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Harrabin's Notes: Carbon trading | Harrabin's Notes: Carbon trading |
(about 1 hour later) | |
In his regular column, the BBC's environment analyst, Roger Harrabin, assesses the latest assault against carbon trading ahead of the Copenhagen climate conference. | In his regular column, the BBC's environment analyst, Roger Harrabin, assesses the latest assault against carbon trading ahead of the Copenhagen climate conference. |
CARBON TRADING: DOES IT REALLY REDUCE EMISSIONS? Energy efficiency will have more impact in fast-emerging economies like China | CARBON TRADING: DOES IT REALLY REDUCE EMISSIONS? Energy efficiency will have more impact in fast-emerging economies like China |
Carbon trading could trigger a financial collapse like the sub-prime loans crisis, according to a new report from the green group Friends of the Earth (FoE). | Carbon trading could trigger a financial collapse like the sub-prime loans crisis, according to a new report from the green group Friends of the Earth (FoE). |
It is the latest in a series of assaults against carbon trading as the Copenhagen climate conference looms. | It is the latest in a series of assaults against carbon trading as the Copenhagen climate conference looms. |
The carbon trade allows dirty industries in rich countries to offset emissions targets by paying for clean development projects in poor countries. London is a major centre for the trade, which could reach trillions of dollars in the next few decades. | The carbon trade allows dirty industries in rich countries to offset emissions targets by paying for clean development projects in poor countries. London is a major centre for the trade, which could reach trillions of dollars in the next few decades. |
But FoE says most trades are done not by polluting industries, but by speculative traders packaging carbon credits into complex financial products similar to those which triggered the sub-prime mortgage crash. | But FoE says most trades are done not by polluting industries, but by speculative traders packaging carbon credits into complex financial products similar to those which triggered the sub-prime mortgage crash. |
It warns that this could lead to a future crisis of sub-prime carbon. | It warns that this could lead to a future crisis of sub-prime carbon. |
'Get-out clause' | 'Get-out clause' |
The report's author, Sarah Jayne-Clifton, said: "Carbon trading is failing dismally at reducing emissions, yet allows speculators to grow rich from the climate crisis and hands politicians and industry a get-out clause for polluting business as usual." | The report's author, Sarah Jayne-Clifton, said: "Carbon trading is failing dismally at reducing emissions, yet allows speculators to grow rich from the climate crisis and hands politicians and industry a get-out clause for polluting business as usual." |
The allegation was instantly rejected by Patrick Birley from the European Climate Exchange, who accused Friends of the Earth of demonstrating a loose grasp of financial markets by relating carbon trading to complex sub-prime trading. | |
"Carbon trading is a very simple trading tool much like trading in oil or gas," he said. He pointed out that carbon trading is merely a tool to achieve carbon caps set by governments. | |
Friends of the Earth's rhetoric in this case might indeed be loose - but it is inarguable that confidence in carbon trading has been eroded after investigations showed that a substantial proportion of clean energy projects in developing countries funded by carbon finance had benefited business but not the environment. | |
A recent report from Greenpeace focused on what it regards as a carbon trading failure in the Noel Kempff forestry project in Bolivia. | |
Greenpeace says over the 12 years of the project, estimates of the emissions reduction have fallen almost 90%. | Greenpeace says over the 12 years of the project, estimates of the emissions reduction have fallen almost 90%. |
Onus on rich | |
The Bolivian government is now fervently anti-trading, insisting that rich nations should take responsibility for all their own emissions themselves. | The Bolivian government is now fervently anti-trading, insisting that rich nations should take responsibility for all their own emissions themselves. |
I also wrote recently in this column about the American Breakthrough Institute studies of carbon trading which concluded that a straight carbon tax (if ever it could be politically achieved) would be much more effective. | I also wrote recently in this column about the American Breakthrough Institute studies of carbon trading which concluded that a straight carbon tax (if ever it could be politically achieved) would be much more effective. |
The British government agrees that rich nations must make big emissions cuts - but insists emissions trading still has a cost-effective part to play. | The British government agrees that rich nations must make big emissions cuts - but insists emissions trading still has a cost-effective part to play. |
Indeed, the EU's promise of 30% emissions cuts if other nations agree tough targets is based on carbon trading. | Indeed, the EU's promise of 30% emissions cuts if other nations agree tough targets is based on carbon trading. |
The US position relies heavily on carbon trading too - although right-wingers in the Senate insist it cannot be trusted. | The US position relies heavily on carbon trading too - although right-wingers in the Senate insist it cannot be trusted. |
This is ironic given that it was free-market thinkers in the US who influenced the American government to insist that trading was part of the Kyoto climate deal, which the US subsequently rejected. | This is ironic given that it was free-market thinkers in the US who influenced the American government to insist that trading was part of the Kyoto climate deal, which the US subsequently rejected. |
Now the EU is flying the flag for trading, and assuming that it will provide much of the funding needed for adaptation and clean energy in developing countries. | Now the EU is flying the flag for trading, and assuming that it will provide much of the funding needed for adaptation and clean energy in developing countries. |
Chinese example | Chinese example |
Having just returned from China, it is eminently clear that in theory it is much, much more efficient to provide clean infrastructure in a fast-emerging economy than in our sclerotic rich countries with so much of their energy infrastructure, factories and homes already set in concrete. | Having just returned from China, it is eminently clear that in theory it is much, much more efficient to provide clean infrastructure in a fast-emerging economy than in our sclerotic rich countries with so much of their energy infrastructure, factories and homes already set in concrete. |
But it will not work if people cannot trust the trade. On a previous visit to China I went to a wood-waste power station funded under the carbon trading scheme known as the CDM. | But it will not work if people cannot trust the trade. On a previous visit to China I went to a wood-waste power station funded under the carbon trading scheme known as the CDM. |
It was obviously working well. But when I asked the owners if they had really needed the CDM cash to make the economics work, they repeatedly refused to answer. | It was obviously working well. But when I asked the owners if they had really needed the CDM cash to make the economics work, they repeatedly refused to answer. |
This touches on the principle known as additionality - ie, will a clean development project slow emissions growth in a way that would not have happened without it? | This touches on the principle known as additionality - ie, will a clean development project slow emissions growth in a way that would not have happened without it? |
This will have to be bolted down very firmly if agreement is to be reached on it in Copenhagen. | This will have to be bolted down very firmly if agreement is to be reached on it in Copenhagen. |
When I ponder the cost of making my inherently leaky Victorian home in London properly energy-efficient, I cannot help thinking how much better it would be to spend that money insulating some of the Chinese buildings that are being hurled skywards as a breathtaking rate. | When I ponder the cost of making my inherently leaky Victorian home in London properly energy-efficient, I cannot help thinking how much better it would be to spend that money insulating some of the Chinese buildings that are being hurled skywards as a breathtaking rate. |
But could you trust that the investment would happen in the right way? FoE is by no means alone in its scepticism. | But could you trust that the investment would happen in the right way? FoE is by no means alone in its scepticism. |
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