Pseudoscience

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https://en.wikipedia.org/wiki/Pseudoscience

A typical 19th-century phrenology chart: during the 1820s, phrenologists claimed the mind was located in areas of the brain, and were attacked for doubting that mind came from the nonmaterial soul. Their idea of reading "bumps" in the skull to predict personality traits was later discredited. Phrenology was first termed a pseudoscience in 1843 and continues to be considered so.

Pseudoscience consists of statements, beliefs, or practices that claim to be scientific or factual but are inherently incompatible with the scientific method. Pseudoscience is often characterized by contradictory, exaggerated or unfalsifiable claims; reliance on confirmation bias rather than rigorous attempts at refutation; lack of openness to evaluation by other experts; absence of systematic practices when developing hypotheses; and continued adherence long after the pseudoscientific hypotheses have been experimentally discredited. It is not the same as junk science.

The demarcation between science and pseudoscience has scientific, philosophical, and political implications. Philosophers debate the nature of science and the general criteria for drawing the line between scientific theories and pseudoscientific beliefs, but there is widespread agreement "that creationism, astrology, homeopathy, Kirlian photography, dowsing, ufology, ancient astronaut theory, Holocaust denialism, Velikovskian catastrophism, and climate change denialism are pseudosciences." There are implications for health care, the use of expert testimony, and weighing environmental policies. Recent empirical research has shown that individuals who indulge in pseudoscientific beliefs generally show lower evidential criteria, meaning they often require significantly less evidence before coming to conclusions. This can be coined as a 'jump-to-conclusions' bias that can increase the spread of pseudoscientific beliefs. Addressing pseudoscience is part of science education and developing scientific literacy.

Pseudoscience can have dangerous effects. For example, pseudoscientific anti-vaccine activism and promotion of homeopathic remedies as alternative disease treatments can result in people forgoing important medical treatments with demonstrable health benefits, leading to ill-health and deaths. Furthermore, people who refuse legitimate medical treatments for contagious diseases may put others at risk. Pseudoscientific theories about racial and ethnic classifications have led to racism and genocide.

The term pseudoscience is often considered pejorative, because it suggests something is being presented as science inaccurately or even deceptively. Therefore, practitioners and advocates of pseudoscience frequently dispute the characterization.

Etymology

The word pseudoscience is derived from the Greek root pseudo meaning "false" and the English word science, from the Latin word scientia, meaning "knowledge". Although the term has been in use since at least the late 18th century (e.g., in 1796 by James Pettit Andrews in reference to alchemy), the concept of pseudoscience as distinct from real or proper science seems to have become more widespread during the mid-19th century. Among the earliest uses of "pseudo-science" was in an 1844 article in the Northern Journal of Medicine, issue 387:

That opposite kind of innovation which pronounces what has been recognized as a branch of science, to have been a pseudo-science, composed merely of so-called facts, connected together by misapprehensions under the disguise of principles.

An earlier use of the term was in 1843 by the French physiologist François Magendie, that refers to phrenology as "a pseudo-science of the present day". During the 20th century, the word was used pejoratively to describe explanations of phenomena which were claimed to be scientific, but which were not in fact supported by reliable experimental evidence.

Dismissing the separate issue of intentional fraud – such as the Fox sisters' "rappings" in the 1850s – the pejorative label pseudoscience distinguishes the scientific 'us', at one extreme, from the pseudo-scientific 'them', at the other, and asserts that 'our' beliefs, practices, theories, etc., by contrast with that of 'the others', are scientific. There are four criteria:
     (a) the 'pseudoscientific' group asserts that its beliefs, practices, theories, etc., are 'scientific';
     (b) the 'pseudoscientific' group claims that its allegedly established facts are justified true beliefs;
     (c) the 'pseudoscientific' group asserts that its 'established facts' have been justified by genuine, rigorous, scientific method; and
     (d) this assertion is false or deceptive: "it is not simply that subsequent evidence overturns established conclusions, but rather that the conclusions were never warranted in the first place"

From time to time, however, the usage of the word occurred in a more formal, technical manner in response to a perceived threat to individual and institutional security in a social and cultural setting.

Relationship to science

Pseudoscience is differentiated from science because, although it usually claims to be science, pseudoscience does not adhere to scientific standards, such as the scientific method, falsifiability of claims, and Mertonian norms.

Scientific method

Main article: Scientific method

The scientific method is a continuous cycle of observation, questioning, hypothesis, experimentation, analysis and conclusion.

A number of basic principles are accepted by scientists as standards for determining whether a body of knowledge, method, or practice is scientific. Experimental results should be reproducible and verified by other researchers. These principles are intended to ensure experiments can be reproduced measurably given the same conditions, allowing further investigation to determine whether a hypothesis or theory related to given phenomena is valid and reliable. Standards require the scientific method to be applied throughout, and bias to be controlled for or eliminated through randomization, fair sampling procedures, blinding of studies, and other methods. All gathered data, including the experimental or environmental conditions, are expected to be documented for scrutiny and made available for peer review, allowing further experiments or studies to be conducted to confirm or falsify results. Statistical quantification of significance, confidence, and error are also important tools for the scientific method.

Falsifiability

Main article: Falsifiability

During the mid-20th century, the philosopher Karl Popper emphasized the criterion of falsifiability to distinguish science from non-science. Statements, hypotheses, or theories have falsifiability or refutability if there is the inherent possibility that they can be proven false, that is, if it is possible to conceive of an observation or an argument that negates them. Popper used astrology and psychoanalysis as examples of pseudoscience and Einstein's theory of relativity as an example of science. He subdivided non-science into philosophical, mathematical, mythological, religious and metaphysical formulations on one hand, and pseudoscientific formulations on the other.

Another example which shows the distinct need for a claim to be falsifiable was stated in Carl Sagan's book The Demon-Haunted World when he discusses an invisible dragon that he has in his garage. The point is made that there is no physical test to refute the claim of the presence of this dragon. Whatever test one thinks can be devised, there is a reason why it does not apply to the invisible dragon, so one can never prove that the initial claim is wrong. Sagan concludes; "Now, what's the difference between an invisible, incorporeal, floating dragon who spits heatless fire and no dragon at all?". He states that "your inability to invalidate my hypothesis is not at all the same thing as proving it true", once again explaining that even if such a claim were true, it would be outside the realm of scientific inquiry.

Mertonian norms

Main article: Mertonian norms

During 1942, Robert K. Merton identified a set of five "norms" which characterize real science. If any of the norms were violated, Merton considered the enterprise to be non-science. His norms were:

• Originality: The tests and research done must present something new to the scientific community.
• Detachment: The scientists' reasons for practicing this science must be simply for the expansion of their knowledge. The scientists should not have personal reasons to expect certain results.
• Universality: No person should be able to more easily obtain the information of a test than another person. Social class, religion, ethnicity, or any other personal factors should not be factors in someone's ability to receive or perform a type of science.
• Skepticism: Scientific facts must not be based on faith. One should always question every case and argument and constantly check for errors or invalid claims.
• Public accessibility: Any scientific knowledge one obtains should be made available to everyone. The results of any research should be published and shared with the scientific community.

Refusal to acknowledge problems

In 1978, Paul Thagard proposed that pseudoscience is primarily distinguishable from science when it is less progressive than alternative theories over a long period of time, and its proponents fail to acknowledge or address problems with the theory. In 1983, Mario Bunge suggested the categories of "belief fields" and "research fields" to help distinguish between pseudoscience and science, where the former is primarily personal and subjective and the latter involves a certain systematic method. The 2018 book about scientific skepticism by Steven Novella, et al. The Skeptics' Guide to the Universe lists hostility to criticism as one of the major features of pseudoscience.

Criticism of the term

Larry Laudan has suggested pseudoscience has no scientific meaning and is mostly used to describe human emotions: "If we would stand up and be counted on the side of reason, we ought to drop terms like 'pseudo-science' and 'unscientific' from our vocabulary; they are just hollow phrases which do only emotive work for us". Likewise, Richard McNally states, "The term 'pseudoscience' has become little more than an inflammatory buzzword for quickly dismissing one's opponents in media sound-bites" and "When therapeutic entrepreneurs make claims on behalf of their interventions, we should not waste our time trying to determine whether their interventions qualify as pseudoscientific. Rather, we should ask them: How do you know that your intervention works? What is your evidence?"

Alternative definition

For philosophers Silvio Funtowicz and Jerome R. Ravetz "pseudo-science may be defined as one where the uncertainty of its inputs must be suppressed, lest they render its outputs totally indeterminate". The definition, in the book Uncertainty and Quality in Science for Policy, alludes to the loss of craft skills in handling quantitative information, and to the bad practice of achieving precision in prediction (inference) only at the expenses of ignoring uncertainty in the input which was used to formulate the prediction. This use of the term is common among practitioners of post-normal science. Understood in this way, pseudoscience can be fought using good practices to assess uncertainty in quantitative information, such as NUSAP and – in the case of mathematical modelling – sensitivity auditing.

