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Mapping Weak Signals

Inspired by: FP7 » Emergence of secondary carbon financial vehicles

version: 5 / updated: 2011-01-10
id: #1403 / version id: #484
mode: VIEW

Originally submitted by: Joe Ravetz
List of all contributors by versions (mouse over)
Last changed by: Joe Ravetz
WI-WE status:
submitted unpublished archived

Source of inspiration

European Commission Framework Programme for RTD (FP7)

Theme/activity of inspiration

Theme 6 - Environment (including Climate Change)

Sub-theme/area of inspiration

Pressures on environment and climate

Optional reference/s to FP7 project/s

Use the following format: Project Acronym (Project Reference No.). Use commas if more than one project is associated to this Wild Card, for example: ALFA-BIRD (213266), SAFAR (213374), LAPCAT-II (211485)
CLIMATE-COST http://siteresources.worldbank.org/NEWS/Resources/State&Trendsformatted06May10pm.pdf

Signal's headline

(max. 9 words)
Emergence of secondary carbon financial vehicles

Signal's description

(approx. 150 words)
Please describe the Weak Signal (approx. 150 words)
Over the last decade there has been exponential increase in the volume of secondary carbon financial trading (e.g. compliance security, securitization etc). These are a logical development which spreads risk and provides security for rapidly growing portfolios: and the UNFCC-backed CDM system is increasingly linked to the major emissions permit trading scheme such as ETS. Each of these is dependent on political decisions on the size of the cap, and on market regulation: but there is a growing possibility that the political decisions will be driven by financial logic, rather than by environmental goals.

Keywords

market speculation, carbon market, carbon emissions reduction, financial vehicle, systemic resilience

Mini-description

(max. 250 characters)
Rapid increase in number of secondary carbon financial trading which is derived from project based credits and permits. This shows signs of runaway speculation, and the shifting of carbon markets from an environmental to a financially-driven system.

Signal's first apperance

2005-now

Signal's potential evolution

It could lead to...
issue type of issue/development potential impact on society timeframe for the issue to become at least 50% probable
#1 Financial speculation on new carbon markets. new/emerging
 		harmful
 		now-2015

Under what assumption the Weak Signal might evolve.

- Business as usual? Nothing is done to prevent it or to strengthen it

Importance

please specify
please select
Level 3: important for the European Union
Level 4: important for the whole world

Filters preventing the signal's monitoring

information/communicational filters (media/editorial interests, language, reasoning)
economic filters (business/market interests)
political filters (party or ideological interests)

Comments on selection:

in the same way as the banking crisis & credit crunch of 2008-2010, the carbon crunch could be a result of systemic speculation, coverup, manipulation and mendacity on a global level

Key driving forces of this signal

Please use these boxes to provide up to 2 drivers of HIGH importance. Click on HELP to see examples:
Driver 1 Driver 2
Economic financial speculation as a '3rd circuit' for capital accumulation
Environmental climate policy

Major risks & opportunities associated to the signal

Please choose the most appropriate timeframe option(s) to which you would like to provide inputs.
Risks Opportunities
before 2015 the entire global climate policy framework is undermined
between 2015-2025 if finance can be attracted then carbon targets will be politically accepted.

Potential stakeholders' actions

short-term actions
(now-2015) 		longer-term
(after 2015)
Policy actors (at the international, European and national levels) close attention on the markets for CDM, voluntary and ETS
Non-for-profit organisations (e.g. NGOs, political parties, social movements, voluntary associations) continuing scrutiny of the financial / policy balance in climate targets

Signal's relevance for European Grand Challenges

where? please justify:
particularly relevant Europe world
Crime and terrorism
Food security and diet
Energy security/dynamics
Sustainability and climate change
Water security/vulnerability

Signal's relevance for thematic research areas

please justify:
particularly relevant
Food, Agriculture and Fisheries, and Biotechnology
Energy
Environment (including Climate Change)
Social Sciences and Humanities

Pan-European strategies influencing the signal

please justify:
particularly relevant
Developing and funding world-class research infrastructures
Facilitating and promoting knowledge sharing and transfer
Fostering and facilitating coherent international cooperation in science and technology

Research-friendly strategies potentially improving understanding of the signal

For further information about 'research-friendly strategies' click here
please justify:
particularly relevant
Overcoming sub-criticality and systemic failures
To be subcritical means that the effort in a particular field or subfield lacks resources, equipment or a sufficient number of researchers to achieve a desired goal
Creating a closer link between researchers & policy-makers
(e.g. supporting both thematic and cross-cutting policies, highlighting the strategic purpose of the European Research Area, etc.

Signal's relevance for future R&D and STI policies

Note: RTD = research and technology development; STI = science, technology and innovation
This example links environmental policy with financial systems analysis, with global political negotiations. Research will need to address the systemic vulnerabilities and resilience factors in market based environment-climate policy.