Carbon Trading

In an article entitled “Made in the USA, A short history of carbon trading” an argument is made against Carbon Trading, “how corporations, academics, governments, United Nations agencies and environmentalists united around a neoliberal or ‘market approach to climate change emanating from North America”Larry Lohmann, "Carbon Trading: A critical conversation on Climate Change, Privatisation and Power", Dag Hammarskjold Foundation, Durban Group for Climate Justice and The Corner House, Oct 2006, p. 31, Accessed April 2009. 
Here, the system of Carbon Trading is seen as a form of ‘global inequality’, one which threatens all life on the planet. The consequences of climate change, it is argued, are multiple, and many sided, different people see the crisis in different ways. While for northern elites, it posses problems such as how are they to maintain their power and privilege, how are corporations and society in general going to cope with a new threat to a fossil-fuelled industrial structure, and whether or not the various climate factors be either contained or exploited. While, for Southern elites the questions such as how best to mitigate unanticipated catastrophes and increased flows of environmental refugees, how can the situation be prevented from being used as an excuse for pushing to one side the South’s claim to industrialisation and its rightful share of global wealth, and how can the situation be used as political leverage. 
The situation, it is suggested, can’t be fixed without broad social and political change, it is especially seen as a threat to the largest energy companies, as well as the energy intensive private sector in general. The argument is made that there IS the political will, there is a problem here however, as almost all of this will is directed towards technical, informational or market fixes entrusted to a handful of undemocratic institutions. Mick Kelly, from the Climate Research Unit of the University of East Anglia is quoted as saying; “Acceptance of the carbon trading provisions of the Kyoto Protocol represents an article of faith, faith in the free market and faith in the process of globalisation. It rests on an ideological stance”Larry Lohmann, "Carbon Trading: A critical conversation on Climate Change, Privatisation and Power", Dag Hammarskjold Foundation, Durban Group for Climate Justice and The Corner House, Oct 2006, p32, Accessed April 2009. 
The situation is seen as ‘business as usual’, the proposed solutions seen in Carbon Trading are seen as a promise to fix the problem, while leaving everything else (politics & economics) just as it is. Here, the process of moving toward a Carbon Trading Market is seen as a process that brought international action on climate change within a US-style framework of neoliberal policy. It is argued that the process has been formed around three interlinked strategies, each of which reinforces the others. “The first strategy works to reshape or suppress understanding of the climate problem so that public reaction to it will present less of a political threat to corporations. The second strategy appeals to technological fixes as a way of bypassing debate over fossil fuels while helping to spur innovations that can serve as new sources of profit. The third strategy appeals to a market fix that secures the property rights of heavy Northern fossil users over the world’s carbon absorbing capacity while creating new opportunities for corporate profit through trade”Larry Lohmann, "Carbon Trading: A critical conversation on Climate Change, Privatisation and Power", Dag Hammarskjold Foundation, Durban Group for Climate Justice and The Corner House, Oct 2006, p34, Accessed April 2009. 
However, it is stressed here that Carbon Trading is not a corporate conspiracy, it is a joint invention of civil society as well as business and the state. NGO’s have been nearly as prominent in its development a private corporations it is argued. “The World Wide Fund for Nature (WWF), an organisation with an annual budget 3.5 times that of the World Trade Organisation, meanwhile joined the European Roundtable of Industrialists (ERT) and the US think tank inspired Centre for European Policy Studies in support of the EU Emissions Trading Scheme. WWF also helped develop an eco-label for the Kyoto Protocol’s Clean Development Mechanism projects. Greenpeace, for its part, has moved from being critical of corporate lobby groups and carbon trading to complete acceptance”Larry Lohmann, "Carbon Trading: A critical conversation on Climate Change, Privatisation and Power", Dag Hammarskjold Foundation, Durban Group for Climate Justice and The Corner House, Oct 2006, p58, Accessed April 2009. 
It is suggested that most Northern members of the NGO grouping on climate change, the Climate Action Network, have given their total support to the carbon market. However, it is stated that some NGO’s have been critical, and those groups are being urged “ to unite behind an entirely bizarre, incomprehensible, and totally corruptible system of carbon trading”Larry Lohmann, "Carbon Trading: A critical conversation on Climate Change, Privatisation and Power", Dag Hammarskjold Foundation, Durban Group for Climate Justice and The Corner House, Oct 2006, p59, Accessed April 2009. 
