European Union Emissions Trading Scheme, Scenes I and II

So far this play has two scenes. The second shows why.


Many policies, laws and regulations are cases studies in the failure to macro-design micro-behavior. Since this does not appear to be a self-correcting problem, such cases continue to need calling out. Consider the travails of the EU’s CO2 cap-and-trade system, the Emissions Trading Scheme (ETS). Always bear in mind the theory upon which the ETS was based is that the higher the price of carbon, the fewer the emissions, all else equal.

–Over a decade ago in 2005, CO2 emission credits were issued under the ETS, credit prices did initially rise, but it was realized too many credits had been issued when prices declined. By 2007 it was conceded that not only had too many credits been issued, but that coal imports into the EU had been rising at the same time. Credits continued to be issued, and by the end of 2009 prices were said to be too low to encourage investment in lowering emissions.

Around 2010, computer hacking, cyber-theft and permit fraud occurred coupled with the obvious fact that the low carbon prices were in part due to declining carbon emissions because of increasing use of renewable energy (in other words, success by other means). The recession following the 2008 financial crisis had a depressive effect on credit prices as well. By the end of 2013, the European Parliament had approved a rescue plan for the ETS, including a provision to delay allocation of a third of the credits—even though the market would still likely be oversupplied by 2020 (such was found still in 2018). The thought now was that the ETS should promote green technological innovation, not just carbon reduction.

–It will not do for the cap-and-trade supporters to counter: Well, what else could we do other than the ETS! We needed some kind of market, or things would have only gotten worse. Well, I respond, what you could have done was to search for those better practices elsewhere that infrastructure control rooms use in real time to meet environmental standards. It may be the case that some EU energy control rooms did just that, but who would know that from existing reports?

What other practices? Consider the example of “environmental dispatching” of generators in Austin, Texas to meet specific real-time emission standards (starting at around the time the ETS was under cyber theft). As described by David Allen and his colleagues, the municipal utility was able to maintain reliable electricity supplies while shifting its real-time generator usage in ways to better meet regulated ozone constraints. Why is such a practice important? Never once in seven years of observation did I see anyone come into the major transmission control room that my colleague, Paul R. Schulman, and I studied and ask: “Why don’t we use lower-emitting generator x rather than higher emitting generator y, given both meet market price conditions?”

The point is that opportunities for doing so exist, and not just in the U.S.


Most of the above, save for the 2018 update, was written several years ago. I agree with the analysis, but now see how to recast the story to push the implications further. (Any single recasting implies others are possible.)

This different storyline relies on (1) the notion of “policy palimpsest” discussed in the blog entry, “Blur, Gerhard Richter and failed states” and (2) a wonderful essay by Lydia Davis, the translator, which expands the notion of palimpsest for rethinking the ETS.

The upshot of a policy palimpsest is that any cur­rent policy statement—my above analysis of ETS—is the concatenation of prior policy arguments and narratives that have accumulated and partly overwritten each other. A composite argument read off today’s surface of a policy palimpsest reads sensibly—nouns and verbs appear in order and sense is made—but none of the previous policy texts shine clear and whole through the layers, efface­ments, and erasures elsewhere in the policy palimpsest.

The palimpsest in the case of the ETS is the massed narratives and controversies, past and present, over just what is better for the environment—a carbon tax, cap-and-trade systems, renewable energy technologies, a mix of these, some other hybrid, or something altogether different? The analyt­ic challenge is to read any composite argument, like the one I gave above, with the effaced elements made visible. Once you have identified what is missing from the composite but was in the palimpsest (no guarantees here), you have identified potential means to recast the complex issue along different lines.

I shamelessly appropriate from Davis’s essay to show how the palimpsest and composite argument works for the ETS. Start here. Since a composite argument is the concatenation of fragments of other earlier texts, the composite itself can be viewed as a larger fragment consisting of smaller ones. Viewing it so has two important implications.