History

Main article: History of pseudoscience

The astrological signs of the zodiac

The history of pseudoscience is the study of pseudoscientific theories over time. A pseudoscience is a set of ideas that presents itself as science, while it does not meet the criteria to be properly called such.

Distinguishing between proper science and pseudoscience is sometimes difficult. One proposal for demarcation between the two is the falsification criterion, attributed most notably to the philosopher Karl Popper. In the history of science and the history of pseudoscience it can be especially difficult to separate the two, because some sciences developed from pseudosciences. An example of this transformation is the science of chemistry, which traces its origins to the pseudoscientific or pre-scientific study of alchemy.

The vast diversity in pseudosciences further complicates the history of science. Some modern pseudosciences, such as astrology and acupuncture, originated before the scientific era. Others developed as part of an ideology, such as Lysenkoism, or as a response to perceived threats to an ideology. Examples of this ideological process are creation science and intelligent design, which were developed in response to the scientific theory of evolution.

Indicators of possible pseudoscience

See also: List of topics characterized as pseudoscience

Homeopathic preparation Rhus toxicodendron, derived from poison ivy

A topic, practice, or body of knowledge might reasonably be termed pseudoscientific when it is presented as consistent with the norms of scientific research, but it demonstrably fails to meet these norms.

Use of vague, exaggerated or untestable claims

• Assertion of scientific claims that are vague rather than precise, and that lack specific measurements.
• Assertion of a claim with little or no explanatory power.
• Failure to make use of operational definitions (i.e., publicly accessible definitions of the variables, terms, or objects of interest so that persons other than the definer can measure or test them independently) (See also: Reproducibility).
• Failure to make reasonable use of the principle of parsimony, i.e., failing to seek an explanation that requires the fewest possible additional assumptions when multiple viable explanations are possible (See: Occam's razor).
• Lack of boundary conditions: Most well-supported scientific theories possess well-articulated limitations under which the predicted phenomena do and do not apply.
• Lack of effective controls in experimental design, such as the use of placebos and double-blinding.
• Lack of understanding of basic and established principles of physics and engineering.

Improper collection of evidence

• Assertions that do not allow the logical possibility that they can be shown to be false by observation or physical experiment (See also: Falsifiability).
• Assertion of claims that a theory predicts something that it has not been shown to predict. Scientific claims that do not confer any predictive power are considered at best "conjectures", or at worst "pseudoscience" (e.g., ignoratio elenchi).
• Assertion that claims which have not been proven false must therefore be true, and vice versa (See: Argument from ignorance).
• Over-reliance on testimonial, anecdotal evidence, or personal experience: This evidence may be useful for the context of discovery (i.e., hypothesis generation), but should not be used in the context of justification (e.g., statistical hypothesis testing).
• Use of myths and religious texts as if they were fact, or basing evidence on readings of such texts.
• Use of concepts and scenarios from science fiction as if they were fact. This technique appeals to the familiarity that many people already have with science fiction tropes through the popular media.
• Presentation of data that seems to support claims while suppressing or refusing to consider data that conflict with those claims. This is an example of selection bias or cherry picking, a distortion of evidence or data that arises from the way that the data are collected. It is sometimes referred to as the selection effect.
• Repeating excessive or untested claims that have been previously published elsewhere, and promoting those claims as if they were facts; an accumulation of such uncritical secondary reports, which do not otherwise contribute their own empirical investigation, is called the Woozle effect.
• Reversed burden of proof: science places the burden of proof on those making a claim, not on the critic. "Pseudoscientific" arguments may neglect this principle and demand that skeptics demonstrate beyond a reasonable doubt that a claim (e.g., an assertion regarding the efficacy of a novel therapeutic technique) is false. It is essentially impossible to prove a universal negative, so this tactic incorrectly places the burden of proof on the skeptic rather than on the claimant.
• Appeals to holism as opposed to reductionism to dismiss negative findings: proponents of pseudoscientific claims, especially in organic medicine, alternative medicine, naturopathy and mental health, often resort to the "mantra of holism" .

Lack of openness to testing by other experts

• Evasion of peer review before publicizing results (termed "science by press conference"): Some proponents of ideas that contradict accepted scientific theories avoid subjecting their ideas to peer review, sometimes on the grounds that peer review is biased towards established paradigms, and sometimes on the grounds that assertions cannot be evaluated adequately using standard scientific methods. By remaining insulated from the peer review process, these proponents forgo the opportunity of corrective feedback from informed colleagues.
• Some agencies, institutions, and publications that fund scientific research require authors to share data so others can evaluate a paper independently. Failure to provide adequate information for other researchers to reproduce the claims contributes to a lack of openness.
• Appealing to the need for secrecy or proprietary knowledge when an independent review of data or methodology is requested.
• Substantive debate on the evidence by knowledgeable proponents of all viewpoints is not encouraged.

Absence of progress

• Failure to progress towards additional evidence of its claims. Terence Hines has identified astrology as a subject that has changed very little in the past two millennia.
• Lack of self-correction: scientific research programmes make mistakes, but they tend to reduce these errors over time. By contrast, ideas may be regarded as pseudoscientific because they have remained unaltered despite contradictory evidence. The work Scientists Confront Velikovsky (1976) Cornell University, also delves into these features in some detail, as does the work of Thomas Kuhn, e.g., The Structure of Scientific Revolutions (1962) which also discusses some of the items on the list of characteristics of pseudoscience.
• Statistical significance of supporting experimental results does not improve over time and are usually close to the cutoff for statistical significance. Normally, experimental techniques improve or the experiments are repeated, and this gives ever stronger evidence. If statistical significance does not improve, this typically shows the experiments have just been repeated until a success occurs due to chance variations.

Personalization of issues

• Tight social groups and authoritarian personality, suppression of dissent and groupthink can enhance the adoption of beliefs that have no rational basis. In attempting to confirm their beliefs, the group tends to identify their critics as enemies.
• Assertion of a conspiracy on the part of the mainstream scientific community, government, or educational facilities to suppress pseudoscientific information. People who make these accusations often compare themselves to Galileo Galilei and his persecution by the Roman Catholic Church; this comparison is commonly known as the Galileo gambit.
• Attacking the motives, character, morality, or competence of critics, rather than their arguments (see ad hominem)

Use of misleading language

• Creating scientific-sounding terms to persuade non-experts to believe statements that may be false or meaningless: for example, a long-standing hoax refers to water by the rarely used formal name "dihydrogen monoxide" and describes it as the main constituent in most poisonous solutions to show how easily the general public can be misled.
• Using established terms in idiosyncratic ways, thereby demonstrating unfamiliarity with mainstream work in the discipline.

Prevalence of pseudoscientific beliefs

Countries

The Ministry of AYUSH in the Government of India is purposed with developing education, research and propagation of indigenous alternative medicine systems in India. The ministry has faced significant criticism for funding systems that lack biological plausibility and are either untested or conclusively proven as ineffective. Quality of research has been poor, and drugs have been launched without any rigorous pharmacological studies and meaningful clinical trials on Ayurveda or other alternative healthcare systems. There is no credible efficacy or scientific basis of any of these forms of treatment.

In his book The Demon-Haunted World, Carl Sagan discusses the government of China and the Chinese Communist Party's concern about Western pseudoscience developments and certain ancient Chinese practices in China. He sees pseudoscience occurring in the United States as part of a worldwide trend and suggests its causes, dangers, diagnosis and treatment may be universal.

A large percentage of the United States population lacks scientific literacy, not adequately understanding scientific principles and method. In the Journal of College Science Teaching, Art Hobson writes, "Pseudoscientific beliefs are surprisingly widespread in our culture even among public school science teachers and newspaper editors, and are closely related to scientific illiteracy." However, a 10,000-student study in the same journal concluded there was no strong correlation between science knowledge and belief in pseudoscience.

During 2006, the U.S. National Science Foundation (NSF) issued an executive summary of a paper on science and engineering which briefly discussed the prevalence of pseudoscience in modern times. It said, "belief in pseudoscience is widespread" and, referencing a Gallup Poll, stated that belief in the 10 commonly believed examples of paranormal phenomena listed in the poll were "pseudoscientific beliefs". The items were "extrasensory perception (ESP), that houses can be haunted, ghosts, telepathy, clairvoyance, astrology, that people can mentally communicate with the dead, witches, reincarnation, and channelling". Such beliefs in pseudoscience represent a lack of knowledge of how science works. The scientific community may attempt to communicate information about science out of concern for the public's susceptibility to unproven claims. The NSF stated that pseudoscientific beliefs in the U.S. became more widespread during the 1990s, peaked about 2001, and then decreased slightly since with pseudoscientific beliefs remaining common. According to the NSF report, there is a lack of knowledge of pseudoscientific issues in society and pseudoscientific practices are commonly followed. Surveys indicate about a third of adult Americans consider astrology to be scientific.

