CARBON CREDITS
Permission to pollute
Oscar Reyes
The Guardian, 24 January 2008
Far from tackling climate change, the EU's timid plans are rewarding those on the wrong track
Promising a 20% cut in carbon emissions by 2020, the EU now claims to be the world leader in tackling climate change. But dig a little deeper, and the whole project starts to look like a smoke-and-mirrors trick to allow European industry to carry on polluting.
At the heart of the European commission's proposal, published yesterday, is an assumption that the EU emissions trading scheme (ETS) will put a high price on carbon emissions, and that this will encourage a switch to renewable energy. This is backed up with a target of 10% for biofuel use in transport by 2020. Both measures are deeply flawed.
For starters, the commission assumes that the ETS, which awards "permits to pollute" to industry, will deliver a practical means to achieve its target. These permits have to date been given away, resulting in massive windfalls for energy-intensive industries. It now proposes to auction the greater part of these pollution licences, although heavy lobbying has resulted in a series of opt-outs and delays. In effect, the EU is offering polluting industries an extended period of grace. This despite the mass of evidence, from the Intergovernmental Panel on Climate Change downwards, that the next 15 years will be the crucial period for action on climate change.
There are even more fundamental problems with the ETS, however, as the failure of its first phase (from 2005-07) showed. Under pressure from lobbyists, the EU was over-generous in its allocation of carbon credits. As a result, more than 90% of the heavy industrial plants covered by the scheme emitted less than their quota of free credits. The market value of the credits collapsed, pollution continued apace, and the companies involved made billions in windfall profits by passing on imagined "costs" to consumers.
The second phase, which started this month, imposes tighter limits on the number of credits allocated within Europe. But loopholes remain. In particular, companies can now import credits from the global south, providing them with a cheap means to offset their own failure to deliver emissions reductions.
The EU's biofuel target, meanwhile, flies in the face of mounting evidence that the expansion of this sector has a detrimental net effect. I have witnessed at firsthand that the changes in land to accommodate biofuels entail unsustainable farming practices and trigger serious land conflicts, all of which outweigh any net benefits that might be achieved in a shift from fossil to biofuels.
Last Monday, the House of Commons environmental audit committee called for a moratorium on biofuel targets, both because of the impact of changing land use and due to fears biofuels may, in fact, emit more greenhouse gases than fossil fuels. The commission claims to have resolved this problem with strict "sustainability criteria", but its definition of this term includes only a very narrow range of environmental criteria, and no mention of social or labour concerns whatsoever.
The EU may be trumpeting a new climate and energy road map, but it is one that will only send us in the wrong direction. By focusing on the price of carbon, rather than regulations to cut emissions domestically, it is offering polluters the means to buy their way out of action on climate change. By persisting with biofuel targets, it compounds the problem by incentivising measures that will increase emissions. And by fixing on a 20% target, rather than demanding the scale of cuts that climate scientists advocate, it has shown a paucity of ambition that no amount of talk about "leadership" on climate change can really hide.
'Made in the USA': A short history of carbon trading
Chapter 2 of Carbon Trading:A Critical Conversation on Climate Change, Privatisation and Power
by Larry Lohmann (editor)
published by Dag Hammarskjold Foundation, Durban Group for Climate Justice and The Corner House
first published October 2006 | PDF
At the insistence of the United States, carbon trading mechanisms became the centrepiece of the 1997 Kyoto Protocol, the main current international agreement on how to cope with climate change.
Two kinds of trading are involved. First, tradable rights to emit carbon dioxide are handed out to the biggest polluters. Second, companies or industrialised countries can buy additional pollution credits from projects in the South that claim to be emitting less greenhouse gas than they would have without the carbon market investment. Other examples of carbon trading include the European Union Emissions Trading Scheme (EUETS) and private deals to make consumers' activities 'carbon-neutral'.
This second chapter of the book, Carbon Trading: A Critical Conversation on Climate Change, Privatisation and Power, sketches how this extraordinary, little-tested, highly-theoretical 'market' approach to the climate problem -- designed principally merely to save industrial polluters money in the short-term -- triumphed politically, in spite of its obvious weaknesses.
Chapter 5 of the book, Carbon Trading: A Critical Conversation on Climate Change, Privatisation and Power, dissects and sets aside the claim that there are no alternatives to carbon trading in addressing climate change.
Conventional regulation, public works, green taxes, legal action, popular movements against fossil fuel extraction and fossil fuel pollution, shifting of subsidies away from fossil fuels and nuclear energy toward renewable energy -- taken together, such actions are far more effective than carbon trading in effecting the structural change needed to tackle global warming.
Many of these types of action are already already being taken, and some boast a record of success in bringing about social and environmental change stretching back centuries. The debate over climate solutions needs to be conducted not only by corporations, ministries, specialists and big NGOs but by a wider public.
http://www.thecornerhouse.org.uk/summary.shtml?x=544238
States seek federal carbon offset rules
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MONTPELIER, Vt.
Leery about the potential for fraud in the emerging carbon offset market, Vermont Attorney William Sorrell and his counterparts in nine other states asked the Federal Trade Commission on Monday to develop guidelines for businesses that sell credits.
The inherently intangible nature of carbon offsets and the lack of standards and definitions among those selling them make it hard for consumers to know whether they got what they paid for, according to Sorrell and his counterparts in Arkansas, California, Connecticut, Delaware, Illinois, Maine, Mississippi, New Hampshire and Oklahoma.
The market for carbon offsets has ballooned into a $100 million a year business, but it needs regulation by the federal government, the attorneys general said in a seven-page letter dated Sunday.
The FTC should research consumers' understanding of what carbon offsets are and what disclosures might be necessary to help them make informed decisions, and should undertake enforcement efforts to prevent "overly broad environmental claims" by sellers, they said.
Carbon offset is the term applied to credits bought by people and companies to offset their contributions to global climate change by supporting environmental projects that reduce carbon dioxide elsewhere in the environment.