Is Cap and Trade The Solution?
by Just mentioning the term carbon credits raises eyebrows and is followed by a suspicious "oh yeah". So much has been written about climate change and proses have been written about whether we are really heading towards global warming. Say for a minute that we are moving towards irreversible environmental damage, what then is the solution that governments are proposing to get us out of this fiery end. Read my view of the Copenhagen debacle…
At the Copenhagen meeting last year, world leaders came together to find a way to stop climate change. The leading solution emerged as a cap and trade on carbon emissions.
However, emissions trading schemes (another term for cap and trade) have been met with criticism.
Enron and Goldman Sachs are at the heart of the cap and trade solution. These are the same people that gave us energy trading and the sub prime mortgage crisis. They are now about to develop a new $3 trillion market.
The fundamental basis of a cap and trade system is to reduce the amount of Carbon Dioxide in the atmosphere to 350 parts per million (we are currently at 385ppm).
In the United States this means reducing Carbon Emissions by a staggering 80%. The problem is that most of us use products producing carbon emissions (example, electrical appliances, cars, ships). Obviously, a workable solution is not to go back to prehistoric times.
The cap and trade goal is to create a global carbon stock market. The first step is to get countries to agree to a particular cap on emissions.
Then governments would issue permits to the polluters allowing them to pollute up to a certain level. Once the number of permits is reduced (or used up by pollution) those with left over permits would be able to trade them to others. In theory, this is said to push polluters to use greener alternatives to fall under the cap (also thereby conserving their left over permits for later trade).
The second part of the cap and trade solution is the creation of permits for projects that reduce emissions through greener technologies, which may then be sold to polluters to enable them to pollute more.
However, there are two problems with this approach: 1. distribution of permits by governments to polluters is free, and 2. there are no foolproof checks to know whether carbon offsets are actually legitimate (in other words cheating may occur).
An example is where forests are being cut down and then replanted with the sole aim to produce offset permits for sale to polluters.
Now, some big businesses have caught on to the gold rush (or permit rush) to third world countries where rules are less stringent. There they can hide behind suspect claims of carbon offsetting.
What about climate change in all of this? Well, there is no global agreement yet on a cap for Carbon Dioxide emissions. Cheating on offsetting is already happening… And the precursor emissions trading market in Europe failed to reduce carbon emissions!
Meanwhile changing sea levels could put whole island nations under water in the next century. It may be time to revisit “our” climate change solution.
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