In Russia, in the late 20th and early 21st century, significant budgetary funds were spent on programs for the experimental study of "torsion fields", the extraction of energy from granite, the study of "cold nuclear fusion", and astrological and extrasensory "research" by the Ministry of Defense, the Ministry of Emergency Situations, the Ministry of Internal Affairs, and the State Duma (see Military Unit 10003). In 2006, Deputy Chairman of the Security Council of the Russian Federation Nikolai Spassky published an article in Rossiyskaya Gazeta, where among the priority areas for the development of the Russian energy sector, the task of extracting energy from a vacuum was in the first place. The Clean Water project was adopted as a United Russia party project; in the version submitted to the government, the program budget for 2010–2017 exceeded $14 billion.

Racism

There have been many connections between pseudoscientific writers and researchers and their anti-semitic, racist and neo-Nazi backgrounds. They often use pseudoscience to reinforce their beliefs. One of the most predominant pseudoscientific writers is Frank Collin, a self-proclaimed Nazi who goes by Frank Joseph in his writings. The majority of his works include the topics of Atlantis, extraterrestrial encounters, and Lemuria as well as other ancient civilizations, often with white supremacist undertones. For example, he posited that European peoples migrated to North America before Columbus, and that all Native American civilizations were initiated by descendants of white people.

The alt-right using pseudoscience to base their ideologies on is not a new issue. The entire foundation of anti-Semitism is based on pseudoscience, or scientific racism. In an article from Newsweek by Sander Gilman, Gilman describes the pseudoscience community's anti-Semitic views. "Jews as they appear in this world of pseudoscience are an invented group of ill, stupid or stupidly smart people who use science to their own nefarious ends. Other groups, too, are painted similarly in 'race science', as it used to call itself: African-Americans, the Irish, the Chinese and, well, any and all groups that you want to prove inferior to yourself". Neo-Nazis and white supremacist often try to support their claims with studies that "prove" that their claims are more than just harmful stereotypes. For example Bret Stephens published a column in The New York Times where he claimed that Ashkenazi Jews had the highest IQ among any ethnic group. However, the scientific methodology and conclusions reached by the article Stephens cited has been called into question repeatedly since its publication. It has been found that at least one of that study's authors has been identified by the Southern Poverty Law Center as a white nationalist.

The journal Nature has published a number of editorials in the last few years warning researchers about extremists looking to abuse their work, particularly population geneticists and those working with ancient DNA. One article in Nature, titled "Racism in Science: The Taint That Lingers" notes that early-twentieth-century eugenic pseudoscience has been used to influence public policy, such as the Immigration Act of 1924 in the United States, which sought to prevent immigration from Asia and parts of Europe.

Explanations

In a 1981 report Singer and Benassi wrote that pseudoscientific beliefs have their origin from at least four sources:

• Common cognitive errors from personal experience
• Erroneous sensationalistic mass media coverage
• Sociocultural factors
• Poor or erroneous science education

A 1990 study by Eve and Dunn supported the findings of Singer and Benassi and found pseudoscientific belief being promoted by high school life science and biology teachers.

Psychology

The psychology of pseudoscience attempts to explore and analyze pseudoscientific thinking by means of thorough clarification on making the distinction of what is considered scientific vs. pseudoscientific. The human proclivity for seeking confirmation rather than refutation (confirmation bias), the tendency to hold comforting beliefs, and the tendency to overgeneralize have been proposed as reasons for pseudoscientific thinking. According to Beyerstein, humans are prone to associations based on resemblances only, and often prone to misattribution in cause-effect thinking.

Michael Shermer's theory of belief-dependent realism is driven by the idea that the brain is essentially a "belief engine" which scans data perceived by the senses and looks for patterns and meaning. There is also the tendency for the brain to create cognitive biases, as a result of inferences and assumptions made without logic and based on instinct – usually resulting in patterns in cognition. These tendencies of patternicity and agenticity are also driven "by a meta-bias called the bias blind spot, or the tendency to recognize the power of cognitive biases in other people but to be blind to their influence on our own beliefs". Lindeman states that social motives (i.e., "to comprehend self and the world, to have a sense of control over outcomes, to belong, to find the world benevolent and to maintain one's self-esteem") are often "more easily" fulfilled by pseudoscience than by scientific information. Furthermore, pseudoscientific explanations are generally not analyzed rationally, but instead experientially. Operating within a different set of rules compared to rational thinking, experiential thinking regards an explanation as valid if the explanation is "personally functional, satisfying and sufficient", offering a description of the world that may be more personal than can be provided by science and reducing the amount of potential work involved in understanding complex events and outcomes.

Anyone searching for psychological help that is based in science should seek a licensed therapist whose techniques are not based in pseudoscience. Hupp and Santa Maria provide a complete explanation of what that person should look for.

Education and scientific literacy

There is a trend to believe in pseudoscience more than scientific evidence. Some people believe the prevalence of pseudoscientific beliefs is due to widespread scientific illiteracy. Individuals lacking scientific literacy are more susceptible to wishful thinking, since they are likely to turn to immediate gratification powered by System 1, our default operating system which requires little to no effort. This system encourages one to accept the conclusions they believe, and reject the ones they do not. Further analysis of complex pseudoscientific phenomena require System 2, which follows rules, compares objects along multiple dimensions and weighs options. These two systems have several other differences which are further discussed in the dual-process theory. The scientific and secular systems of morality and meaning are generally unsatisfying to most people. Humans are, by nature, a forward-minded species pursuing greater avenues of happiness and satisfaction, but we are all too frequently willing to grasp at unrealistic promises of a better life.

Psychology has much to discuss about pseudoscience thinking, as it is the illusory perceptions of causality and effectiveness of numerous individuals that needs to be illuminated. Research suggests that illusionary thinking happens in most people when exposed to certain circumstances such as reading a book, an advertisement or the testimony of others are the basis of pseudoscience beliefs. It is assumed that illusions are not unusual, and given the right conditions, illusions are able to occur systematically even in normal emotional situations. One of the things pseudoscience believers quibble most about is that academic science usually treats them as fools. Minimizing these illusions in the real world is not simple. To this aim, designing evidence-based educational programs can be effective to help people identify and reduce their own illusions.

Boundaries with science

Classification

Philosophers classify types of knowledge. In English, the word science is used to indicate specifically the natural sciences and related fields, which are called the social sciences. Different philosophers of science may disagree on the exact limits – for example, is mathematics a formal science that is closer to the empirical ones, or is pure mathematics closer to the philosophical study of logic and therefore not a science? – but all agree that all of the ideas that are not scientific are non-scientific. The large category of non-science includes all matters outside the natural and social sciences, such as the study of history, metaphysics, religion, art, and the humanities. Dividing the category again, unscientific claims are a subset of the large category of non-scientific claims. This category specifically includes all matters that are directly opposed to good science. Un-science includes both "bad science" (such as an error made in a good-faith attempt at learning something about the natural world) and pseudoscience. Thus pseudoscience is a subset of un-science, and un-science, in turn, is subset of non-science.

Science is also distinguishable from revelation, theology, or spirituality in that it offers insight into the physical world obtained by empirical research and testing. The most notable disputes concern the evolution of living organisms, the idea of common descent, the geologic history of the Earth, the formation of the Solar System, and the origin of the universe. Systems of belief that derive from divine or inspired knowledge are not considered pseudoscience if they do not claim either to be scientific or to overturn well-established science. Moreover, some specific religious claims, such as the power of intercessory prayer to heal the sick, although they may be based on untestable beliefs, can be tested by the scientific method.

Some statements and common beliefs of popular science may not meet the criteria of science. "Pop" science may blur the divide between science and pseudoscience among the general public, and may also involve science fiction. Indeed, pop science is disseminated to, and can also easily emanate from, persons not accountable to scientific methodology and expert peer review.

If claims of a given field can be tested experimentally and standards are upheld, it is not pseudoscience, regardless of how odd, astonishing, or counterintuitive those claims are. If claims made are inconsistent with existing experimental results or established theory, but the method is sound, caution should be used, since science consists of testing hypotheses which may turn out to be false. In such a case, the work may be better described as ideas that are "not yet generally accepted". Protoscience is a term sometimes used to describe a hypothesis that has not yet been tested adequately by the scientific method, but which is otherwise consistent with existing science or which, where inconsistent, offers reasonable account of the inconsistency. It may also describe the transition from a body of practical knowledge into a scientific field.