It is suggested that as Carbon Trading became centre stage of international climate policy, that UN climate conferences became more like trade fairs than international environmental negotiations. From the earliest days of Carbon Trading ideology, groups such as the International Petroleum Environmental Conservation Association have been in negotiations with national governments to promote market approaches to climate change. During recent UN climate negotiations carbon traders, consultants, manufacturers associations, petroleum and mining companies lobbyists have easily outnumbered government delegates and environmentalists. This weight of numbers has meant that legislation and policy has been directed by the business world. “The World Bank, which provides billions of dollars in public money to fossil fuel companies for their production and transport expenses, profitably expanded its remit to host seven different carbon funds aimed at providing cheap credits to corporations to allow them to continue to use fossil fuels”Larry Lohmann, "Carbon Trading: A critical conversation on Climate Change, Privatisation and Power", Dag Hammarskjold Foundation, Durban Group for Climate Justice and The Corner House, Oct 2006, p59, Accessed April 2009. 
The influence of the petroleum industry goes deeper, through lobby groups such as the International Chamber of Commerce (ICC), the industry brings its full weight of influence. The ICC has played a significant role in recent negotiations, ever since the 1992 Rio Earth Summit. Before this summit, together with Shell, Texaco, Mobil, and Chevron, the ICC sent a 30 person delegation to Senegal to round up support for the CDM from over 20 African nations. In return for their support the delegation promised foreign investment and technological transfer. The influence of business has increased as carbon trading has been gradually fused with UN policy and apparatus, staff of corporations and other organisations in a position to benefit from carbon trading gradually occupied positions of influence within UN expert panels. Ironically, these would then determine the rules and legislation for the new system, and hence govern their future profits. “The market fix, the technological fix and the knowledge fix have come together to encase international climate politics in a debate in which the only questions spoken are the narrow ones large corporations most want to hear”Larry Lohmann, "Carbon Trading: A critical conversation on Climate Change, Privatisation and Power", Dag Hammarskjold Foundation, Durban Group for Climate Justice and The Corner House, Oct 2006, p63, Accessed April 2009. 
==Practical solution to Global warming or corporate greenwash ?==
Daphne Wysham in an article entitled “Carbon Trading: Practical solution to Global warming or corporate greenwash” Carbon Trade Watch Website, Accessed April 2009 outlines an argument against carbon trading. Asked by Amy Goodman the author of the article as to what her problem with carbon trading is she states “Well, you know, this is a nice abstraction, but what we should be looking at is how carbon trading is playing out in reality. If you look at the EU emissions system that was up and running, has been up and running for several years, we see that emissions are actually up for greenhouse gas emissions, as are profits. Profits are up for the nuclear industry, for the coal industry, and the average consumer is paying more”Carbon Trade Watch Website, Accessed April 2009. 
She argues that what carbon trading does is turn the Earth’s carbon cycling capacity into property, which will be bought and sold as a commodity by the same corporate powers which have been destroying the climate. She claims that the arena of climate change has been reduced to a very small avenue of debate due to such issues as who profits, who pays, democracy, or power are not discussed. An example of how the system can be abused is provided in the shape of oil rigs flaring off in the Niger Delta. This activity has been banned by the international community and Nigeria has come under pressure to stop. However, Wysham contends that Chevron and other petroleum companies have been pushing for gas flaring reduction projects in the Niger Delta to count as carbon credits under the CDM, therefore we have the nonsensical situation where if this credit moves forward as planned, Chevron and the World Bank as well as others will actually profit from reducing gas flares, a process which is illegal.
Building upon this example Wysham continues “I think it’s instructive to look at, for example, the World Bank, which I have been monitoring for over ten years now. They have invested over fifteen times as much in fossil fuels as renewable since 1992. Originally, it was a hundred to one. Now they are getting onto carbon trading. The US Treasury back in 1997 said this is a clear conflict of interest for a financial institution to both profit from financing fossil fuels and profit from carbon trading. They’re actually charging somewhere on in the order of 13% commission on all carbon trading transactions"Carbon Trade Watch Website, Accessed April 2009. The argument is then made with regards to banks, in that if this particular model is globalised banks will profit from ‘gaming the system’, through loans for reconstruction or development, it is suggested that the banks will profit. “They will be profiting from selling, from giving loans to the likes of Chevron, and then they’ll be profiting again from charging a commission on CO2 that is captured from those operations in developing countries”Carbon Trade Watch Website, Accessed April 2009.
