The Purchasing of Indulgences, the Status Quo and Follow The Money Solution To Global Warming

Posted on August 4th, 2008

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Carbon Indulgences

Indulgence from the Latin originally meant kindness or favor. Post Latin it meant a remission from a tax or debt. In the Christian Old Testament (Isaiah 61:1) it expresses release from captivity or punishment.

Medieval writs of indulgences for past offenses, some purchased with coin of the realm, where wrongly attributed to popes. Clement V (1305-1314) condemned the practice that pretended to absolve “a culpa et a poena”. The Council of Constance (1418) revoked all indulgences containing the said formula; Benedict XIV (1740-1758) treats all indulgences granted in this way as spurious.

Haven’t we learned anything from history?

The United Nations Framework Convention on Climate Change (UNFCCC), an international environmental treaty considered legally non-binding, came up with a solution to limit greenhouse gas emissions at the Earth Summit in June of 1992. By monitoring emissions and creating a protocol, the principal and better known update the Kyoto Protocol was created that would set mandatory emission limits to prevent dangerous anthropogenic interference with climate systems.

As part of the solution a system of emissions or emission trading, sometimes called cap and trade, was introduced to attempt to keep emissions below the 1990 levels. Governments or international bodies set caps on pollution levels and credits are issued. What the purchaser doesn’t use can be sold. If needed more can be bought from those that have a surplus.

The theory is, those that can more easily reduce will do so, allowing reduction at the lowest possible cost to society. On the surface a nice looking plan yet with close examination we find considerable flaws.

The European Union Emission Trading Scheme (EU ETS) is the largest neighboring communities emissions trading scheme, with more than 10,000 installations in energy and industrial sectors. Among this group current emission-trading schemes have proven to be little more than a shell game with developed world polluters shifting the burden of change to factories in the developing world.

Often developing world factory owners use the additional profits banked from carbon credits to expand their dirty installations.

More worrying is the set back emission trading is creating by diverting investment from renewable energy technology.

So far the only winners are the large polluters who sell small cuts for large profits and the brokers who sell the rights to pollute.

Some consider carbon trading a promising strategy for reducing greenhouse gas emissions but also believe the current structure seriously flawed.

The plan is seen as easy to implement. Governments set caps on the amount of pollution they’ll allow. Then turning the right to pollute into a tradable commodity, let capitalism do the rest.

But emission trading under the Kyoto Protocol is proving grossly inefficient. Nation companies with Kyoto targets are avoiding expensive cuts to their own emissions by paying companies in India or China to make the cuts instead. Since developing countries have no cap on emissions they can use the money to build new polluting factories.

For example India’s Gujarat Fluorochemicals, tripled it’s 2005 income of $10.5 million US in the last three quarters of 2006 to a sum of $42 million US because of carbon credits. They are currently building a new plant to produce Teflon and caustic soda, both pollutant substances.

A study published in Nature, February 2007, a scientific journal clearly showed $132 million in equipment upgrades would have accomplished more than $6 billion spent on efforts to curb emissions of HFC-23. In 2006 Kyoto countries paid around $3 billion to some of the worst carbon polluters in the developing world.

There is a clear lack of standards that allows the trading of credits with polluters whose standards and concern for the environment are lower than accepted human living standards, leaving locals with growing health problems.

As a result of a vulnerability to lobbying, the European Union’s Emissions Trading Scheme, a zero-sum program, were too generous in handing out targets with some industries. The result, many companies where absolved from cuts or the need to buy credits. The resulting surplus of credits caused a market collapse in 2006.

Many say the whole concept was ill conceived. Others feel a tax would be more straightforward. Europe has set stricter quotas. Americans are talking of auctioning instead of giving away. They all feel there is a need for strict caps.

Only 2% of the United Nations’ trading projects involve renewable energy like solar, wind, and hydro projects. Natural preservation, and eco-friendly communities and practices are ignored.

The yearly global emissions of 25 billion tons is purchasable for $100 billion. One carbon offset credit = 1 ton of pollution or 1yr’s worth of emissions from 216,000 cars. The incredible fact is I can buy that for $4.00 US.

That’s an unbelievable cheap indulgence for such an incredible amount of environmental damage and raises a serious question of balance. When are we going to see a more timely, realistic approach?

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