Philosophy

Main article: Demarcation problem

Karl Popper stated it is insufficient to distinguish science from pseudoscience, or from metaphysics (such as the philosophical question of what existence means), by the criterion of rigorous adherence to the empirical method, which is essentially inductive, based on observation or experimentation. He proposed a method to distinguish between genuine empirical, nonempirical or even pseudoempirical methods. The latter case was exemplified by astrology, which appeals to observation and experimentation. While it had empirical evidence based on observation, on horoscopes and biographies, it crucially failed to use acceptable scientific standards. Popper proposed falsifiability as an important criterion in distinguishing science from pseudoscience.

To demonstrate this point, Popper gave two cases of human behavior and typical explanations from Sigmund Freud and Alfred Adler's theories: "that of a man who pushes a child into the water with the intention of drowning it; and that of a man who sacrifices his life in an attempt to save the child." From Freud's perspective, the first man would have suffered from psychological repression, probably originating from an Oedipus complex, whereas the second man had attained sublimation. From Adler's perspective, the first and second man suffered from feelings of inferiority and had to prove himself, which drove him to commit the crime or, in the second case, drove him to rescue the child. Popper was not able to find any counterexamples of human behavior in which the behavior could not be explained in the terms of Adler's or Freud's theory. Popper argued it was that the observation always fitted or confirmed the theory which, rather than being its strength, was actually its weakness. In contrast, Popper gave the example of Einstein's gravitational theory, which predicted "light must be attracted by heavy bodies (such as the Sun), precisely as material bodies were attracted." Following from this, stars closer to the Sun would appear to have moved a small distance away from the Sun, and away from each other. This prediction was particularly striking to Popper because it involved considerable risk. The brightness of the Sun prevented this effect from being observed under normal circumstances, so photographs had to be taken during an eclipse and compared to photographs taken at night. Popper states, "If observation shows that the predicted effect is definitely absent, then the theory is simply refuted." Popper summed up his criterion for the scientific status of a theory as depending on its falsifiability, refutability, or testability.

Paul R. Thagard used astrology as a case study to distinguish science from pseudoscience and proposed principles and criteria to delineate them. First, astrology has not progressed in that it has not been updated nor added any explanatory power since Ptolemy. Second, it has ignored outstanding problems such as the precession of equinoxes in astronomy. Third, alternative theories of personality and behavior have grown progressively to encompass explanations of phenomena which astrology statically attributes to heavenly forces. Fourth, astrologers have remained uninterested in furthering the theory to deal with outstanding problems or in critically evaluating the theory in relation to other theories. Thagard intended this criterion to be extended to areas other than astrology. He believed it would delineate as pseudoscientific such practices as witchcraft and pyramidology, while leaving physics, chemistry, astronomy, geoscience, biology, and archaeology in the realm of science.

In the philosophy and history of science, Imre Lakatos stresses the social and political importance of the demarcation problem, the normative methodological problem of distinguishing between science and pseudoscience. His distinctive historical analysis of scientific methodology based on research programmes suggests: "scientists regard the successful theoretical prediction of stunning novel facts – such as the return of Halley's comet or the gravitational bending of light rays – as what demarcates good scientific theories from pseudo-scientific and degenerate theories, and in spite of all scientific theories being forever confronted by 'an ocean of counterexamples'". Lakatos offers a "novel fallibilist analysis of the development of Newton's celestial dynamics, [his] favourite historical example of his methodology" and argues in light of this historical turn, that his account answers for certain inadequacies in those of Karl Popper and Thomas Kuhn. "Nonetheless, Lakatos did recognize the force of Kuhn's historical criticism of Popper – all important theories have been surrounded by an 'ocean of anomalies', which on a falsificationist view would require the rejection of the theory outright...Lakatos sought to reconcile the rationalism of Popperian falsificationism with what seemed to be its own refutation by history".

Many philosophers have tried to solve the problem of demarcation in the following terms: a statement constitutes knowledge if sufficiently many people believe it sufficiently strongly. But the history of thought shows us that many people were totally committed to absurd beliefs. If the strengths of beliefs were a hallmark of knowledge, we should have to rank some tales about demons, angels, devils, and of heaven and hell as knowledge. Scientists, on the other hand, are very sceptical even of their best theories. Newton's is the most powerful theory science has yet produced, but Newton himself never believed that bodies attract each other at a distance. So no degree of commitment to beliefs makes them knowledge. Indeed, the hallmark of scientific behaviour is a certain scepticism even towards one's most cherished theories. Blind commitment to a theory is not an intellectual virtue: it is an intellectual crime.

Thus a statement may be pseudoscientific even if it is eminently 'plausible' and everybody believes in it, and it may be scientifically valuable even if it is unbelievable and nobody believes in it. A theory may even be of supreme scientific value even if no one understands it, let alone believes in it.

— Imre Lakatos, Science and Pseudoscience

The boundary between science and pseudoscience is disputed and difficult to determine analytically, even after more than a century of study by philosophers of science and scientists, and despite some basic agreements on the fundamentals of the scientific method. The concept of pseudoscience rests on an understanding that the scientific method has been misrepresented or misapplied with respect to a given theory, but many philosophers of science maintain that different kinds of methods are held as appropriate across different fields and different eras of human history. According to Lakatos, the typical descriptive unit of great scientific achievements is not an isolated hypothesis but "a powerful problem-solving machinery, which, with the help of sophisticated mathematical techniques, digests anomalies and even turns them into positive evidence".

To Popper, pseudoscience uses induction to generate theories, and only performs experiments to seek to verify them. To Popper, falsifiability is what determines the scientific status of a theory. Taking a historical approach, Kuhn observed that scientists did not follow Popper's rule, and might ignore falsifying data, unless overwhelming. To Kuhn, puzzle-solving within a paradigm is science. Lakatos attempted to resolve this debate, by suggesting history shows that science occurs in research programmes, competing according to how progressive they are. The leading idea of a programme could evolve, driven by its heuristic to make predictions that can be supported by evidence. Feyerabend claimed that Lakatos was selective in his examples, and the whole history of science shows there is no universal rule of scientific method, and imposing one on the scientific community impedes progress.

— David Newbold and Julia Roberts, "An analysis of the demarcation problem in science and its application to therapeutic touch theory" in International Journal of Nursing Practice, Vol. 13

Laudan maintained that the demarcation between science and non-science was a pseudo-problem, preferring to focus on the more general distinction between reliable and unreliable knowledge.

[Feyerabend] regards Lakatos's view as being closet anarchism disguised as methodological rationalism. Feyerabend's claim was not that standard methodological rules should never be obeyed, but rather that sometimes progress is made by abandoning them. In the absence of a generally accepted rule, there is a need for alternative methods of persuasion. According to Feyerabend, Galileo employed stylistic and rhetorical techniques to convince his reader, while he also wrote in Italian rather than Latin and directed his arguments to those already temperamentally inclined to accept them.

— Alexander Bird, "The Historical Turn in the Philosophy of Science" in Routledge Companion to the Philosophy of Science

Politics, health, and education

Political implications

The demarcation problem between science and pseudoscience brings up debate in the realms of science, philosophy and politics. Imre Lakatos, for instance, points out that the Communist Party of the Soviet Union at one point declared that Mendelian genetics was pseudoscientific and had its advocates, including well-established scientists such as Nikolai Vavilov, sent to a Gulag and that the "liberal Establishment of the West" denies freedom of speech to topics it regards as pseudoscience, particularly where they run up against social mores.

Something becomes pseudoscientific when science cannot be separated from ideology, scientists misrepresent scientific findings to promote or draw attention for publicity, when politicians, journalists and a nation's intellectual elite distort the facts of science for short-term political gain, or when powerful individuals of the public conflate causation and cofactors by clever wordplay. These ideas reduce the authority, value, integrity and independence of science in society.

Health and education implications

Distinguishing science from pseudoscience has practical implications in the case of health care, expert testimony, environmental policies, and science education. Treatments with a patina of scientific authority which have not actually been subjected to actual scientific testing may be ineffective, expensive and dangerous to patients and confuse health providers, insurers, government decision makers and the public as to what treatments are appropriate. Claims advanced by pseudoscience may result in government officials and educators making bad decisions in selecting curricula.

