You can't trade in something unless you own it. When governments and companies "trade" in carbon, they establish de facto property rights over the atmosphere; a commonly held global commons. At no point have these atmospheric property rights been discussed or negotiated - their ownership is established by stealth with every carbon trade.
Market shares in the new carbon market will be allocated on the basis of who is already the largest polluter and who is fastest to exploit the market. The new "carbocrats" will therefore be the global oil, chemical, and car corporations, and the richest nations; the very groups that created the problem of climate change in the first place. What is more, with the current absence of "supplementarity", the richest nations and corporations will be able to further increase their global share of emissions by outbidding poorer interests for carbon credits.
Many of the projects proposed within the CDM, in particular tree planting and dams, are subject to the same criticisms as other large scale development projects- they assert foreign ownership of local resources, they consolidate the power of undemocratic elites, they oust people from their land, they undermine local self sufficient economies and low carbon cultures.
Carbon absorbed by forests is only removed from the carbon cycle for as long as the tree is standing and alive. Industrial forestry will not sequester carbon. Permanent reforestation is a once only removal of carbon from the cycle and cannot offset sustained overproduction.
Because we cannot know the future, we can have no certainty that any project selling carbon credits has really reduced its emissions further than it would have done without the intervention. Profit competition and technical innovation ensures that industry consistently reduces its energy costs. A carbon market can provide an automatic cash subsidy for any investment in low energy technology. If such incentives exist they should be explicit, targeted and accountable.
Russia's economic collapse since 1990 has reduced its emissions by 30%. Russia is intending to sell this incidental windfall (often call "hot air") as international carbon credits- potentially swamping the market. If countries subsidise their emissions with these Russian credits, the final global emissions will end up being exactly the same as they would have been without a carbon market or a Kyoto protocol.
There are strong incentives for cheating and creating bogus credits that do not represent any real reduction in emissions. The vendor gets the cash without having to change anything and the buyer gets cheap credits. There are similar incentives for misdeclaration, and "leakage"- transferring polluting activities to areas that are not accounted.
The temptation for all parties to cheat requires that every transaction to be scrutinised and every sale to be certified. There is no global institution or accounting system that can manage the complexity of this market.
International legal frameworks are usually very weak. Countries that want to use carbon credits to subsidise their emissions are already arguing for penalties so weak that they will not discourage cheating. Many of the Annex 1 (Russia, Turkey, Ukraine), Romania- these are some of the most corrupt and lawless countries are corrupt or desperate for foreign currency and will happily endorse doctored carbon credits.
The main model for carbon trading is Sulphur Dioxide (SO2) emissions trading under the US 1990 Clean Air Act. This programme faced none of the problems listed above- it was small (a few hundred companies), easy to monitor (one pollutant from one source-power generation), had permanent targets, and, above all, was conducted within one country with strong enforcement mechanisms.
The only international emissions trading has been in CFCs under the Montreal Protocol. Once again, the programme was small (only 17 producer companies), easy to monitor (one pollutant from one industrial process), and within a strong legal framework.
The market assumes that carbon credits from different sources will be fully interchangeable ("fungible" in carbospeak). However, carbon sequestered in sinks is a completely different product from the carbon "saved" by a technical innovation, which is different again from the carbon "saved" by a social or lifestyle change. Add to this the complexity of trading in different greenhouse gases. Each source requires different monitoring rules, different criteria and different agencies. Forcing them to be interchangeable in one market is a recipe for corruption and fraud.
Supporters of carbon trading will argue that these are not problems- they are challenges. "Just because it is hard, does not mean that we should not take action", they say. Let's be clear that carbon trading is not being supported because it will solve climate change. In fact it will undermine even the pathetic emissions reductions already proposed. The real reasons for carbon trading are:
1. Governments want to be assured of a cheap way to buy off their failure to meet their Kyoto targets which will keep public and corporations quiescent.
2. Brokers, accountants, and financial institutions are extremely excited at the thought of the size of their cut in a new $2.3 trillion speculative market.
3. Corporations and other major polluters want pliant governments who don't punish them for their emissions and hand over public money to pay for any emissions they are forced to make.
4. Oil companies support carbon trading as a way to avoid making any cuts in oil production.
5. Academics and financial consultants see rich pickings from becoming "experts" in the new market.
What Is Carbon Trading
Emissions Trading is particularly suited to the emissions of greenhouse gases, the gases responsible for global warming, which have the same effect wherever they are emitted.
Emissions of carbon dioxide - a greenhouse gas - are widely thought to be a key factor in global warming, increasing atmospheric temperatures around the world.
The idea of the carbon-trading scheme was to raise the cost to firms of continuing to pollute while creating a market to give an incentive to become more environmentally efficient.
They are traded in a similar way to buying and selling shares, there are a number of companies that offer the buying and selling of carbon units and many offer different commissions and even free trading if you shop around. I even saw one firm that offered a one stop shopping for Renewable Energy, Biodiversity, and Greenhouse Gas. Its like an online retailer but for things you can't touch. Ill have 2 pounds of apples, a bag of potatoes and a Biodiversity credit please!!!
On an international level countries are able to deal in carbon trading The potential benefits of such a system for developing countries would be that poorer, developing countries can sell there surplus carbon dioxide to richer countries. This income could stimulate much needed economic growth. They could also achieve their Kyoto commitments at the lowest possible cost as the money needed to invest in cleaner technology can be funded by the trading on carbon units. Countries like the USA and UK could pay the countries in Africa to REFOREST there lands, this reduction in carbon dioxide in the planet would then allow USA/UK firms to emit extra carbon dioxide into the atmosphere. It would probably be cheaper to REFOREST parts of Africa then to buy state of the art cleaner technology for firms in the West. How many trees could you plant for a million dollars/pounds in Africa? The cost of cleaner technology in the West obviously varies from industry to industry, size of the company, technological advances available etc but surely a company would not trade CO2 unless we were talking big money. Carbon trading sounds a bit strange to me, as you are trading air, but if this leads to more trees being planted and a reduction in climate change ? Im all for it!
Both James Nash & Wez Wells are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
James Nash has sinced written about articles on various topics from Environment, Painting and Environment. James Nash is a climate scientist with Greatest Planet (). Greatest Planet is a non-profit environmental organization specialising in carb. James Nash's top article generates over 368000 views. to your Favourites.
Wez Wells has sinced written about articles on various topics from Careers and Job Hunting, Parenting and Career Change. Wez Wells works for the and directory that lists 100s of Organic a. Wez Wells's top article generates over 18100 views. to your Favourites.
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