hirt.deana.takehome1.doc

 

 

 

 

 

Carbon Trading

    In our society, guided primarily by the values of the free market system, free market solutions to environmental problems have gained legitimacy as a way to controlpollution with the least possible economic costs to society.  Their proponents claim that these solutions resolve environmental problems while simultaneously creating profit opportunities. The emerging emissions market, meant to curb carbon emissions, is predicted to provide new profit opportunities on a global scale for business by creating new sites of capital accumulation. In contrast to a treaty with strict targets and timetables to restrict greenhouse gases, the market mechanism could become the largest commodity market in the world, given the amount of global emissions.

    Proponents of such solutions as well as reputable research entities and newspapers like the Financial Times estimate that the CO₂ market could be worth well over $3 trillion by 2020, if the U.S. were to participate.

    The EU Emissions Trading Scheme, the largest multinational, multi-sector emissions trading scheme in the world, was created to capitalize on such opportunities. Implemented largely to help European member states reach their CO2 reduction goals under the Kyoto Protocol, it has yet to produce any actual reduction.

    Emissions’ trading entails the following processes. A central authority, such as a government or international body, sets a limit or cap on the amount of a pollutant that can be discharged. The government then issues allowances, or credits, to existing polluters. This is to quantitatively limit their allowed emissions and thus reducing the discharge of the gas into the atmosphere. Companies that cannot emit within their limit must buy credits from others who have extra credits. This in turn rewards those who pollute less by allowing them to make a profit by selling their unused credits in the carbon market.

    Premised on the assertion of being a fair and neutral way to distribute resources, market mechanisms are not isolated from the political process. Since credits are allocated on an individual basis by governments, decisions regarding the amount of credits and to whom they are allocated are subject to influence from many interested parties, like the industries themselves. Ideally, carbon credits ought to be sold or auctioned off to polluters by government. Under the EU ETS, they are given away, free of charge, to a selection of polluting industries- established companies in wealthy countries. This is referred to as grandfathering rights.

     Since it is “a free market approach” politicians maintain that distribution is fair and neutral. However, the free allocation of allowances always results in the overcompensation of power companies. Several studies have shown that, indeed, European power producers are benefitting from the tradable CO2 allowances under the EU ETS. And, quite logically, the carbon trading regime has been favored disproportionally by the established companies who are granted the rights to the Earth’s carbon dumps.

    Furthermore, this “normative” ethic sets the environment to the same rank as any other commodity with a price tag. Whatever beneficial environmental action one takes must outweigh the cost. This assumes that society can collectively decide how much it wants to pay for a clean environment and the market should determine the outcome of this moral question.

    Targeting the cheapest emissions directs the attention of climate action merely towards the “low hanging fruit”, eliminating large short-term costs but delaying the switch to renewable energies, resulting in long-term costs.  This favors the position of industry and politicians who oppose the immediate restructuring of the petrol-dependant economies of the industrialized west. This, however, is not in the interest of the global community, who will end up incurring these long-term costs, be they health related or economic. Politicians often side with empirical evidence that privileges ‘market approaches’ like emissions trading because they protect industry from taxes and a more command-and-control approach for reducing greenhouse gas emissions. These political interests might have something to do with the fact that emissions programs have yielded insignificant results.

Enacted in the fall of 2003, the EU ETS is currently in its third phase of operation. The first two phases have been largely unsuccessful at reducing carbon emissions compared to standard regulation.  This is largely due to the over allocation of credits by states. In April 2006, the corporate participants in the EU were granted around 10 percent more allowances than they needed to cover their 2005 emissions. That amounts to between 44 and 150 million tones of surplus carbon permits, or, at 13 pounds per ton, up to 1.8 billion pounds of free money, since unneeded rights can be bought and sold.

        There is now great pressure coming from the energy industry to maintain the caps as they are, giving polluters the liberty to continue business as usual. After two rounds of over allocation by EU governments, what country will want to step up and radically reduce the number of allowances allocated to industry? Indeed, for markets to be “predictable,” there must be secure private property rights. Once these rights are secured by companies, it will be very difficult to take them away without corporate demand for compensation. The inefficiency, so far, of the EU ETS and its gifting of valuable property rights to industrial polluters calls the accountability of the scheme into question. Who is held accountable, after all?