The extent to which students acquire a range of social and cognitive thinking skills related to the proper usage of science and technology determines whether they are scientifically literate. Education in the sciences encounters new dimensions with the changing landscape of science and technology, a fast-changing culture and a knowledge-driven era. A reinvention of the school science curriculum is one that shapes students to contend with its changing influence on human welfare. Scientific literacy, which allows a person to distinguish science from pseudosciences such as astrology, is among the attributes that enable students to adapt to the changing world. Its characteristics are embedded in a curriculum where students are engaged in resolving problems, conducting investigations, or developing projects.

Alan J. Friedman mentions why most scientists avoid educating about pseudoscience, including that paying undue attention to pseudoscience could dignify it.

On the other hand, Robert L. Park emphasizes how pseudoscience can be a threat to society and considers that scientists have a responsibility to teach how to distinguish science from pseudoscience.

Pseudosciences such as homeopathy, even if generally benign, are used by charlatans. This poses a serious issue because it enables incompetent practitioners to administer health care. True-believing zealots may pose a more serious threat than typical con men because of their delusion to homeopathy's ideology. Irrational health care is not harmless and it is careless to create patient confidence in pseudomedicine.

On 8 December 2016, journalist Michael V. LeVine pointed out the dangers posed by the Natural News website: "Snake-oil salesmen have pushed false cures since the dawn of medicine, and now websites like Natural News flood social media with dangerous anti-pharmaceutical, anti-vaccination and anti-GMO pseudoscience that puts millions at risk of contracting preventable illnesses."

The anti-vaccine movement has persuaded large numbers of parents not to vaccinate their children, citing pseudoscientific research that links childhood vaccines with the onset of autism. These include the study by Andrew Wakefield, which claimed that a combination of gastrointestinal disease and developmental regression, which are often seen in children with ASD, occurred within two weeks of receiving vaccines. The study was eventually retracted by its publisher, and Wakefield was stripped of his license to practice medicine.

Alkaline water is water that has a pH of higher than 7, purported to host numerous health benefits, with no empirical backing. A practitioner known as Robert O. Young who promoted alkaline water and an "Alkaline diet" was sent to jail for 3 years in 2017 for practicing medicine without a license.

Carbon emission trading

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Carbon_emission_trading

Allowance prices for carbon emission trade in all major emission trading schemes in Euro per ton of CO₂ emitted (from 2008 until August 2024)

Carbon emission trading (also called carbon market, emission trading scheme (ETS) or cap and trade) is a type of emissions trading scheme designed for carbon dioxide (CO₂) and other greenhouse gases (GHGs). A form of carbon pricing, its purpose is to limit climate change by creating a market with limited allowances for emissions. Carbon emissions trading is a common method that countries use to attempt to meet their pledges under the Paris Agreement, with schemes operational in China, the European Union, and other countries.

Emissions trading sets a quantitative total limit on the emissions produced by all participating emitters, which correspondingly determines the prices of emissions. Under emission trading, a polluter having more emissions than their quota has to purchase the right to emit more from emitters with fewer emissions. This can reduce the competitiveness of fossil fuels, which are the main driver of climate change. Instead, carbon emissions trading may accelerate investments into renewable energy, such as wind power and solar power.

However, such schemes are usually not harmonized with defined carbon budgets that are required to maintain global warming below the critical thresholds of 1.5 °C or "well below" 2 °C, with oversupply leading to low prices of allowances with almost no effect on fossil fuel combustion. Emission trade allowances currently cover a wide price range from €7 per tonne of CO₂ in China's national carbon trading scheme to €63 per tonne of CO₂ in the EU-ETS (as of September 2021).

Other greenhouse gases can also be traded but are quoted as standard multiples of carbon dioxide with respect to their global warming potential.

An international coalition to create a global carbon market, including a global, gradually declining, cap on emissions began to form in COP30. It can speed up emissions reduction seven-fold in all participating countries, while delivering $200 billion per year for clean-energy and social programs.

Purpose

The economic problem with climate change is that the emitters of greenhouse gases (GHGs) do not face the external costs of their actions, which include the present and future welfare of people, the natural environment, and the social cost of carbon. This can be addressed with the dynamic price model of emissions trading.

An emissions trading scheme for greenhouse gas emissions (GHGs) works by establishing property rights for the atmosphere. The atmosphere is a global public good, and GHG emissions are an international externality. In the cap-and-trade variant of emissions trading, a cap on access to a resource is defined and then allocated among users in the form of permits. Compliance is established by comparing actual emissions with permits surrendered. The setting of the cap affects the environmental integrity of carbon trading, and can result in both positive and negative environmental effects.

Emissions trading programmes such as the European Union Emissions Trading System (EU-ETS) complement the country-to-country trading stipulated in the Kyoto Protocol by allowing private trading of permits, coordinating with national emissions targets provided under the Kyoto Protocol. Under such programmes, a national or international authority allocates permits to individual companies based on established criteria, with a view to meeting targets at the lowest overall economic cost.

History

See also: Emissions trading § History

"Economy-wide pricing of carbon is the centre piece of any policy designed to reduce emissions at the lowest possible costs".

— Ross Garnaut, lead author of the Garnaut Climate Change Review in 2011

Carbon emission trading began in Rio de Janeiro in 1992, when 160 countries agreed the UN Framework Convention on Climate Change (UNFCCC). The necessary detail was left to be settled by the UN Conference of Parties (COP).

In 1997, the Kyoto Protocol was the first major agreement to reduce greenhouse gases. 38 developed countries committed themselves to targets and timetables. The resulting inflexible limitations on GHG growth could entail substantial costs if countries have to solely rely on their own domestic measures.

Carbon emissions trading increased rapidly in 2021 with the start of the Chinese national carbon trading scheme. The increasing costs of permits on the EU ETS have had the effect of increasing costs of coal power.

A 2019 study by the American Council for an Energy Efficient Economy finds that efforts to put a price on greenhouse gas emissions are growing in North America. In 2021, shipowners said they were against being included in the EU ETS.

Global Carbon Market Statistics

The global carbon market has experienced significant growth in recent years. In 2023, the value of the global carbon market reached a record high of 881 billion euros (approximately $949 billion), representing a 2% increase from the previous year. The European Union Emissions Trading System (EU ETS) remains the largest carbon market based on value, accounting for approximately 87% of the global market size in 2023.

In terms of trading volume, approximately 12.5 billion metric tons of carbon dioxide (GtCO₂) were traded in global carbon markets in 2022, which represented a decline of over 20% from the previous year but still an 18.2% increase compared to 2019 levels. Europe dominated the carbon trading volume, accounting for roughly 74% of the traded volume of CO₂ worldwide in 2022.

Economic aspects and tools

See also: Emissions trading § Economics, Carbon price, and Economic analysis of climate change

Economists generally agree that to regulate emissions efficiently, all polluters need to face the full marginal social costs of their actions. Regulation of emissions applied only to one economic sector or region drastically reduces the efficiency of efforts to reduce global emissions. There is, however, no scientific consensus over how to share the costs and benefits of reducing future climate change, or the costs and benefits of adapting to any future climate change.

Carbon offsets and credits

Renewable energy projects, such as these wind turbines near Aalborg, Denmark, constitute one common type of carbon offset project.

A carbon credit is a tradable instrument (typically a virtual certificate) that conveys a claim to have avoided greenhouse gas (GHG) emissions or to have enhanced removal of GHG from the atmosphere. One carbon credit represents the avoided or enhanced removal of one metric ton of carbon dioxide or its carbon dioxide-equivalent (CO₂e).

Carbon offsetting is the practice of using carbon credits to offset or counter an entity's greenhouse gas inventory emissions in line with reporting programs or institutional emissions targets/goals. Carbon credit trading mechanisms (i.e., crediting programs), enable project developers to implement projects that mitigate GHGs and receive carbon credits which can be sold to interested buyers who may use the credits to claim they have offset their inventory GHG emissions. Similar to "offsetting", carbon credits that are permitted as compliance instruments within regulatory compliance markets (e.g., The European Union Emission Trading Scheme or the California Cap-n-Trade program) can be used by regulated entities to report lower emissions and achieve compliance status (with limitations around their use that vary by compliance program). Aside from "offsetting", carbon credits can also be used to make contributions toward global net zero GHG-level targets. It is an individual buyer's choice how to use, or "retire", the carbon credit.

Projects entail mitigation actions that avoid or enhance the removal of GHG emissions. Projects are implemented in line with the standards of crediting programs, including their methodologies, rules, and requirements. Methodologies are approved for each specific project type (e.g., tree planting, mangrove restoration, early retirement of coal powerplants). Provided a project fulfills all of the requirements and provisions of a crediting program, it will be issued credits that can be sold to buyers. Each crediting program typically has its own carbon credit 'label' such as CDM's Certified Emission Reductions (CERs), Article 6.4 Mechanism Emission Reductions (A6.4ERs), VCS' Verified Emission Reductions (VERs), ACR's Emission Reduction Tonnes, Climate Action Reserves' Climate Reserve Tonnes (CRTs), etc.