==Greenpeace on Carbon Trading ==
Carbon Trading is a complex issue according to Greenpeace. Backing the idea in general, the NGO points to problems with the way in which it is being implemented. 
Prior to the EU Emissions Scheme being brought into being in 2005, Greenpeace’s criticism of the scheme was more vigorous. In October 2004 just before the scheme’s implementation, Greenpeace Executive Director Stephen Tindale released a statement regarding a government announcement that more CO2 would be emitted by Britain under the schemeGreenpeace Website, Accessed April 2009. The statement points out, that while the Kyoto Protocol provided ‘flexible mechanisms’ to help countries achieve their reduction targets, that as negotiations continued it became clear that these mechanisms had the potential of becoming ‘loopholes’. Tindale concludes that the government “seems to have been hood-winked by the totally discredited argument that cutting emissions is bad for competitiveness. Cutting out the wasteful use of energy will improve, not damage it. This is just another example of how vested interests with loud voices and deep pockets can drive policy in the wrong direction”Greenpeace Website, Accessed 2009. 
In January of this year, the Conservative party in Britain published its “Low Carbon Economy” paper. On the same day as its release, Greenpeace released a reply analysing the implications of this paper if it were to become government policy after the next general election. The paper, Greenpeace points out, focuses on three relevant key elements of contemporary energy policy. (1) Energy Security (2) A policy beyond the EU Emissions Scheme for coal (3) Kick starting renewable energy systems. Greenpeace with regard to the report in general say “Tory proposals are not the final word and can be improved, they do put the weakness of the government’s position in focus”Greenpeace Website, Accessed April 2009. 
For Greenpeace, the main factor in the paper with regard to Carbon, is a system to incorporate coal beyond relying on the Emissions Trading Scheme alone – a UK Emissions Performance Standard for power stations. Here the Conservatives suggest that this standard would ensure that unabated conventional coal plants would not be allowed to operate in Britain. “The Conservatives endorsement of an emissions performance standard is a welcome addition to the ranks of those calling for its introduction – including all the major environmental groups, the EU member sates of the Netherlands and Denmark, as well as the Liberal Democrats”Greenpeace Website, Accessed April 2009.
In essence, for Greenpeace, this standard in addition to the EU Emissions Trading Scheme would guard against the threat of leaving Britain ‘locked in’ to a carbon intensive infrastructure. While the NGO praises the Conservatives for recognising that more than the Emissions Trading System is needed, it is quick to add that the figure for the standard of 500g/kwh proposed is “worryingly generous”. Alongside this the statement continues that there is no intention to progressively strengthen and tighten the standard, as technology to abate carbon improves. “This would dangerously undermine the UK’s chances of meeting our long term emission reduction targets and set a woeful example to the rest of the world, damaging our claim to be a world leader on climate change”Greenpeace Website, Accessed April 2009. 
Greenpeace finish by stating that a figure of 350g/kwh would be a more effective standard and that as the technology improves that a figure of 100g/kwh should be rigorously enforced by 2025. It is clear from this that as with other NGO’s, Greenpeace supports initiatives to build upon the EU Emissions Scheme, suggesting that they recognise that that alone is not enough, however they remain critical of any initiative put forward by political parties.
Greenpeace, although agreeing in principle to Carbon Trading have been keen to criticise where it sees it is needed. An example of this is April 2009, when it accused the Government of Papua New Guinea of lying to the international community about its commitment to ending deforestation. It suggested that PNG could earn hundreds of millions of dollars for reducing its deforestation, if carbon trading initiatives go ahead. It is argued that most of the land, that the government says it will use for carbon trading is already set aside for logging. Dorothy Tekwie of Greenpeace New Zealand said, “They’re actually lying to the international community about what is actually here. There’s not going to be much to trade off for carbon trade because they have already given those concession rights to logging companies after the ten high impact projects have gone through. So there is going to be nothing left.”Radio New Zealand International Website, Accessed April 2009. 