         Assuming there is someone to hold accountable for the allocation of rights to pollute, the institutional and technical mechanisms for measuring industrial greenhouse gas emissions are far from equipped to account the global massive inventory of carbon emissions. This is true especially in the developing global South.

Because our entire way of life depends heavily on petrol fuels, the trading of carbon affects every major industry instead of just one as in the case of any successful emissions trading scheme. And although there are many alternatives to fossil fuels, none could, at present, successfully substitute for fossil fuels as a source of energy for the global economy. Required is nothing short of a complete transformation of the world energy sector, which carbon trading does not even claim to try to do. This system of carbon trading is then a distraction an impediment to the global community, preventing the acknowledgment and solutions of the fundamental problem from being considered.

Furthermore, the EU ETS is a “hybrid” trading system, meaning that it uses both emissions trading and the concept of ‘offset trading. Under a lot of pressure to back and legitimize the idea that trees absorb enough CO2 to offset accelerating emissions worldwide. This drastically changed the economics of the traditional ‘cap and trade’ system. Allowances can be earned not only by the government or bought from other companies but also from the purchase of carbon sinks such as forests or national parks (usually in places like India or Africa) which offset the companies’ emissions. Commonly, such ventures are referred to as Clean Development Mechanisms or CDM. These allowances are then mutually exchangeable in the market with those provided by the government.

These allowances make it possible for countries that are subject to emission ceilings to engage in projects in countries not subject to ceilings. The result is then the outsourcing of certain industries and their respective pollution to countries (generally poorer) with minimal regulations.

         So the question remains: Does the carbon market provide adequate incentive towards research and development of innovative renewable or low-carbon technologies so as to radically reduce greenhouse gas emissions in order to avoid climate catastrophe? Is this elimination of the so-called “low hanging fruit” not directing the attention away from the fundamental problems which created the problem? Does is, coincidentally, cater to the well-established industry and politicians who oppose (or don’t want to manage) the immediate restructuring of the petrol-dependant economies of the industrialized West?

 

 

 

those         Those who support the idea of carbon trading emphasize the need to include the whole world in such a scheme in order for it to be truly effective. However, when the focus of carbon trading remains on keeping current businesses safe from possible economic downturn, it seems unlikely that it will do anything but delay the implementation of a long-term solution to global warming.

    As in the case of any market, there are winners and losers. These new property rights, or rather, opportunities for investment and capital accumulation, will not effectively phase out the mining of coal, oil and gas by transferring the rights to Earth’s carbon cycling capacity from public to private hands. How then, can the EU ETS even attempt to achieve its main objective of “tackle[ing] global warming” without beginning with the elimination of fossil fuels?  It cannot. Much evidence has shown that emissions trading schemes slow or even retard the research and development of renewable energies.

                Generally, it will be those who have no say in these decisions, the poor and disenfranchised, who will loose. Based on historical trends, the current neoliberal system of trade has not enriched the masses. Instead, the opposite has happened and wealth has gone to fewer hands. Still, the ‘market based’ emissions trading approach is heralded to be the most respectable and laudable effort to address climate change by politicians. Environmentally conscious citizens of the EU can then feel better about themselves and developing countries have more opportunities to sell off natural resources. At the same time, existing corporations still have their business and Western governments appear to be making a legitimate effort to battle global warming.

Ought social and environmental problems be treated by way of business transactions, out of ordinary people’s hands and managed in the “free” market? Although many economists insinuate that the market is controlled by people’s decisions, many prices are actually set by big businesses (inelastic supply). And furthermore, decisions that are right for the environment, or the commons, may not seem right to the individual.  

Is it right that companies treat global warming as an opportunity to gain new property rights, new assets and new venues for capital accumulation, while climate change is accelerating at a growing rate?

It seems that the proponents of this carbon trading theory try their best to cover their value-ridden and industry-friendly view of the environment as just another commodity through employing the pseudo-technocratic language of efficiency and the pseudo-neutral ideology of neo-liberalism. 

