Carbon capers
Civitas, 20 January 2011
The European carbon market has been temporarily closed after fears that it has been the victim of fraud. Having lost £7 million’s worth of carbon credits, there could be a polluter somewhere in Europe happily belching out their fumes knowing that they won’t be paying for it. This isn’t the first crisis to hit the scheme and the EU should now take a step back and assess if its climate change policies are the optimum way to curb emissions.
The EU’s Emissions Trading Scheme (EU ETS) simply does not work. The EU’s own Law Enforcement Agency has estimated that in 2009, €5 billion of revenue was lost through fraudulent activity and in some countries this accounted for 90% of market activity! While the market cost of carbon credits was €12.5, they were being sold for €1.
The problem is not so much the price either way – if UK companies were paying £1 or £100 so be it, but this only works if everyone else is also paying this cost. Sure, some of the fraudulent credits passed through Britain for a good money laundering, but the heavy regulation of the UK’s businesses and carbon market mean that few of these undercutting credits were ever likely to be bought by UK businesses. The repercussions would simply be too great.
The majority of the credits must go East, to where companies are scrutinised less. This clearly gives them a competitive advantage over their rivals and allows them to undercut costs. As the price of the credits rises, the incentive for this fraud will only rise – penalising those who actually obey the rules and pay properly.
Evidently, the EU ETS needs stronger security to prevent hacking, but the problem is far more wide reaching. Many other environmental commitments are being ignored by member states that care far more about their own GDP than the climate. While Britain is responsible and does everything the EU climate change related regulations ask of us (and more), these other countries, bound by the same obligations are getting away with doing little. With an unequal burden, this means the UK and its businesses are being saddled with costs not being shared by all.
What should be done about this? Well, there is a solution… and the forthcoming Civitas publication, Chain Reactions: How the chemical industry can shrink our carbon footprint, will detail them. My book posits a new approach to tackling climate change and will investigate the problems the EU ETS has caused and what should be done about them.
Hello there! This is my first comment here so I just wanted to give a quick shout out and tell you I truly enjoy reading through your blog posts. Can you suggest any other blogs/websites/forums that cover the same subjects? Thanks!
Can we please, once and for all, reject the ludicrous idea that human beings have more than 0.005% impact on climate, and that the whole”global warming” lobby consists of around 50 “scientics turned politicians” who lie through their teeth.
The whole objective is so politicans can tax us, and the media sell newspapers and similar.
You say Britain – and, by extension, the civilised West – are pillars of exemplary practice within the ETS. The east, however, ‘lets the side down’. I say, bang on, old son!
The eastern governments are making a mockery of the liberal West. It has been this way since the green bandwagon started rolling, in the early 21st Century. They’re ruining the world that’ll be left to our well-bred children; while we try desperately to find ways to curb this decadence, they spend another million on a cheap – but authentic-looking – Mercedes clone. My personal view? Teach them a lesson.
In my day, we too used fake concepts to falsely stimulate the economy and the nation. Eco-friendliness was heightened militarism when I was slightly older than a lad; guns mean factories, which means jobs, which means a happy society. Today, the East is stopping the environmental bubble from reaching its nadir.
Eagerly anticipating the book! As a climate scientist it is encouraging to see increasing political awareness of innovative approaches to the issue of sustainable energy.
I await this eagerly!