A quick explanation about how the "carbon credits" market works

[innonimatu]

Is this true?

The British Government, as revealed by the EU’s Official Journal, has allocated £60 million of taxpayers’ money to be spent on buying carbon credits from the Third World for the use of government buildings and other official purposes – so that our civil servants can continue to benefit from the CO2 emissions needed to keep their offices warm and lit.
[...]
The story then becomes even more bizarre. The contracts with Barclays, J P   Morgan and co – who will retain up to £9 million in commissions – will be used to buy Certified Emissions Reduction (CER) credits under the UN’s Clean Development Mechanism (CDM) set up under the 1997 Kyoto Protocol.

Easily the largest beneficiaries of this curious system are firms in China and India which receive the credits for showing that they have at least nominally cut back on their own greenhouse gas emissions. They can then sell their CERs through intermediaries, to allow organisations in the West, such as the British Government, to continue pumping out greenhouse gases such as CO2.

The largest and easily the most lucrative component of the CDM market, administered under the UN Framework Convention on Climate Change (UNFCCC), is a peculiar racket centred on the manufacture of CFCs (chlorofluorocarbons), classified under Kyoto as greenhouse gases infinitely more potent than CO2. The way the racket works is that Chinese and Indian firms are permitted to carry on producing the refrigerant gas known as HCFC-22 until 2030. But a by-product of this process is HCFC-23, 11,700 times more powerful as a greenhouse gas than CO2. The firms can then destroy the HCFC-23, claiming allocations of carbon credits worth billions for doing so (while much of the useful HCFC-22 is then sold on to the international black market).

According to the UN Environment Programme – a body set up in 1972 by a Canadian businessman, Maurice Strong, who was its first chairman and also father of the UNFCCC – destruction of CFCs as of last year accounted for more than half the CDM credits issued, in a market which will eventually be worth an estimated $17 billion. Less than 1 per cent of the 1,390 CDM projects so far approved accounts for 36 per cent of their total value.

Thus we pay billions of dollars to the Asian countries for the right to continue emitting CO2 and other greenhouse gases here in the West, including the £60 million contributed by British taxpayers to keep our civil servants warm. As a result we enrich a small number of people in China and India, including Maurice Strong, who now lives in exile in Beijing, having been caught out in 2005 for illicitly receiving $1 million from Saddam Hussein in the “Oil for Food” scandal. He played a key part in setting up China’s carbon exchange, to buy and sell the CDM credits administered by the UNFCCC – of which Strong himself was the chief architect.

The net result of all this trading and jiggery-pokery is that, after billions of pounds and dollars have changed hands, with a hefty commission for those bankers and other carbon traders along the way, there is no reduction in greenhouse gas emissions whatever. But at least our political class can continue to work in warm offices and fly righteously round the world on our behalf – while the rest of us foot the bill.

The more I read about all the swindling done with the excuse of "global warming", the more I wonder about how long can people be willfully blind...

 

[Ayatollah So]

Carbon credits are scammilicious. No doubt there are a few honest brokers out there, but they've got plenty of less savory competition. To make matters worse - on a partly related subject - there is a lot of serious (and carbon-increasing) deforestation going on to make palm oil for biofuels. Environmentalists need to call a scam a scam - but I suppose, that may require more megaphones than they have on hand.

The whole Kyoto/Copenhagen approach is wrong, anyway. It's basically impossible to solve an N-person prisoner's dilemma by agreeing "let's all play nice!". Standard economic theory, game theory, etc. says that (A) the agreement won't be agreed on by enough players and furthermore (B) those that do agree will cheat on the agreement. Let's see: A, check; B, check. Wow, economic theory actually works for once

What we need, folks, is a technical fix. Luckily, there are several reasonably promising candidates.

 

[Mise]

The carbon credits "market" is utterly disfunctional. It's counterfunctional. It's not only useless, it actually works against its intended purpose.

That said, it could work, if there was sufficient political will to make one work. We need to scrap existing arrangements and start afresh, because the current system is broken. Hopefully, Obama will jump on board. Maybe the West can pressure China somehow, too, with tariffs or taxes on imports from countries not signed up or something...

 

[MeteorPunch]

How is it determined who gets credits? Can individuals rather than corporations get them?

 

[El_Machinae]

Well, the entire system is viable if we didn't hamstring our governments & totally only engage in token negotiations regarding carbon. I'm a bigger fan of a carbon tax, since it's so much easier.

The people who believe in plundering the Commons are the most wrong, but the second most wrong are the people who think mediocre efforts towards a treaty are superior to any local initiative & self-monitoring.

 

[Hakim]

I didn't know the emission trading system was global, afaik the biggest market would be the European one.

The British Government, as revealed by the EU’s Official Journal, has allocated £60 million of taxpayers’ money to be spent on buying carbon credits from the Third World for the use of government buildings and other official purposes – so that our civil servants can continue to benefit from the CO2 emissions needed to keep their offices warm and lit.
[...]
The story then becomes even more bizarre.

In what way is it bad that some government institution buys emission rights to cover for the emissions it's responsible for? Before the system, they could keep their offices warm without having to buy emission rights, right?

If the point is that it's problematic that emission rights are bought from poor countries that need the emission rights themselves then I can sympathise, there's some credit to that. However this applies for most stuff we buy from poor countries, like food. Would poor countries benefit if we stopped buying their food exports?

Ofc if you don't like markets of any kind then you will not like this one either. There's a lot of crooks out there making money right now, legally, right in front of our eyes.

Regarding the efficiency: when throwing the lasso you can't have the loop being the same size as the neck it's targeting. First you get the lasso around the neck, then you tighten it and pull it where ever you want. The world is in the throwing phase here when it comes to the carbon permit market. It needs to be in place and somewhat functional before the emission cuts starts.

 

[skazka]

thanks for explonation

you can get mp3 Pearl Jam on your audio player