Gernot Koehler wrote:
... You can count environmentalism as an additional countervailing
power to the status quo.
N'est-ce pas?
Oui, it'll have to be with, with this coming neolib administration:
A timely death?
Carbon trading is a charade that will do nothing to reduce global
warming. Now it seems doomed by the financial meltdown. So will Barack
Obama continue championing it, wonders Patrick Bond?
In the year leading to the Copenhagen Summit, preventing climate change
may now finally get a proper global hearing – but not necessarily with
useful outcomes. What could be a last ditch attempt to rely on markets
to reduce greenhouse gas emissions looks likely to come from carbon
trading enthusiast, US President-elect Barack Obama.
His market-friendly approach to tackling climate change is not
surprising. Wall Street financiers donated substantially more campaign
cash to Obama than McCain. In January 2008 Obama announced: ‘We would
put a cap-and-trade system [a carbon trading mechanism] in place that is
as aggressive, if not more aggressive, than anybody else’s out there… So
if somebody wants to build a coal-powered plant, they can; it’s just
that it will bankrupt them because they’re going to be charged a huge
sum for all that greenhouse gas that’s being emitted. That will also
generate billions of dollars that we can invest in solar, wind,
biodiesel and other alternative energy approaches.’
The idea is that polluters would bid against each other for a share of
the emissions allowed under an agreed cap, which in turn they can trade
with each other so as to improve economic efficiency.
This may sound like a neat plan. But it won’t work, in part, ironically,
because the financial crisis that helped sweep Obama to power has also
caused the price of carbon to collapse.
Carbon crash
The crisis crashed so many financial institutions and froze credit
markets so quickly that carbon values in the emissions-trading markets
plummeted by a quarter during the first weeks of October 2008, from
around 30 dollars per tonne to less than 22. The price had been 37
dollars per tonne in July – showing just how quickly an incentive scheme
meant to provide stability and security to clean energy investors can do
the opposite.
A low carbon price is no good for stimulating the kind of investment in
alternatives needed: for example, an estimated 50-75 dollars per tonne
is required to activate private sector investments in ‘carbon capture
and storage’, the as-yet-non-existent technology by which coal-fired
power stations could, theoretically, bury liquefied carbon emitted
during power generation.
This extreme volatility makes it abundantly clear that market forces
cannot be expected to discipline polluters.
Privatizing the air
The financial crisis opens up space for a crucial strategic debate about
how to change the world’s economy into something that does not threaten
our descendants’ future.
Most climate policies currently under consideration by élites are what
the French sociologist Andre Gorz would have called ‘reformist reforms’.
Carbon trading, for example, is addressing a market-caused problem –
greenhouse gases released during most capitalist transactions – with a
capitalist ‘solution’. That solution allows the North to continue
emitting through the granting and trading of brand new property rights
to pollute. The only real winners are speculators, financiers and energy
sector hucksters who have made billions already. As the air itself is
privatized and commodified, poor communities across the world suffer and
resources and energy are diverted away from real solutions.
But opponents of emissions trading still need to persuade centrist
greens and the broader swathes of society that the carbon market is
crazy, because conventional wisdom begins with the opposite premise. As
Obama himself says: ‘This market mechanism has worked before and will
give all American consumers and businesses the incentives to use their
ingenuity to develop economically effective solutions to climate change.’
Will it really?
A brief history of failure
Canadian economist John Dales first justified trading in emissions
rights by applying market logic to water pollution in a 1968 essay.
Then, after the 1980s Reagan/Bush administrations neutered the US
Government’s ability to prohibit destructive activities, the Clean Air
Act of 1990 was the first to legalize trade in sulphur dioxide to tackle
acid rain. This approach was far less successful than parallel European
‘command-and-control’ environmental policies.
Nonetheless, in 1997, the Kyoto Protocol was negotiated to include
carbon trading as a core strategy to reduce global emissions. This was
because the then US Vice President Al Gore threatened that his Congress
would only sign up if corporations gained the ability to continue
emitting above set limits by paying to buy someone else’s right to
pollute. After co-opting critics in Kyoto, the Clinton-Gore
Administration and Congress did not keep their word and, later, George W
Bush pulled out of Kyoto. But the idea of carbon trading stuck and in
Europe the Emissions Trading Scheme (ETS) was launched in January 2005.
Ever since, tales of scandals and market mishaps have emerged from
dismayed financiers and business journalists. The intrinsic problem in
setting an artificially-generated market price for carbon was revealed
to the world in April 2006 when the ETS crashed thanks to the
over-allocation of pollution rights. The EU had miscalculated on how to
set up the market and granted electricity generation firms far too many
credits. Carbon lost over half its value in a single day, destroying
many carbon offset projects earlier considered viable investments.
By 2007, the European Commissioner for Energy had admitted the ETS was:
‘A failure’. Peter Atherton of Citigroup conceded: ‘ETS has done nothing
to curb emissions…[and] is a highly regressive tax falling mostly on
poor people.’
Had it achieved its aims? ‘Prices up, emissions up, profits up… so, not
really.’
