Economics class: Windfalls for heavy industry in EU carbon scheme are a moral hazard

This article picked by a teacher with suggested questions is part of the Financial Times free schools access programme. Details/registration here.

Specification:

•  Market failure and government intervention

Click to read the article below and then answer the questions:

Windfalls for heavy industry in EU carbon scheme are a moral hazard

• Watch this video and then explain how the EU’s Emissions Trading System (ETS) operates

• The ETS works on a ‘cap and trade’ principle. Using a demand and supply diagram, analyse how the cap and trade ETS can reduce emissions over time

• Define moral hazard

• Outline the reasons why ‘windfalls for heavy industry in EU carbon scheme are a moral hazard.’

Gavin Clarke, Emmanuel College