First, the readers of the larger fragment must provide more of its sense-making. Yes, the composite above is assembled to be read as paragraphs with sentences that follow each other, each in turn with subject-verb-object sequences and such. But that meaning is not constructed sequentially and logically, but rather paratactically by myself and associatively by you, the readers.

That is, my above composite reads as if it were a chronological history of the ETS—”just the facts ma’am”—when in fact it is no such thing.  First, it is parataxis at work—that is, I have conjoined disparate statements together as if each statement were somehow equally important in the sequence I construct. Second, you the reader have to link these disparate statements together by associations that you provide, not me. At its extreme, such a construction is an instance of what writer, Mary McCarthy, said of Lillian Hellman, another writer, “every word she writes is a lie, including ‘and’ and ‘the.’”

This juxtaposition of fragments that are read as if they were statements equally associated with each other means that the resulting composite argument is punctuated by interruptions the readers do not typically see. The analytic aim to make these interruptions visible to the reader: again to make evident what is missing in the current composite argument by virtue of all those earlier debates and points having been obscured or written out of the record  relevant to the ETS.[1]

In the above composite, I identified one of the missing elements and focussed on it, i.e., what infrastructure control centers were actually doing by way of mitigating emissions over the decade or more the ETS was floundering under the claim there was no alternative to it.

It strikes me that I also missed something bigger.

There are, conceptually, at least three types of fragments, small or large: that which awaits finishing or completed, that which survives what once had been finished or completed, and that which is (no longer) finishable or completable. You have a hole in the ground. In one version, it surrounds the foundation upon which a structure will be built. In the second version, it surrounds the remaining ruins of a previous structure. In the third version, it surrounds what is now nothing: What was there has rotted away entirely or disappeared irretrievably. Indeed, the third version could be cohabitating with the first or second versions.

I now think the wider missing element from the first scene of the ETS play is the open question about just what kind of fragment the ETS is. Is it primarily an institutional structure under continual or intermittent construction? Or is it the ruins left behind by techno-managerial elite and New Class of bureaucrats operating well beyond their capacities? Or is the ETS an hollow cypher for all types of environmental hopes that are still treated too unrealistic, evanescent or without substance? Maybe all? Maybe none?

What I did not see is that the question of just what kind of fragment my above composite is remains open. To cut to the quick, my Scene I analysis was to be a last word on the ETS, and that is a temptation policy analysts, including myself, must resist. The palimpsest is always being written over—consider the current EU proposal for carbon border taxes based on average prices in the ETS. There is no last word for the ETS. Instead, what needs to be done is to be prepared for the inevitable new interruptions and excavate what could now be better approaches that were effaced and rendered invisible in the past.

Principal sources

Davis, L. (2019). “Fragmentary or unfinished: Barthes, Joubert, Hölderlin, Mallarmé, Flaubert” In: Essays One, Farrar, Straus and Giroux, New York, NY.

Blog entry, “Blur, Gerhard Richter and failed states”

Allen, D., M. Webber, R. Williams, R. Prinn and M. Webster (2011). EFRI RESIN. The Interface of Infrastructures, Markets, and Natural Cycles: Innovative Modeling and Control Mechanisms for Managing Electricity, Water and Air Quality in Texas. A powerpoint presentation at the University of Illinois, November 11 2011 (accessed online on December 31 2019 at–.pdf&ei=WelsT8eJGI_YiAKUoPy4BQ&usg=AFQjCNHmaNNgr9oADDodLIrxKI-vgTR45Q&sig2=owWXq_iDzcMnHf8gCEPpHA).

[1] More formally, a composite argument is blurred not only by the way it conveys any argument (as if straightforward when actually interrupted and fragmented), but also by what it doesn’t convey—those elements of argument that are there but illegible as well as those that appear now interstitially as lacunae, non-sequiturs, slippages, caesurae, and aporias (fault-lines all) via the overlaying that is partial in both senses of the word. As such, no palimpsest is inscipted with the last word; no composite argument from it is indisputable. Each composite argument is allographic in the sense of having no one authoritative rendering.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s