Author: Nicole Olynk Widmar, Associate Head and Professor, Purdue University, Department of Agricultural Economics, and Carson Reeling, Associate Professor, Purdue University, Department of Agricultural Economics
Dr. Reeling calls carbon markets non-regulatory offset markets (well, programs, since we do not agree that they are actually markets). In contrast to a regulatory market where demand for permits and carbon sequestration would be driven by regulation, it will instead be driven by voluntary commitments by firms.
“This is actually a really great idea, right? There’s no problem with these offset markets in any real sense. From a societal perspective that’s all [carbon emissions reduction] we want; we want to make sure that we reduce our greenhouse gas emissions. It doesn’t matter if Walmart is doing it, or Apple is doing it, or a farmer in Indiana is doing it. As long as we get rid of those emissions, we’re fine, so in principle these offset markets should work.” Dr. Carson Reeling, April 6th, 2022 in the Consumer Corner Micro-Course Consumer-Driven Changes in Ag Market Channels
Carbon trading is certainty not new; there was talk about these markets going back to the 1960s. We must be a little suspicious of why farmers have not been invited into carbon offsets before now, and we’ll explore it next week in more depth.
A quick primer for those who are interested: In contrast to a non-regulatory voluntary market, the more commonly thought of but seldom formally revisited in a technical (read: non-political) sense is a regulatory market. If you are interested, Dr. Reeling has a 5-minute overview on how the mechanics of a regulatory market and how a regulated polluter may meet emissions caps.
ConsumerCorner.2022.Letter.31
