The Carbon Trading Con Game

by Lorna Salzman

"Where's the organized powerful constituency for higher fuel economy standards, a higher gasoline tax, or a cap-and-trade system on carbon dioxide emissions?"

So asked New York Times columnist/economist Paul Krugman in that paper on January 29th, echoing the frustration of many environmentalists who have asked the same question for months, even years.

You know something is amiss when the only ones who speak out are the Prince of Wales and a few venture capitalists seeking future profit, accompanied by public cries for Cheap Oil. And you know there is a big problem when the sectors most devoted to Truth in Risk Assessment - the European reinsurance companies and the scientists who have done the calculations on the impact of global warming - are routinely and studiously ignored.

Some people may say that all is not lost; look at the new U.S. Climate Action Partnership (USCAP), where big business, the oil companies and a few large environmental groups have come together with what they claim is a big step in reducing greenhouse gas emissions from stationary power plants. But a closer look, in the context of what all credible scientists predict about the chronology and impact of global warming, reveals a plan that is nowhere near commensurate with the real risk and that is barely more "science-based" than Pres. Bush's own plans.

First, this plan addresses only stationary electric power plants, not the transportation sector, which consumes twice the fossil fuels as the former. It is a weak "let's wait and see whether it works" approach that will lock us into limited and inadequate CO2 reductions for years to come and in so doing will pre-empt other approaches such as a desperately needed carbon tax.

Second, it ignores the most credible science such as the International Panel on Climate Change (IPCC), NASA scientist James Hansen, and the recommendations of the Center for American Progress/Institute for Public Policy Research/Australian Institute study, numerous UK reports, and the Global B
Business Network report prepared for the Pentagon.

Backing off from the former 450 ppm benchmark, scientists are now saying that a CO2 concentration of 400 ppm - only 20 ppm more than exists today - will make a 2 degree C. rise in average global temperature inevitable, leading to catastrophic and irreversible consequences such as the end of the Gulf Stream, widespread melting of ice sheets and glaciers, and a drastic rise in sea level. In order to head off this scenario, scientists say that immediate stabilization of CO2 emissions followed by an 80 to 90% reduction in the NEXT TEN YEARS is urgently needed.

But the USCAP report ignores this and would allow for a short-term increase in CO2 emissions in the next five years, followed by modest reductions after that, which would end up reducing CO2 emissions by a maximum of 60% BY THE YEAR 2050...four decades too late to do anything meaningful. It would allow CO2 concentrations to reach 450-550 ppm, in effect dooming the planet to the worst impact of global warming.

So what does USCAP recommend? Ignoring cheap gasoline and the transportation sector, it calls for a cap-and-trade system for fossil fuel power plants, in which each plant would have its emissions capped and credits allotted to it, which, if "unused", could be traded or sold to less efficient plants. The plan would "discourage" additional construction of new power plants that cannot capture CO2. Unfortunately, a cap on individual power plants does not infer a fixed, upper limit on TOTAL emissions in the US or any other country from ALL sources, so the unsustainable limit of 450-550 ppm is inevitable.

The cap-and-trade system, essentially a self-regulating one as opposed to one overseen by the public, is already being gamed and manipulated in Europe, where some utilities distort or lie about their emissions levels. It is completely reliant on the figures and reports of each utility, without any possibility of verification or independent public oversight, and the need to establish the value of a credit and the performance of a utility will create a middleman class of lawyers, economists and accountants who will enrich themselves on behalf of industry, not the public....a new class of bureaucracy that we most certainly do not want or need.

While only three national groups (Natural Resources Defense Council, Environmental Defense, World Resources Institute) have hung their hats alongside companies like BP, General Electric and DuPont, industry is able to boast of support from the environmental community. Meanwhile, the issues of continued underpricing of oil, meaningful efficiency measures, and the crucial need for a broad carbon tax to make renewable energy competitive, have fallen by the wayside, as indeed has the prospect of that "organized, powerful constituency" for a sane energy policy. The badly needed sense of urgency has been pre-empted in favor of what will cause the least disruption to Business As Usual, ignoring the far greater disruption that we will face in the coming decade.

© 2002 Lorna Salzman. All rights reserved. Material may be quoted with permission.