The Carbon Scam
By 2009, Kyoto had been signed and ratified by 187 countries, but two countries who are big polluters – the US and Australia – were unwilling to make amends, and pulled out of it. The small print in the Kyoto Protocol has little to do with saving the planet since it incorporated carbon trading.
Carbon trading, as it came to be known, was accommodated after intense corporate lobbying under the Reagan administration. The US delegation that forced its inclusion was led by Al Gore of An Inconvenient Truth fame, who continues to be a major financial beneficiary of carbon trading. Later, Clinton made it a key provision of the Protocol. Someone remarked: “They act like the sale of indulgences by the mediaeval church, absolving the buyers for their immoral actions.”
Front organisations, or rather lobbies like the Environmental Defence Fund and the National Development and Reform Commission that reach deep into Washington, are so heavily funded by corporate interests, all civil society organisations put together cannot match their clout. What they proposed was a perverse and thoroughly dishonest mechanism that legitimises the right to pollute. The scheme was the brainchild of Dr Richard Sandor, founder and chairman of the Chicago Climate Exchange, North America’s sole legally binding greenhouse gas trading system. He is the same person who dreamt up financial futures speculation – essentially irresponsible gambling – that led to the global scams and financial crash last year.
Under the Kyoto Protocol, the industrialised nations had agreed to country-specific reduction targets within a pre-defined time frame while developing and replacing polluting technologies with new low-carbon ones. The volume was to be equivalent to their 1990 levels of emissions, plus or minus the reduction amount they had committed to. A recent report by the Princeton University states that only 700 million people – about one-ninth of the world’s population – are actually responsible for producing half the emissions of the world.
Creative accounting began by setting the baseline emissions unrealistically high above what the levels really were, allowing the polluters to pollute even more. Governments are given permits which they in turn allocate to the biggest industrial polluters in their own countries, mostly for free. If the polluter doesn’t use up its allowance in the given time (four years), it can sell spare permits to another polluter, or these can be saved and used in the subsequent four-year period. If the polluter still has capacity to pollute some more, it can buy permits from yet another polluter that hasn’t exhausted its allowance. What it boils down to is that polluters can just pay someone else, anywhere else, to lower emissions on their behalf.
A third, and seemingly generous, ploy for earning credits is to invest in pollution-reduction schemes in other countries, mainly developing nations like Pakistan that do not yet have to meet carbon reductions. By simply financing pollution-reducing projects in developing countries, such as solar or wind projects, technology improvements in polluting factories, cleaner improvements to existing energy generation, etc., industrialised countries can avoid reducing their own emissions.
This scheme is probably the biggest scam of all because it allows imagination to run riot. In this, the polluter is allowed to make up its own calculations about an envisaged project to estimate the difference between the emissions of the future project and in the event that it is not executed, all the polluter has to do is to hugely overestimate the emissions, because the bigger they are, the bigger the reductions on the basis of which credits can be earned. Worse, imaginary costs to industry are passed on to consumers. This way they double their profits under the false claim that they have contributed to carbon reduction. There is far too much riding on misplaced trust here.
Already some have made a killing. Lakshmi Mittal, majority owner of the steel company ArcelorMittal and the UK’s richest man bagged a huge excess of permits that by next year could swell to 80 million tonnes worth of carbon emissions – equivalent to Denmark’s entire annual carbon emissions. He is expected to make a billion pounds without any effort.
It has even led to criminal profiteering. Last year, Europol, Europe’s top police body, collaborating with the police in Belgium, Netherlands, France, Denmark, Spain and UK, managed to unearth massive fraud in Europe’s Emission Trading System (ETS). The exercise exposed the weaknesses of carbon trading, and the pointlessness of continuing with it.
The System allows anyone to open a trading account with a national carbon registry, and that is the criminals’ first step. Next, they buy EU emission allowances from any one of the six official carbon exchanges in Europe, but in a country other than where they are registered. They then shift these permits to a third country and subsequently sell to an unregulated broker in a fourth country.
The slick broker then charges VAT (Value Added Tax), without bothering to turn it over to the tax department: some 5 billion euros annually are being pocketed this way by criminals in western Europe. Soon after, before anyone gets wise, the criminal operators vanish into thin air. When the cops arrive, the registered company turns out to be a dummy. Later on, once the coast is clear, they set up another dummy company under a different name, and do it all over again.
By next year, eight years after the ETS will have been established, Europe’s industrial sectors, mainly of metals, cement and glass, will be sporting 400 million surplus permits (measured in units of carbon dioxide only – one tonne of carbon dioxide is equal to one permit), leaving them free to sell them to power companies, which are not given many free permits, and other polluters, encouraging everybody to speed up and increase the intensity of global warming.
Continued on next page . . .
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here’s to four years of KU fun:)