Who wins, who loses? ‘All generation-based utilities – winners. Coal and
nuclear-based generators – biggest winners. Hedge funds and energy
traders – even bigger winners. Losers…ahem…consumers!’
Even the Wall Street Journal confirmed in March 2007 that emissions
trading ‘would make money for some very large corporations, but don’t
believe for a minute that this charade would do much about global warming.’
The Kyoto Protocol also promotes carbon trading in the Majority World
via the Clean Development Mechanism (CDM). This aims to finance
emissions reductions project by project: for example, by turning
landfill methane into electricity, or by planting trees. But, according
to a Newsweek investigation in March 2007, ‘it isn’t working... [and
represents] a grossly inefficient way of cutting emissions in the
developing world.’
Notorious projects like the Bisasar Road toxic landfill in Durban and
Plantar timber monoculture in Brazil were promised vast funds, with
dreadful consequences for local communities and ecosystems. Newsweek
called the trade ‘a shell game’ which has already transferred ‘$3
billion to some of the worst carbon polluters in the developing world’.
In October 2008, with the market crashing, Carl Mortished wrote in The
Times of London: ‘The ETS is making a mockery of Europe’s stumbling
attempts to lead the world in a market-based carbon strategy. It is
causing irritation and frustration to the armies of advisers and
investors who seek to cajole utilities into big investments in carbon
reduction.’
With friends like these...
All this mainstream criticism should spell the end for what is clearly a
bad idea, incapable of fulfilling its goals. But many still doggedly
endorse the carbon market, including major green groups in the
influential Climate Action Network (CAN), which has lobbied most visibly
on the Kyoto Protocol. Why? Some would say pragmatism: it’s the only
game in town. Consider this comment from Sierra Club Canada director
Elizabeth May: ‘I would have preferred a carbon tax, but that is not the
agreement we have. The reality is that Kyoto is the only legally binding
agreement to reduce greenhouse gases. When you’re drowning and someone
throws you a lifeboat, you can’t wait for another one to come along.’
But according to Michael Dorsey, professor of political ecology at the
US’s Dartmouth College, there is another reason for CAN’s support: some
of its leaders have personal involvement in the industry. He lists many
prominent greens closely connected to carbon trading firms. Take, for
example, CAN board member Jennifer Morgan of the Worldwide Fund for
Nature who took leave for two years to direct work on Climate and Energy
Security at carbon trading firm E3G. Or Kate Hampton, formerly of
Friends of the Earth, who joined Climate Change Capital as head of
policy while simultaneously advising the EU on energy and the
environment, working for the California Environmental Protection Agency,
and acting as president of International Carbon Investors and Services.
Dorsey concludes: ‘After more than a decade of failed politicking, many
NGO types...are only partially jumping off the sinking ship – so as to
work for industries driving the problem. Unfortunately, many continue to
influence NGO policy from their current positions, while failing to
admit to or even understand obvious conflicts of interest.’
In October, Friends of the Earth International formally withdrew from
CAN membership.
Serious strategies
Carbon trading is not a seaworthy lifeboat and as temperatures (and sea
levels) rise we are discovering the numerous leaks. Luckily, countering
the more sluggish, corporate-sponsored elements of the environmental
movement are grassroots organizations coming together to oppose market
strategies wholesale and advocate direct and equitable measures that
reverse addiction to fossil fuels.
Critics of carbon trading from Indonesia, Thailand, India, South Africa,
Brazil and Ecuador, together with Northern academics, researchers and
radical environmentalists first issued the ‘Durban Declaration’ in
October 2004. This sounded the alarm about the ethical and economic
shortcomings in carbon trading; their deep critique was later turned
into a seminal book by Larry Lohmann. [1]
A tragic setback came in July 2007 with the death of Durban Declaration
host Sajida Khan. She had battled against a Clean Development Mechanism
proposal for methane extraction that had kept open the Bisasar Road
toxic dump next to her home – a facility that caused the cancer that
ultimately killed her. But in December 2007, the movement joined forces
with broader global justice activism at the Bali climate talks and
formed the Climate Justice Now! network.
Climate Justice Now! is committed to exposing the false solutions to the
climate crisis promoted by governments, financial institutions and
multinational corporations – ‘solutions’ such as trade liberalization,
privatization, forest carbon markets, agro-fuels and carbon offsetting.
Instead, its members are campaigning to leave fossil fuels in the ground
and invest in clean, efficient, community-led renewable energy.
These are the only serious strategies in place: to halt climate change
at the supply side. They will go much further than market gimmicks
towards saving the planet.
Patrick Bond directs the Centre for Civil Society at the University of
KwaZulu-Natal in Durban, South Africa, and is co-editor of the new book,
Climate Change, Carbon Trading and Civil Society, available from UKZN
Press and Rozenberg Publishers (Amsterdam).
1. Larry Lohmann, Carbon Trading - a critical conversation on climate
change, privatisation and power, Dag Hammarskjold Foundation and the
Corner House, 2006.
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