EU cap-and-trade system left to die by EU parliament

The ETS is dead, long live climate change.

The European Union has voted not to limit the supply of carbon permits, in a move that's widely thought to have dealt "a near-mortal blow" to the EU's Emissions Trading Scheme, according to Alphaville's Kate Mackenzie.

The ETS is supposed to limit the amount of greenhouse gases pumped into the atmosphere, by requiring permits to pollute. The idea was that companies who needed to release greenhouse gases would have to buy the right to do so from companies which had managed to cut their emissions, and a market-based solution to climate change would be found.

Unfortunately, the way the permits were allocated was to give them to companies based on their emissions in year zero, and then only increase the quantity by a little bit each year, limiting growth in emissions. Unfortunately, the global financial crisis came along and did that for us: output fell, and with it, so did emissions. But the number of permits available kept increasing, and now the EU faces a situation where they are basically worthless.

The initial sticking-plaster solution was to "backload" the permits, delaying the scheduled releases by a few years, in order to bring supply back down to a level where it would start constraining carbon emissions again. But on Wednesday evening, the EU parliament voted against the backloading, sending prices tumbling:

Iza Kaminska draws parallels with the Bitcoin crash:

All in all this is yet another valuable lesson in what happens when you make asset classes out of nothing. Unlike with Bitcoin, the cyber-spawned crypto-currency based on nothing but black market interests, the lesson here is not the fact that there is no authoritative mandate, mutual interest or even value — but rather that there is no central authority on standby to flexibly adjust and regulate supply.

But looking at the ETS in terms of its efficiency as a market is somewhat missing the point. The aim, after all, isn't to provide a stable investment vehicle or create an asset class for the sake of it – it's to reduce carbon emissions. The problem is that political constraints were never going to allow the EU to make a carbon market which would actually have a chance of doing that.

The IEA reports that a carbon price of €50 a tonne – ten times the price of an ETS permit at its peak yesterday – is needed just to encourage a switch in the short term from coal to gas generation. The price – and stability of price – required to encourage investment in completely carbon-free generation is likely to be higher still (although renewables advocates disagree). In that context, whether the ETS permits are trading at €3 or €5 is almost irrelevant. Neither price will have anywhere near the required effect.

In that context, maybe the damage done to the ETS is a good thing. Now that it's fairly conclusively demonstrated to be doing nothing to cap emissions, the EU could start getting moving on a genuine market based solution to climate change – a carbon tax, or a cap-and-trade program which actually pays attention to the "cap" part. Either way, it's going to be a while yet.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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The Prevent strategy needs a rethink, not a rebrand

A bad policy by any other name is still a bad policy.

Yesterday the Home Affairs Select Committee published its report on radicalization in the UK. While the focus of the coverage has been on its claim that social media companies like Facebook, Twitter and YouTube are “consciously failing” to combat the promotion of terrorism and extremism, it also reported on Prevent. The report rightly engages with criticism of Prevent, acknowledging how it has affected the Muslim community and calling for it to become more transparent:

“The concerns about Prevent amongst the communities most affected by it must be addressed. Otherwise it will continue to be viewed with suspicion by many, and by some as “toxic”… The government must be more transparent about what it is doing on the Prevent strategy, including by publicising its engagement activities, and providing updates on outcomes, through an easily accessible online portal.”

While this acknowledgement is good news, it is hard to see how real change will occur. As I have written previously, as Prevent has become more entrenched in British society, it has also become more secretive. For example, in August 2013, I lodged FOI requests to designated Prevent priority areas, asking for the most up-to-date Prevent funding information, including what projects received funding and details of any project engaging specifically with far-right extremism. I lodged almost identical requests between 2008 and 2009, all of which were successful. All but one of the 2013 requests were denied.

This denial is significant. Before the 2011 review, the Prevent strategy distributed money to help local authorities fight violent extremism and in doing so identified priority areas based solely on demographics. Any local authority with a Muslim population of at least five per cent was automatically given Prevent funding. The 2011 review pledged to end this. It further promised to expand Prevent to include far-right extremism and stop its use in community cohesion projects. Through these FOI requests I was trying to find out whether or not the 2011 pledges had been met. But with the blanket denial of information, I was left in the dark.

It is telling that the report’s concerns with Prevent are not new and have in fact been highlighted in several reports by the same Home Affairs Select Committee, as well as numerous reports by NGOs. But nothing has changed. In fact, the only change proposed by the report is to give Prevent a new name: Engage. But the problem was never the name. Prevent relies on the premise that terrorism and extremism are inherently connected with Islam, and until this is changed, it will continue to be at best counter-productive, and at worst, deeply discriminatory.

In his evidence to the committee, David Anderson, the independent ombudsman of terrorism legislation, has called for an independent review of the Prevent strategy. This would be a start. However, more is required. What is needed is a radical new approach to counter-terrorism and counter-extremism, one that targets all forms of extremism and that does not stigmatise or stereotype those affected.

Such an approach has been pioneered in the Danish town of Aarhus. Faced with increased numbers of youngsters leaving Aarhus for Syria, police officers made it clear that those who had travelled to Syria were welcome to come home, where they would receive help with going back to school, finding a place to live and whatever else was necessary for them to find their way back to Danish society.  Known as the ‘Aarhus model’, this approach focuses on inclusion, mentorship and non-criminalisation. It is the opposite of Prevent, which has from its very start framed British Muslims as a particularly deviant suspect community.

We need to change the narrative of counter-terrorism in the UK, but a narrative is not changed by a new title. Just as a rose by any other name would smell as sweet, a bad policy by any other name is still a bad policy. While the Home Affairs Select Committee concern about Prevent is welcomed, real action is needed. This will involve actually engaging with the Muslim community, listening to their concerns and not dismissing them as misunderstandings. It will require serious investigation of the damages caused by new Prevent statutory duty, something which the report does acknowledge as a concern.  Finally, real action on Prevent in particular, but extremism in general, will require developing a wide-ranging counter-extremism strategy that directly engages with far-right extremism. This has been notably absent from today’s report, even though far-right extremism is on the rise. After all, far-right extremists make up half of all counter-radicalization referrals in Yorkshire, and 30 per cent of the caseload in the east Midlands.

It will also require changing the way we think about those who are radicalized. The Aarhus model proves that such a change is possible. Radicalization is indeed a real problem, one imagines it will be even more so considering the country’s flagship counter-radicalization strategy remains problematic and ineffective. In the end, Prevent may be renamed a thousand times, but unless real effort is put in actually changing the strategy, it will remain toxic. 

Dr Maria Norris works at London School of Economics and Political Science. She tweets as @MariaWNorris.