Emissions Trading – good for business but bad for the environment

Europe’s Emissions Trading System has been around a few years. It has had many teething problems, including some shocking cases of fraud and governmental incompetence, and I have always argued against the ETS as being fundamentally flawed. Trying to us the same kind of devices to reduce emissions that brought banks and economies to their knees is simply foolish.

The ETS was so loved by the British Government in its early stages that it diverted money from real measures, like solar water heating, to prop up the ETS. Undertaking real direct measures to prevent emissions of carbon dioxide was held to be secondary to getting a market in trading emissions by the mandarins and politicians under the last labour government. They gave companies that produce high emissions free quota of certificates, which amounted to giving them free money just as surely as if they had transferred the money into the bank accounts of the energy, cement, paper, glass and steel companies that got the free money. These generous allowances continue until 2017, which means that there is no incentive to start reducing emissions until then.

If you are a major polluter you can offset your pollution against credits from the United Nation’s Clean Development Mechanism. That mechanism is also riddled with corruption and 80% of the credits emanate from industrial gas projects which are emission creating and only described as emission saving by a fantastic twisted logic – something worse could happen. It is like rewarding the driver of a three litre car on the basis that he has not got a six litre car.

It was inevitable that the ETS has become an emission subsidy scheme. The real scandal is that this was all predictable (I did indeed predict it) because we allow lobby interests to dictate our carbon dioxide emission policies, not just in this field but in many other fields which governments should think for themselves and not be bamboozled by lobby interests.

Carbon Trade Watch has published a short paper on the ETS. You can read it at http://www.thecornerhouse.org.uk/sites/thecornerhouse.org.uk/files/EU-ETS_briefing_april2011.pdf