Since the publication of the Stern Review, economists have started to ask more normative questions about climate change. Should we act now or tomorrow? What is the best theoretical carbon price to reach long-term abatement targets? How do we discount the long-term costs and benefits of climate change? This provocative book argues that these are the wrong sorts of questions to ask because they don't take into account the policies that have already been implemented. Instead, it urges us to concentrate on existing policies and tools by showing how the development of carbon markets could dramatically reduce world greenhouse gas (GHG) emissions, triggering policies to build a new low-carbon energy system while restructuring the way agriculture interacts with forests. This provides an innovative new perspective on how a post-Kyoto international climate regime could emerge from agreements between the main GHG emitters capping their emissions and building an international carbon market.

The European Union's Emissions Trading Scheme (EU ETS) is the world's largest market for carbon and the most significant multinational initiative ever taken to mobilize markets to protect the environment. It will be an important influence on the development and implementation of trading schemes in the US, Japan, and elsewhere. However, as is true of any pioneering public policy experiment, this scheme has generated much controversy. Pricing Carbon provides the first detailed description and analysis of the EU ETS, focusing on the first 'trial' period of the scheme (2005-7). Written by an international team of experts, it allows readers to get behind the headlines and come to a better understanding of what was done and what happened based on a dispassionate, empirically based review of the evidence. This book should be read by anyone who wants to know what happens when emissions are capped, traded, and priced.

Since the publication of the Stern Review, economists have started to ask more normative questions about climate change. Should we act now or tomorrow? What is the best theoretical carbon price to reach long-term abatement targets? How do we discount the long-term costs and benefits of climate change? This provocative book argues that these are the wrong sorts of questions to ask because they don't take into account the policies that have already been implemented. Instead, it urges us to concentrate on existing policies and tools by showing how the development of carbon markets could dramatically reduce world greenhouse gas (GHG) emissions, triggering policies to build a new low-carbon energy system while restructuring the way agriculture interacts with forests. This provides an innovative new perspective on how a post-Kyoto international climate regime could emerge from agreements between the main GHG emitters capping their emissions and building an international carbon market.

Many believe economic growth is incompatible with ecological preservation. Green Capital challenges this argument by shifting our focus away from the scarcity of raw materials and toward the deterioration of the great natural regulatory functions (such as the climate system, the water cycle, and biodiversity). Although we can find substitutes for scarce natural resources, we cannot replace a natural regulatory system, which is incredibly complex. It is therefore critical that we introduce a new price into the economy that measures the costs of damage to these regulatory functions. This change in perspective justifies such innovations as the carbon tax, which addresses not the scarcity of carbon but the inability of the atmosphere to absorb large amounts of carbon without upsetting the climate system. Brokering a sustainable peace between ecology and the economy, Green Capital describes a range of valuation schemes and their contribution to the goals of green capitalism, proposing a new approach to natural resources that benefits both businesses and the environment.