Hundreds of GHG mitigation project types exist and have approved methodologies with established crediting programs. The program that defined the first phase of carbon market development, the Clean Development Mechanism (CDM) provides a summary booklet of its many approved methodologies. But each crediting program has its own list of approved methodologies, for example unless explicitly stated, an ACR approved methodology could not be used by someone trying to work through Verra's Verified Carbon Standard. Carbon credits are a form of carbon pricing, along with carbon taxes, and Carbon Border Adjustment Mechanisms (CBAM). Carbon credits are intended to be fungible across different markets, but some compliance markets and reporting programs limit eligibility to specified carbon credit types or characteristics (e.g., vintage, project origin, project type).

Carbon leakage

A domestic carbon emissions trading scheme is constrained in its regulatory jurisdiction. GHG emissions may thus leak to another region or sector with less regulation. Generally, leakages reduce the effectiveness of domestic emission abatement efforts. Notwithstanding, leakages may also be negative in nature, increasing the effectiveness of domestic abatement efforts. For example, a carbon tax applied only to developed countries might lead to a positive leakage to developing countries. However, a negative leakage might also occur due to technological developments driven by domestic regulation of GHGs, helping to reduce emissions even in less regulated regions.

The current state of carbon emissions trading shows that roughly 22% of global greenhouse emissions are covered by 64 carbon taxes and emission trading systems as of 2021. Energy intensive industries that are covered by such instruments may view the regulatory disparity between jurisdictions as a loss of competitiveness. They may therefore make strategic production decisions that involve carbon leakage. To mitigate carbon leakage and its effects on the environment, policymakers need to harmonize international climate policies and provide incentives to prevent companies from relocating production to regions with more lenient environmental regulations.

Free emission permits, given to sectors vulnerable to international competition, are one way of addressing carbon leakage by acting as a subsidy for the sector in question. The Garnaut Climate Change Review considered the free allocation of permits unjustified in any circumstances, arguing that governments could deal with market failure or claims for compensation more transparently with the revenue from full auctioning of permits.

Border Adjustment

Further information: Eco-tariff

Another economically efficient solution to carbon leakage is border adjustment, where tariffs are set on imported goods from less regulated countries. A problem with border adjustments is that they might be used as a disguise for trade protectionism. Some types of border adjustment may also not prevent emissions leakage. The EU Carbon Border Adjustment Mechanism takes in effect for 6 sectors in 2026.

A study examining the potential effects of the European Union's Carbon Border Adjustment Mechanism (CBAM) suggests that the regulation may impose additional costs on EU companies. The analysis focused on publicly listed firms operating in CBAM-covered sectors across 75 countries and assessed stock market reactions at three key stages of the EU legislative process. The findings indicate that, around the relevant announcement dates, EU-based firms experienced larger declines in share prices than non-EU firms in the same sectors, with differences in returns ranging between 2 and 3 percentage points.

The study finds heterogeneity among EU firms. Companies with a greater reliance on suppliers located outside the EU showed more pronounced negative market reactions than those with fewer non-EU suppliers. In addition, the adverse response was concentrated among firms with relatively low profit margins, often used as an indicator of limited market power. The results suggest that some EU firms may face higher import costs either because of their dependence on non-EU suppliers or because limited pricing power constrains their ability to pass on carbon-related costs to foreign exporters subject to the CBAM.

Relevance to climate justice

Carbon trading can be helpful to achieve climate justice. It can transfer money from rich countries, which tend to have higher emissions, to countries with lower incomes and lower emissions for improved climate action.

Cap-and-trade systems have also been linked to causing environmental justice as low-income communities receive less benefits from reduced emissions and are often located near the emitters. Companies under emission trading systems will often emit more pollutants not covered by the system and disproportionately affect low-income communities.

Potential global carbon market

The Paris Agreement provided a legal base for the creation of a global carbon market, which has a potentially significant role in stopping climate change. In the beginning of 2024, the idea made some progress with the Bonn meeting where new tools and supervisory bodies were created.

The rules of the European Union Emissions Trading System include the possibility of connecting it with other trading systems. This has already happened with the Switzerland emissions trading system China expressed a support for a global carbon market, saying it is better than the EU Carbon Border Adjustment Mechanism.

In 2023 the global value of carbon markets was $948.75 billion. It is expected to reach 2.68 trillion dollars by 2028  and 22 trillion by 2050.

Merging the ETC of China and the EU can be something that sends "a powerful signal to the rest of the world and catalyzes international buy-in" while strongly increasing the efficiency of the system and allowing both countries to attain higher results with less spending.

A global carbon market can speed up emissions reduction seven-fold in all participating countries, while delivering $200 billion per year for clean-energy and social programs. An international coalition for creating it called Open Coalition on Compliance Carbon Markets began to form in COP 30. The plan is to create a global emissions cap beginning with a level close to current emissions rate, and then reducing it until reaching net-zero by 2050. For any activity which causes emissions, people would buy allowances. As the cap decreases, the cost of the allowances will increase, creating an incentive for decarbonization. There will be a border adjustment mechanism governed by all participants. Poorer countries can not pay or pay less and part of the revenue will be spent on helping them address the climate crisis. The formal launch of the Coalition is expected during 2026.

In voluntary carbon markets, the Integrity Council for the Voluntary Carbon Market publishes the Core Carbon Principles (CCPs) and related guidance intended to define high-level integrity criteria for carbon credits.

Allocation of permits

Tradable emissions permits can be issued to firms within an ETS by two main ways: by free allocation of permits to existing emitters or by auction. In the first case, the government receives no carbon revenue. In the second it receives the full value of the permits, on average. In either case, permits will be equally scarce and just as valuable to market participants, such that the price at sale will be the same in either case.

Generally, emitters will profit from permits allocated to them for free. But if they must pay, their profits will be reduced. If the carbon price equals the true social cost of carbon, then long-run profit reduction will reflect the consequences of paying this new cost. If having to pay this cost is unexpected, then there will likely be a one-time loss due to the change in regulations and not simply due to paying the real cost of carbon. However, if there is advanced notice of this change, or if the carbon price is introduced gradually, this one-time regulatory cost will be minimized. There has now been enough advance notice of carbon pricing that this effect should be negligible on average.

Grandfathering

Allocating permits based on past emissions is called "grandfathering". Grandfathering permits can lead to perverse incentives, such as a firm being given fewer permits in the future for aiming to cut emissions drastically. Another method of grandfathering is to base allocations on current production of economic goods rather than historical emissions. Under this method of allocation, the government will set a benchmark level of emissions for each good deemed to be sufficiently trade exposed and allocate firms units based on their production of this good. However, allocating permits in proportion to output implicitly subsidises production.

The Garnaut Climate Change Review noted that grandfathered permits are not free of cost. As the permits are scarce, they have value, and the benefit of that value is acquired in full by the emitter. The cost is imposed elsewhere in the economy, typically on consumers who cannot pass on the costs: The cost of a grandfathered permit may be regarded as the opportunity cost of not selling the permit at full value. As a result, profit-maximising firms receiving free permits will raise prices to customers because of the new, non-zero cost of emissions. This gives permit-liable polluters an incentive to reduce their emissions. However, if a firm sells the same amount of output as before that cap, with no change in production technology, the full value of permits received for free becomes windfall profits. However, since the cap reduces output and often causes the company to incur costs to increase efficiency, windfall profits will be less than the full value of its free permits.

Grandfathering may also slow down technological development towards less polluting technologies. The Garnaut Report noted that any method for free permit allocation will have the disadvantages of high complexity, high transaction costs, value-based judgements, and the use of arbitrary emissions baselines. Garnaut also noted that the complexity of free allocation and the large amounts of money involved encourage non-productive rent-seeking behaviour and lobbying of governments — activities that dissipate economic value.

At the same time, allocating permits can be used as a measure to protect domestic firms who are internationally exposed to competition. This happens when domestic firms compete against other firms that are not subject to the same regulation. This argument in favor of allocation of permits has been used in the EU ETS, where industries that have been judged to be internationally exposed have been given permits for free.

The International Air Transport Association, whose 230 member airlines comprise 93% of all international traffic, argue that emissions levels should be based on industry averages rather than using individual companies' previous emissions levels to set their future permit allowances, stating that "would penalise airlines that took early action to modernise their fleets, while a benchmarking approach, if designed properly, would reward more efficient operations".

