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Mapping Wild Cards

Inspired by: FP7 » Carbon crunch and the climate bubble

version: 8 / updated: 2011-01-08
id: #1373 / version id: #265
mode: VIEW

Originally submitted by: Joe Ravetz
List of all contributors by versions (mouse over)
Last changed by: Rafael Popper
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submitted unpublished archived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)
CLIMATECOST (212774) http://www.climatecost.cc/ClimateCost/Welcome.html http://cordis.europa.eu/fetch?CALLER=FP7_PROJ_EN&ACTION=D&DOC=1&CAT=PROJ&QUERY=012511593f73:6a11:5cfd32e4&RCN=89308

Headline

(max. 9 words)

Carbon crunch and the climate bubble

Description

(approx. 150 words)
Please describe the Wild Card (approx. 150 words)
Who will bail out the climate bubble? global carbon markets and pricing mechanisms fulfil the aspirations of the global climate community. But they quickly lead to runaway speculation, high risk carbon derivatives markets, and an inflationary carbon bubble, driven by the perception of easy money in carbon finance. This rapidly undermines any remaining confidence in low carbon technology investment, and increases the vulnerability of the global climate governance system.

Keywords

carbon, economy, technology, investment, climate, market

Mini-description

(max. 250 characters)

Global carbon markets and pricing mechanisms fulfil the wildest aspirations of the global community. But they quickly lead to runaway speculation and an inflationary carbon bubble, driven by expectations of easy money in carbon finance.

Likelihood

Closest timeframe for at least 50% likelihood
Please use one of the following options:
now-2015

Features of life if the wild card manifests

Feature 1: business models and industrial environment
Carbon becomes an alternative form of finance with similar levels of risk and moral hazard.
Feature 2: education and research environment
Research is needed on systemic risk in new carbon markets.
Feature 3: consumers, markets and lifestyles
Consumers adapt to carbon credits but then the market collapses.
Feature 4: technology and infrastructure
Technology is steered towards carbon credits at the cost of other greenhouse gases & environmental effects.
Feature 5: politics and global affairs
Carbon speculation causes international tension particularly between fossil fuel producers and consumers.
Feature 6: health and quality of life
Instability feeds through to fuel prices with problems for travel-dependent consumers.
Feature 7: security and defence
There is para-military involvement in many fossil fuel producing areas.

Type of event

Unplanned consequence of events/trends/situations (e.g. financial crisis, accidental breakthrough)

Type of emergence

please select (if any) describe related trend or situation
A contemporary equivalent of past Wild Cards
(e.g. earthquake, tsunami or, similar to the disintegration of the Soviet Union, the USA breaks up into independent countries sometime between 2025-2050, for example) 		Credit crunch

Type of systems affected

Both

Classification

Undesirable

Importance

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

Early indicators

(including weak signals)

rapid growth in secondary carbon finance

Latent phase

Obstacles for early indentification

information/communicational filters (media/editorial interests, language, reasoning)
economic filters (business/market interests)

Manifestation phase

Type of manifestation

In a probably pervasive way (contagious or transmittable)

Aftermath phase

Important implications
Collapse of a system
Emergence of a new system (e.g. new technologies, new paradigms)

Comments

the success of the 'marketization' of carbon & ecosystems services could lead to the failure of the original objectives.

Key drivers or triggers

Provide up to 2 possible drivers or triggers of HIGH importance. Click on HELP to see examples:
please describe
Driver / Trigger 1 		please describe
Driver / Trigger 2
Economic risk-seeking & moral hazard in secondary finance
Political universal marketization of carbon & climate policy

Potential impacts (risks & opportunities)

Timeframe options
Risks Opportunities
immediate
(within 1 year after the Wild Card manifests) 		CO2 Market collapses

Potential stakeholders' actions

before
it occurs 		after
it occurs
Policy actors (at the international, European and national levels) action to build stable & responsible carbon markets action to build stable & responsible carbon markets
Academic/Research sector research on systemic instability & resilience
Non-for-profit organisations (e.g. NGOs, political parties, social movements, voluntary associations) link to voluntary offset markets & others

Relevance for Grand Challenges

where? please justify:
particularly relevant Europe world
Food security and diet
Governance and trust in democracy
Energy security/dynamics
Sustainability and climate change
Water security/vulnerability

Relevance for thematic research areas

please justify:
particularly relevant
Energy
Environment (including Climate Change)
Social Sciences and Humanities

Pan-European strategies potentially helping to deal with the wild card

please justify:
particularly relevant
Developing and funding world-class research infrastructures research on systemic resilience / instability
Facilitating and promoting knowledge sharing and transfer

 Features of a research-friendly ecology contributing to deal with the wild card

For further information about 'research-friendly strategies' click here

please justify:
particularly relevant
Strengthening the actors in the research-friendly ecology
(i.e. Research funding organisations, universities, businesses, Research and Technology Organisations, Researchers and Citizens) 		the agenda involves many types of actor outside the research community
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.

Relevance for future R&D and STI policies

Note: RTD = research and technology development; STI = science, technology and innovation
Research is needed on systemic resilience / instability at the global level.