Carbon trading does not reduce carbon emissions

The carbon trading scandals under the Kyoto Clean Development Mechanism continue to grow. The original point of the Clean Development Mechanism was to reward environmentally friendly energy projects with valuable “carbon credits” in order to create an incentive for them, so that they could take place. The clean project earns carbon credits which can be traded for real money on the artificial carbon market.

Obviously there is no point in awarding carbon credits for projects that are not genuinely “clean” but that are exactly what is now going, and it is happening on a grand scale. Instead of acting as the incentive to make clean projects viable the Clean Development Mechanism and its associated carbon credits are quickly becoming a way for large companies to clean up, in the financial sense rather than the environmental sense.

The BBC World Service claims that several projects in India which would have happened anyway are simply using the CDM to make extra money by selling carbon credits which are not deserved. They have highlighted a biomass generator at KRBL in Uttar Pradesh, which would have been installed, carbon credits or not, an incinerator for cheaply eliminating industrially produced greenhouse gas, which iKRBL, Uttar Pradesh, is now going to receive over $50 million a years worth of credits but the incinerator costs substantially less to install than the value of the credits being received.

I have always thought that carbon trading would never work. We have yet to see any evidence that it will work. All it seems to do it to allow people in the Northern Hemisphere to continue to pollute without genuinely incentivising people in the Southern Hemisphere to stop polluting.

A study published by the Dag Hammarskjold Foundation goes further.  “This is the most absurd and impossible market human civilization has ever seen. Carbon trading is bad for the South, bad for the North and bad for the climate.” according to Soumitra Ghosh, a research for the Foundation and a contributor to the study.

These projects are only supposed to be used for carbon credits if they are “additional” and would not have taken place without the carbon credits.

I hope that those running the CDM are getting the message that “additionality” is not just a long and curious word, but it means that the project financed by the CDM would not have taken place without it. They also have to understand that the CDM is not just a mechanism for getting money from the first world to the second and third worlds; it is supposed to be a tool that reduces the amount of greenhouse gas emissions.

In 2006 practically all applications for assistance under the CDM scheme were granted. Last year 9% of the proposals were rejected and 21% sent for further review. It has been commented that if the CDM approach were discredited (I think it already is) then companies would be forced to stop buying credits and start reducing carbon emissions. That would cost more money but there would be a genuine reduction in carbon emissions, not a theoretical reduction which disguises the fact that emissions are rising.

You cannot have it both ways. There is no easy solution, no marvellous scheme that will reduce carbon emissions. They can only be reduced by companies and consumers spending real money on low carbon measures, particularly on renewable energy.

There is something surreal about a device that is intended to reduce emissions which rewards the building of a coal fired power plant. The CDM is a device engineered by lawyers, civil servants and accountants. It reminds me of the definition of a camel – a racehorse designed by a committee.

But as awkward and ineffective as carbon trading is, some people argue that even though it may have no effect on reducing emissions it is effective at getting money from the wealthy Northern Hemisphere to the poor Southern Hemisphere.

It does this monetary transfer process, but there are simpler ways of doing it, and cheaper and more effective ways of ensuring that the money gets to the right people.

We do not need a high level international response to poverty to be disguised as a high level international response to carbon emission reduction, and in the process of its ways bestowing wealth on already wealthy third world corporations often using the natural processes in the carbon cycle that he poor already possess.

I am not an economist but I did live over Chrisp Street Market in London’s East End for the first fourteen years of my life and I saw there how markets really operate. They bought everything at more or less the same price and sold everything at more or less the same price. The concern of the market traders was to buy produce and resell it at a profit that would give them a living, or in some cases more than that.

The traders never dealt in commodities that no one wanted to buy. If you created a system that enabled them to buy and sell theoretical emissions they would buy and sell those emissions, but you would not be surprised if the emissions never existed in the first place and if all of the buying and selling was done in the book makers premises.

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