Auctioning

Hepburn et al. state that, empirically, businesses tend to oppose auctioning of emissions permits, while economists almost uniformly recommend auctioning permits. Auctioning permits provides the government with revenues, which can be used to fund low-carbon investment and cuts in distortionary taxes. Auctioning permits can therefore be more efficient and equitable than allocating permits. Garnaut stated that full auctioning will provide greater transparency and accountability and lower implementation and transaction costs as governments retain control over the permit revenue. Auctions of units are more flexible in distributing costs, provide more incentives for innovation, lessen the political arguments over the allocation of economic rents, and reduce tax distortions. Recycling of revenue from permit auctions could also offset a significant proportion of the economy-wide social costs of a cap and trade scheme.

The perverse incentive of grandfathering can be alleviated through auctioning.

Permit supply level

Regulatory agencies run the risk of issuing too many emission credits, which can result in a very low price on emission permits. This reduces the incentive that permit-liable firms have to cut back their emissions. On the other hand, issuing too few permits can result in an excessively high permit price. An argument has been made for a hybrid instrument having a price floor and a price ceiling. However, a price-ceiling safety value removes the certainty of a particular quantity limit of emissions.

Emissions trading and carbon taxes around the world (2024)

  ETS and carbon tax implemented

  ETS implemented

  Carbon tax implemented

  ETS or carbon tax under consideration or under development

Criticisms

See also: Criticism of the Kyoto Protocol § Criticism of Carbon Trade

Chicago Climate Justice activists protesting cap and trade legislation in front of Chicago Climate Exchange building in Chicago Loop

Emissions trading has been criticized for a variety of reasons. For one, it has been argued that climate change requires more radical solutions than pollution trading schemes, and that systemic changes must be made to reduce fossil fuel usage. At the same time, carbon credits have been seen as enabling large companies to pollute the environment at the expense of local communities. Carbon trading has also been criticised as a form of colonialism, in which rich countries maintain their levels of consumption while getting credit for carbon savings in inefficient industrial projects.

Groups such as the Corner House have argued that the market will choose the easiest means to save a given quantity of carbon in the short term, which may be different from the means to reduce climate change. In September 2010, campaigning group FERN released "Trading Carbon: How it works and why it is controversial"^[ which compiles many of the arguments against carbon trading. According to Carbon Trade Watch, carbon trading has had a "disastrous track record". The effectiveness of the EU ETS was criticized, and it was argued that the CDM had routinely favoured "environmentally ineffective and socially unjust projects".

Some groups have claimed that non-existent emission reductions can be recorded under the Kyoto Protocol due to the surplus of allowances that some countries possess. For example, Russia had a surplus of allowances due to its economic collapse following the end of the Soviet Union. Other countries could have bought these allowances from Russia, but this would not have reduced emissions. In practice, as of 2010, Kyoto Parties had not yet chosen not to buy these surplus allowances.

The complexity of cap and trade schemes around the world has resulted in the uncertainties around such schemes in Australia, Canada, China, the EU, India, Japan, New Zealand, and the US. As a result, some organizations have had little incentive to innovate and comply, resulting in an ongoing battle of stakeholder contestation for the past two decades.

Proposals for alternative schemes to avoid the problems of cap-and-trade schemes include Cap and Share, which was considered by the Irish Parliament in 2008, and the Sky Trust schemes.

Carbon emission trading without border adjustments for exports leads to reduced global competitiveness for carbon-intensive products.

Some critics in the EU blamed the EU ETS for contributing to the 2021 global energy crisis.^[95][96] In August 2022, Polish Prime Minister Mateusz Morawiecki called for a temporary suspension of the EU ETS to stabilize electricity prices, saying the "price increase [on the ETS] is out of control and hitting the household budgets of EU citizens."

Abuses

The Financial Times published an article about cap-and-trade systems, which argued that "Carbon markets create a muddle" and "...leave much room for unverifiable manipulation". Emissions trading schemes have also been criticised for the potential of creating a new speculative market through the commodification of environmental risks through financial derivatives.

Annie Leonard's 2009 documentary The Story of Cap and Trade criticized carbon emissions trading for the free permits to major polluters giving them unjust advantages, cheating in connection with carbon offsets, and as a distraction from the search for other solutions.

In China, some companies started artificial production of greenhouse gases with sole purpose of recycling and gaining carbon credits. Similar practices happened in India. Earned credit were then sold to companies in US and Europe.

Corporate and governmental carbon emission trading schemes have been modified in ways that have been attributed to permitting money laundering to take place.

Examples by country

Australia

Main articles: Garnaut Climate Change Review, Carbon Pollution Reduction Scheme, and Clean Energy Bill 2011

In 2003 the New South Wales (NSW) state government unilaterally established the New South Wales Greenhouse Gas Abatement Scheme^[105] to reduce emissions by requiring electricity generators and large consumers to purchase NSW Greenhouse Abatement Certificates (NGACs). This has prompted the rollout of free energy-efficient compact fluorescent lightbulbs and other energy-efficiency measures, funded by the credits. This scheme has been criticised by the Centre for Energy and Environmental Markets (CEEM) of the University of New South Wales (UNSW) because of its lack of effectiveness in reducing emissions, its lack of transparency and its lack of verification of the additionality of emission reductions.

Prior to the 2007 federal election, both the incumbent Howard Coalition government and the Rudd Labor opposition promised to implement an emissions trading scheme (ETS). Labor won the election, and the new government proceeded to implement an ETS. The new Rudd government introduced the Carbon Pollution Reduction Scheme, which the Liberal Party of Australia (now led by Malcolm Turnbull) supported. Tony Abbott questioned an ETS, advocating a "simple tax" as the best way to reduce emissions. Shortly before the carbon vote, Abbott defeated Turnbull in a leadership challenge (December 1, 2009), and from there on the Liberals opposed the ETS. This left the Rudd Labor government unable to secure passage of the bill, and it was subsequently withdrawn.

Julia Gillard defeated Rudd in a leadership challenge, becoming Federal Prime Minister in June 2010. She promised that she would not introduce a carbon tax, but would look to legislate a price on carbon when taking the government to the 2010 election. In the first Australian hung-parliament result in 70 years, the Gillard Labor government required the support of crossbenchers - including the Greens. One requirement for Greens' support was a carbon price, which Gillard proceeded with in forming a minority government. A fixed carbon-price would proceed to a floating-price ETS within a few years under the plan. The fixed price lent itself to characterisation as a "carbon tax", and when the government proposed the Clean Energy Bill in February 2011, the opposition denounced it as a broken election promise.

The Lower House passed the bill in October 2011 and the Upper House in November 2011. The Liberal Party vowed to repeal the bill if elected. The bill thus resulted in passage of the Clean Energy Act, which possessed a great deal of flexibility in its design and uncertainty over its future.

The Liberal/National coalition government elected in September 2013 promised to reverse the climate legislation of the previous government. In July 2014, the carbon tax was repealed - as well as the Emissions Trading Scheme (ETS) that was to start in 2015.

Canada

The Canadian provinces of Quebec and Nova Scotia operate an emissions trading scheme. Quebec links its program with the US state of California through the Western Climate Initiative.

China

Main article: Chinese national carbon trading scheme

The Chinese national carbon trading scheme is the largest in the world. It is an intensity-based trading system for carbon dioxide emissions by China, which started operating in 2021. The initial design of the system targets a scope of 3.5 billion tons of carbon dioxide emissions that come from 1700 installations. It has made a voluntary pledge under the UNFCCC to lower CO₂ per unit of GDP by 40–45% in 2020 when comparing to the 2005 levels.

In November 2011, China approved pilot tests of carbon trading in seven provinces and cities—Beijing, Chongqing, Shanghai, Shenzhen, Tianjin, as well as Guangdong Province and Hubei Province, with different prices in each region. The pilot is intended to test the waters and provide valuable lessons for the design of a national system in the near future. Their successes or failures will, therefore, have far-reaching implications for carbon market development in China in terms of trust in a national carbon trading market. Some of the pilot regions can start trading as early as 2013/2014. National trading is expected to start in 2017, latest in 2020.

The effort to start a national trading system has faced some problems that took longer than expected to solve, mainly in the complicated process of initial data collection to determine the base level of pollution emission. According to the initial design, there will be eight sectors that are first included in the trading system: chemicals, petrochemicals, iron and steel, non-ferrous metals, building materials, paper, power and aviation, but many of the companies involved lacked consistent data. Therefore, by the end of 2017, the allocation of emission quotas have started but it has been limited to only the power sector and will gradually expand, although the operation of the market is yet to begin. In this system, Companies that are involved will be asked to meet target level of reduction and the level will contract gradually.

