Online

McCowen, Tracey

Natural Resources

2017

PhD

The price of emission permits is deemed too low to mitigate climate change. In three studies, policy approaches to pricing carbon in a market setting are examined. First, the emission permit market is analyzed comparatively to how the ethanol mandate impacted prices in the corn market. This leads to the realization that the marketization of carbon is more like a currency than a physical commodity. The next study examines emission permits as a monetary policy tool. Emissions correlate GDP output, thus central banks can use emission permits as forward guidance, as a means to optimize the price for climate change mitigation, and as an alternative to interest rates. Opinions of thought leaders are used to question the acceptability of emission permits as a monetary policy tool. The final study is an ethical analysis using deontology, utilitarianism and virtue ethics within a pragmatic philosophical context, analyzing carbon as a monetary policy tool. In order for carbon as a monetary policy tool to be considered ethically acceptable, it must satisfy the temporal, spatial and institutional dilemmas of climate change articulated in Stephen Gardiner's Perfect Moral Storm. Under this ethical standard, it is found that using carbon as a monetary policy tool can help address these concerns, but not solve them alone. This research is presented using transdisciplinary methods which provide a unique and holistic approach to policy formation not yet presented in the literature. This research is relevant to policy makers in central banking, the IMF and World Bank.