During climate negotiations in Bonn in March 2009 Greenpeace announced that forests could undermine the carbon market. “Carbon market prices could tumble by 75% if credits for safeguarding forests are added to markets for industrial emissions” a spokesperson said.”Reuters Website, Accessed April 2009. It was suggested that an increase in the market and an expansion of forest carbon credits would slow the fight against global warming, as it would divert billions of dollars way from clean technology. “Cheap forest credits sound attractive but a closer examination shows they are a dangerous option”Reuters Website, Accessed April 2009, Roman Czebiniak, Greenpeace political advisor on forests said. It was argued that there would be a huge decline in clean energy investments in countries like China, India and Brazil if forest protection were included in an unrestricted carbon market. There is so far no agreement on how to put a price on forest carbon under a new treaty. Suggestions range from carbon trading to new taxes in developed nations to raise cash. For Greenpeace, the best way of doing this is to allow industrialised nations to meet part of their reduction goals by buying cheaper “tropical deforestation units” as an addition to domestic cuts, these units would be non transferable, and exempt from any market system”Reuters Website, Accessed April 2009.
==Friends of the Earth and Carbon Trading==
According to Friends of the Earth (FOE) prior to COP-4 ,“Carbon Trading is an arrangement where countries producing too much CO2 could buy the right to emit from countries producing less that their limit under the Kyoto agreement ... The result could mean an increase in total global emissions, the very opposite of what the Kyoto agreement meant to achieve”Friends of the Earth Website, Accessed April 2009. Recognising the potential of the Carbon Trading however, at the beginning of 2005, FOE stated that the EU Emissions Trading Directive was “the most important piece of climate legislation anywhere in the world to date”. 
It is suggested that under the scheme heavy industry, power stations and refineries, which account for approximately half of EU emissions, would be limited to the amount of emissions they make. FOE at the time saw the scheme as potentially a very powerful system to reduce emissions, ensuring that Europe meets its Kyoto target of 8% cut in emissions of carbon dioxide by 2012 compared to 1990. “The trading scheme is potentially a huge step toward the race to tackle climate change, but it has been undermined by the lack of ambition countries have shown in bringing it into action. The UK has provided a classic example of how not to do it. Lengthy negotiations mean that the scheme will start late and industry will not be faced with any incentive to make significant emission cuts”Friends of the Earth Website, Accessed April 2009.
This according to FOE at the time was despite Prime Minister Tony Blair’s claims that he wanted Britain to demonstrate leadership in this sector. As well as this FOE points to problems with the scheme from its outset, “fears over the impact on European competitiveness have led to generous allocations being made to industry across Europe, undermining the effectiveness of the scheme”Friends of the Earth Website, accessed April 2009. 
Again, as with other NGO’s, Friends of the Earth, while acknowledging the potential of Carbon Trading, point to the fact that it is not enough, that other measures must be taken, and that Carbon Trading presents the possibility of ‘loop-holes’ for those companies and nations who are large emitters of carbon. Two main concerns for FOE throughout the negotiations about carbon trading has been the aviation industry and the problem of the world’s forests. 
In a press release entitled “Aviation carbon trading plan will sell the climate short”, FOE stated that “plans to bring aviation into the EU Emissions Trading Scheme will barely effect the rapid growth in aviations carbon emissions”. Looking at a report by the Tyndall Centre which looked at improvements to aircraft efficiency, it was suggested that “EU aviation emissions could have grown by 25-60% between 2005 and when the full ETS comes into operation in 2012. Even if the price of carbon in the ETS increases substantially, the current proposal will hardly effect the growth in aviation emissions. Improvements in aircraft technology and air traffic control must happen much quicker”Friends of the Earth Website, Accessed April 2009.
