49®.