An overview of studies related to the impacts of the ETS found that it "generates clear environmental and social benefits but exhibits mixed economic and innovation effects." The system reduce carbon emissions by up to 18.2%, reducing pollution, inequality and improve welfare so that 33% of all health benefits from air pollution control policies in China are the benefits from the ETS. Some researchers found it can reduce GDP or inhibit innovation. By 2027, it is expected to expand to all major industrial emmiters and began to establish an absolute cap.

European Union

Price of CO₂ in the EU Emissions Trading System

The European Union Emissions Trading System (EU ETS) is a carbon emission trading scheme (or cap and trade scheme) that began in 2005 and is intended to lower greenhouse gas emissions in the EU. Cap and trade schemes limit emissions of specified pollutants over an area and make polluters pay for their pollution, requiring them to buy allowances to emit enough to cover their emissions, from the EU or from other companies. The money is channeled to environmental and social goals. As of 2026 the ETS covers around 40% of the EU's greenhouse gas emissions. The cap decline gradually and should reach zero by 2039. After this year no more allowances will be distributed and when the unused allowances will end, no more emissions will be permitted.

As from 2027 road transport, buildings and industrial installation that fell out of EU ETS will be covered by a new EU ETS2. The "old" ETS and the new EU ETS2 allowances will be traded independently. A major difference to the ETS is that ETS2 will cover the CO₂ emissions upstream - fuel suppliers rather than consumers will be obliged to cover emissions with ETS2 emission allowances. The 2 systems will cover 75% of the GHG emissions of the European Union.

Compared to 2005, when the EU ETS was first implemented, the proposed caps for 2020 represent a 21% reduction in greenhouse gases. This target was achieved six years early as emissions in the ETS fell to 1.812 billion (10⁹) tonnes in 2014.

During the years 2005–2025, GHG emissions in the sectors covered by the ETS declined by around 50%, declining only by 20% in the not covered sectors.  A 2020 study showed that between 2008 and 2016 the ETS reduced CO₂ emissions by 11.5% in covered sectors despite low carbon price. A 2024 study estimate the emission reduction effect at 7%. According to a 2023 study the ETS, reduced emissions by 10% between 2005 and 2012 with no impacts on profits or employment for regulated firms. A 2024 study demonstrated that the ETS has contributed to reduce atmospheric levels of air pollutants in the EU including sulfur dioxide, fine particulate matter, and nitrogen oxide. This reduction has translated in local health co-benefits, alongside the system's primary goal of mitigating climate change. EU countries view the emissions trading scheme as necessary for meeting climate goals. A strong carbon market guides investors and industry in their transition from fossil fuels.

India

Trading is set to begin in 2014 after a three-year rollout period. It is a mandatory energy efficiency trading scheme covering eight sectors responsible for 54 per cent of India's industrial energy consumption. India has pledged a 20 to 25 per cent reduction in emission intensity from 2005 levels by 2020. Under the scheme, annual efficiency targets will be allocated to firms. Tradable energy-saving permits will be issued depending on the amount of energy saved during a target year.

Japan

Japan as a country does not have a compulsory emissions trading scheme. The government in 2010 (the Hatoyama cabinet) had planned to introduce one, but the plan lost momentum after Hatoyama resigned as prime minister, due partly from industrial opposition, and was eventually shelved. Japan has a voluntary scheme. Furthermore, the Kyoto Prefecture has a voluntary emissions trading scheme.

Two regional mandatory schemes exist however, in Tokyo and Saitama Prefecture. The city of Tokyo consumes as much energy as "entire countries in Northern Europe, and its production matches the GNP of the world's 16th largest country". A cap-and-trade carbon trading scheme launched in April 2010 covers the top 1,400 emitters in Tokyo, and is enforced and overseen by the Tokyo Metropolitan Government.^[140] Phase 1, which was similar to Japan's voluntary scheme, ran until 2015. Emitters had to cut their emissions by 6% or 8% depending on the type of organization; from 2011, those who exceed their limits were required to buy matching allowances, or invest in renewable-energy certificates, or offset credits issued by smaller businesses or branch offices. Polluters that failed to comply were liable up to 500,000 yen in fines plus credits for 1.3 times excess emissions. In its fourth year, emissions were reduced by 23% compared to base-year emissions. In phase 2 (FY2015–FY2019), the target was expected to increase to 15–17%. The aim was to cut Tokyo's carbon emissions by 25% from 2000 levels by 2020.

One year after Tokyo launched its cap-and-trade scheme, the neighbouring Saitama Prefecture launched a highly similar scheme. The two schemes are connected.

New Zealand

New Zealand Unit Prices

The New Zealand Emissions Trading Scheme (NZ ETS) is an all-gases partial-coverage uncapped domestic emissions trading scheme that features price floors, forestry offsetting, free allocation and auctioning of emissions units.

The NZ ETS was first legislated in the Climate Change Response (Emissions Trading) Amendment Act 2008 in September 2008 under the Fifth Labour Government of New Zealand and then amended in November 2009 and in November 2012 by the Fifth National Government of New Zealand.

The NZ ETS was until 2015 highly linked to international carbon markets as it allowed unlimited importing of most of the Kyoto Protocol emission units. There is a domestic emission unit; the 'New Zealand Unit' (NZU), which was initially issued by free allocation to emitters until auctions of units commenced in 2020. The NZU is equivalent to 1 tonne of carbon dioxide. Free allocation of units varies between sectors. The commercial fishery sector (who are not participants) received a one-off free allocation of units on a historic basis. Owners of pre-1990 forests received a fixed free allocation of units. Free allocation to emissions-intensive industry, is provided on an output-intensity basis. For this sector, there is no set limit on the number of units that may be allocated. The number of units allocated to eligible emitters is based on the average emissions per unit of output within a defined 'activity'. Bertram and Terry (2010, p 16) state that as the NZ ETS does not 'cap' emissions, the NZ ETS is not a cap and trade scheme as understood in the economics literature.

Some stakeholders have criticised the New Zealand Emissions Trading Scheme for its generous free allocations of emission units and the lack of a carbon price signal (the Parliamentary Commissioner for the Environment), and for being ineffective in reducing emissions (Greenpeace Aotearoa New Zealand).

South Korea

South Korea's national emissions trading scheme officially launched on January 1, 2015, covering 525 entities from 23 sectors. With a three-year cap of 1.8687 billion tCO₂e, it now forms the second-largest carbon market in the world, following the EU ETS. This amounts to roughly two-thirds of the country's emissions. The Korean emissions trading scheme is part of the Republic of Korea's efforts to reduce greenhouse gas emissions by 30% compared to the business-as-usual scenario by 2020.

United Kingdom

The UK Emissions Trading Scheme (UK ETS) is the carbon emission trading scheme of the United Kingdom. It is cap and trade and came into operation on 1 January 2021 following the UK's departure from the European Union. The cap is reduced in line with the UK's 2050 net zero commitment.

Carbon Price Support (CPS) is an additional tax, paid by electricity generation companies that use fossil fuels, introduced in 2013 in response to the low prices then on the European Union Emissions Trading System.

United States

See also: Climate change in the United States

The American Clean Energy and Security Act (H.R. 2454), a greenhouse gas cap-and-trade bill, was passed on June 26, 2009, in the House of Representatives by a vote of 219–212. The bill originated in the House Energy and Commerce Committee. It was introduced by Representatives Henry A. Waxman and Edward J. Markey. The political advocacy organizations FreedomWorks and Americans for Prosperity, funded by brothers David and Charles Koch of Koch Industries, encouraged the Tea Party movement to focus on defeating the legislation. Although cap and trade also gained a significant foothold in the Senate via the efforts of Republican Lindsey Graham, Independent and former Democrat Joe Lieberman, and Democrat John Kerry, the legislation died in the Senate.

President Barack Obama's proposed 2010 United States federal budget wanted to support clean energy development with a 10-year investment of US$15 billion per year, generated from the sale of greenhouse gas emissions credits. Under the proposed cap-and-trade program, all GHG emissions credits would have been auctioned off, generating an estimated $78.7 billion in additional revenue in FY 2012, steadily increasing to $83 billion by FY 2019. The proposal was never made law. Failing to get congressional approval for such a scheme, President Barack Obama instead acted through the United States Environmental Protection Agency to attempt to adopt the Clean Power Plan, which does not feature emissions trading. The plan was subsequently challenged by the administration of President Donald Trump.

In 2006, the California State Legislature adopted the California Assembly Bill 32 (AB32), the Global Warming Solutions Act that let to a statewide cap-and-trade program that began in 2012. California and Quebec linked their cap-and-trade programs in 2014, sharing one carbon market.

In 2021, Washington state instituted its own emissions trading system, which it called "Cap-and-Invest." Revenue from the auctioning of carbon allowances is directly invested in programs intended to address climate change.

In the United States, most polling shows large support for emissions trading.