Such was the title of an article in the Economist – notably, though, without the question mark — during the very week I was lecturing in Florence about that subject and carbon markets. An article in the International Herald Tribune the same week asked the question: “Why did cap and trade die?”

News has certainly been unremittingly bleak over recent months: the failures of Copenhagen, VAT tax fraud on carbon transactions in Europe, the sale of ‘recycled’ credits from Hungary, and a brutal political environment for cap & trade in the US Congress. The State of Arizona recently withdrew from the Western Regional Initiative, carbon market traders are being laid off, and markets of any kind – regulatory or otherwise – took a considerable beating after the financial meltdown of late 2008.

But I guess I’m just an incurable optimist, because those obituaries still seem a bit premature to me. Even at this point, any US plan is likely to use such a mechanism for power plants (e.g., building on RGGI’s experience), and perhaps adding other industrial sources down the road. Other countries continue to explore how they might develop new markets to address GHGs and related environmental concerns. Strictly speaking, many of these are not cap-and-trade efforts (e.g., China’s energy intensity trading in Tianjin) – but they could nonetheless have beneficial effects.

I’ve been working over recent months with China’s Ministry of Commerce and the China Beijing Environment Exchange to foster VER transactions within that country, and Business Week cited yours truly in a piece about Japan’s proposed market-based system. One of my students is currently studying the development of RECs and white certificate markets in India. Overall, we seem to be moving more and more towards a wide range of small-scale, nation-based environmental markets, built from the bottom up — rather than one large, global, top-down approach (as in the Kyoto Protocol). This is very much in line with David Victor’s ‘Madisonian’ approach, discussed in the CLSA report I wrote a couple of years ago with Christine Loh. So don’t give up hope….. & stay tuned!