 
In the release FOE conclude that MEP’s and the EU Council must ensure that the ETS is strengthened , it suggests that this could be achieved by using 1990 emissions to calculate allowances, auctioning all carbon permits for the aviation sector so that the polluter pays, and does not receive any windfall, by covering all flights from EU airports by 2010, and by doubling the number of permits bought by the industry to cover ‘non co2’ impacts, this, alongside a removal of aviation tax exemption. This release was followed by another, after a vote by MEP’s to back stronger aviation carbon trading. Once again FOE indicated that they were happy that the vote had gone the way it had, however again it reminds the reader that Ministers must listen and take action. “We are delighted that MEP’s have voted in favour of strengthening plans to bring aviation into the Emissions Trading Scheme. Air travel is the fastest growing source of carbon dioxide emissions in Europe – it must be tackled if we are serious about combating global warming. EU Ministers must now show that Europe is genuinely committed to taking a lead on global warming by backing these proposals too”Friends of the Earth Website, Accessed April 2009. 
Friends of the Earth have also, like other NGO’s been very verbal regarding the inclusion of forests in carbon markets. The World Bank pushed for this and FEO reply was “the initiative, which would allow tropical forests to be included in carbon trading offsetting schemes, fails to combat climate change because it allows industrialised countries and companies to buy their way out of emissions reductions”Friends of the Earth Website, Accessed April 2009. FOE is quick to point out that deforestation causes between 18-20% of annual global carbon emissions, Indonesia due to this being the world’s third largest emitter of greenhouse gases. It calls on world leaders to bring into being genuine measures to address deforestation. One measure it calls for is the exchange form subsidies to fossil fuel and agro-fuels industries to deforestation assistance funds. With this an effective promotion of public transport and the development of solar, wind, geothermal and other renewable energy sources. FOE stress that the driving forces of deforestation such as corruption and trade liberalisation rules must be removed, the reduction of biodiversity seen across the globe also must be tackled, this would be achieved by reducing demand for agricultural and forest products and energy. One main factor in these proposals is the implementation of effective forest conservation policies and institutions. 
FOE suggests that other environmental groups, as well as themselves, see the World Bank as having an extremely unhelpful track record in funding forests and carbon projects. It funds oil, gas and mining projects world-wide and has a vested interest in Carbon Trading, as it is one of the main brokers of Carbon allowances. Arguing that the World Bank’s initiatives would have serious social as well as environmental impact, FOE continue by saying that “Carbon finance mechanisms can result in forests being transferred or sold off to large companies who hope to acquire profitable ‘carbon credits’. Wealthy companies and countries are able to buy the right to continue to pollute, while poor communities in developing countries can find themselves locked into unfavourable, long term commercial contracts over forest management ... Privatising forests for carbon off-setting is not the solution; we need to reduce global carbon emissions”Friends of the Earth Website,Accessed April 2009.
 
As a build up toward COP-15, FOE has been running a campaign urging people to ask their MP to support a strong 2020 climate target, Friends of the Earth outline the situation that it is crucial to make large reductions in emissions. The Committee on Climate Change (CCC), set up to advise the Government, has produced two options for a 2020 target. (1) Interim target 34% by 2020 to be used as a global deal is agreed (2) Intended target 42% by 2020 to be adopted following a global deal non-climate change. Friends of the Earth state that there is simply no choice here, we have to choose the intended target because it is what science demands (at least 40% by 2020), it means less pain later, as small cuts now means harder targets later. It suggests to achieve a ‘Clean Green future’ we need to remove dirty coal and runway expansion. The CCC suggests that if Britain gets its act together and adopts the 42% target that we can ‘buy’ some of these cuts from other countries via Carbon Trading. However, as FOE quickly points out that “this is a loop-hole that allows developed countries to duck their historical responsibilities for cutting their own emissions”Friends of the Earth Website, Accessed April 2009. FOE then go on to urge the reader to press for change by asking their MP to sign a parliamentary petition which calls for an immediate target to cut emissions within the UK by 42% by 2020. Making these cuts it suggest will cut energy bills, create thousands of jobs, and enhance energy security. This would be achieved by a home insulation programme which would reduce fuel poverty, create jobs in an economic downturn, push Britain to the forefront in low carbon technologies, and make use of Britain’s abundant renewable resources”Friends of the Earth Website, Accessed April 2009.
==Notes== 
All sites accessed April 2009
 
Category:Climate Change Category:Climate Category:Climate: Carbon Trading Category:Climate: Government Policy