The Problems with Carbon Trading

Seen linked from Stan Goff: The Flavor of Fear

Carbon Trading Scheme 
A Sop To King Coal

...The scheme has numerous loopholes. Firstly, it assumes that the participating governments will set an emissions cap that mandates massive decreases in CO2 emissions. Only then would the scarcity of permits increase, pushing up their price and impacting on the bottom line of high-emitting plants.

In one of the first major tests of carbon trading, the European Union's Emissions Trading Scheme (ETS) which began on January 1, 2005, was labelled a “major disappointment” in an April 2006 assessment by the Climate Action Network-Europe, the network of major environmental groups in the EU, as a result of member governments setting lax national emission targets.

According to a May 15, 2005, CAN-Europe press release, EU member states condemned Phase 1 of the scheme to failure from the beginning by being too generous in their allocation of permits so that the “actual emissions of installations covered by the ETS in 2005 were several million tonnes below the granted permits”.

As a result, by May 2006 the market price of permits had dropped to 10 euros per tonne, down from 30 euros per tonne in April.

CAN-Europe criticised the “lack of transparency in most member states processes” to determine their national emission caps, highlighting the vulnerability of carbon-trading schemes to manipulation by governments acting in the interests of the big energy corporations.

On the other hand, a stringent national emissions cap can be undermined by a lack of capacity to enforce the regulations or by penalties that are easily absorbed by corporations that make billions of dollars of profits.

Underlying the three Labor governments’ discussion paper is a commitment to coal-fired electricity generation far into the future. It states that coal “is expected to be the dominant source of fuel till 2030". In fact, one of the key aims of establishing a carbon-trading scheme is to “reduce uncertainty” for capitalists who would otherwise be keen to invest in energy production but are unsure how governments’ future climate change policy will impact on their profit margins.