MCC pro Carbon Central Bank
Shortly before the European Council meeting focusing on climate policy MCC director Edenhofer explicates in the daily “FAZ” how a European Carbon Central Bank could help.
An authority, independent from direct political influence, could make the knocked-down Emissions Trading System work again Ottmar Edenhofer, director of the Mercator Research Institute on Global Commons and Climate Change (MCC) told the German national daily “Frankfurter Allgemeine Zeitung” (FAZ). Like the European Central Bank (ECB) supplies banks with money according to the state of the economy, a Carbon Central Bank would increase or decrease the CO2 allowances according to a market price that is too low or too high.
Thereby the scientist, who is also the Chief Economist at the Potsdam Institute for Climate Impact research (PIK), turns against the latest proposal for a market stability reserve by the European heads of state or government. This instrument would reduce the allowances only partly and temporarily. Edenhofer points out that the main reason for the current prices on junk status is the low credibility of climate policy among investors. “We have to reform emissions trading such that we put a minimum price on carbon,” he said.
Furthermore, the economist stresses the importance of an EU climate policy framework that cuts greenhouse gas emissions by 40 percent by 2030, compared with 1990 levels. This is a proposal also brought forward by other economists, such as the French Thomas Piketty, who most recently has become internationally well-known by his work on wealth and income inequality, and the Oxford professor Cameron Hepburn. They, too, pledge in an open letter to the European Council for tightening up climate policy.