 

 

 

 

 

 

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Set the context first, perhaps with a thematic statement such as -- Scientists say that Southwest Virginia is home to 200 freshwater fish. More than 10 percent of them are endangered and three are thought to be extinct, according to Paul Angermeier of Virginia Tech. 

 

Angermeier was a member of a panel on Biodiversity, People, and the Planet: An Appalachian Lesson that took place at the Society of Environmental Journalists conference in Roanoke Va in October, 2008.  

 

 

 

 

Southwest Virginia is home to 200 freshwater fish which are native to the region. There are a total of 1,300 freshwater fish in the USA.  Biodiversity, People, and the Planet: An Appalachian Lesson, largely the brain child of Professor Paul Agermeier of Virginia Tech, addressed habitat destruction and its effects on sensitive freshwater ecosystems with focus on the Appalachian region. Of those two hundred freshwater species, twenty-one are endangered and three are thought to be extinct. In the USA, twenty-three percent of fresh water fish are endangered and three percent have gone extinct. Southwest Virginia is additionally home to 150 native species of amphibians, 250 dragon flies, and 350 snails. Freshwater systems are one of the most imperiled of Earth’s ecosystems and are good indicators of environmental degradation. We do not lose our homes directly from environmental dissemination whereas freshwater organisms do. It takes years for the market to account for what is being lost. The loss of services by nature, such as filtering of water by oysters, results in losses, such as having to build million dollar treatment plants to replace them.

            The panel discussed areas that are rich in biodiversity and home to a large proportion of threatened or endangered species, or hot spots. On earth, half of the species are endemic to 25 hot spots. These areas make up less than two percent of earths landmass. Preservation of just twenty percent of America’s watersheds would sufficiently maintain populations across the entire continent. The southern Appalachians rank second out of the top five hot spots in America. The panel emphasized the need to channel the minimal funds that are available for biodiversity protection to these particularly diverse areas. Much of that money is, however, pulled away to scattered regions for obscure causes by political forces and there are no international or domestic laws that prioritize the protection of hot spots. According to Jerry Moles, this, among others, is the reason why regulation doesn’t work.

            As it stands, we are in a moral and social predicament. There is tremendous environmental degradation in the name of mining for energy and progress both in the Appalachian region and globally. The serious lack of domestic and international laws addressing habitat loss has reduced many species populations to an alarming level. Experts in the field, including John Kunich of Charlotte University, who specializes in Environmental and Biodiversity Law, believe that a mass extinction, of which there have been several in the history of the planet already, is occurring. Global mass extinctions such as this one can take hundreds of years, regardless of the cause, be it by sudden impact, such as a meteor, or gradual atmospheric change.

According to Dr. John Kunich, 20-30% of Earth’s species could go extinct due to climate change in the next few decades. Since biodiversity loss is diffused, incremental, and is not captured in market prices, we can continue to develop in the present way without noticing a problem. Animals can cling on for thousands of years, apparently surviving, while, in reality, they are committed to extinction. This “calamity masquerading as calm” ought to be of equal concern to the public as climate change but receives far less coverage by the media. Because biodiversity loss is a slow and diffused process it has limited public appeal. Countering it would require a vast reevaluation of consumption patterns, which most people, and the media, are not yet willing to address.

Time and again, humanity has been irresponsive to problems until after it has been too late. Even our primary legal bodies, namely Congress, are reactive not a proactive Kunich said.

There is also the problem of identifying that which we do not know, of protecting that which, to us, does not exist. Scientists are still uncertain as to the exact number of species on earth. How then, can policies be enacted to protect that which has not yet been discovered?

In America, developments are sprawling across the land twice as fast as the population is growing. Our companies are being outsourced but we are expected to maintain consumption at its present level to keep “growing” our economy. Based on this logic, wilderness is to keep shrinking in order to keep our economy growing. With that in mind, ninety-six percent of lumber companies in Southwest Virginia have been outsourced.

Farming and land conservation are not as profitable as development of an area. Fifty-two percent of farmers operate at a net loss and have a second job to “support their faming habit.” Meanwhile, the farmer population is aging, the average farmer being fifty-seven years old.

Based on this information, Jerry Moles of the New River Land Trust offers a solution. The Blue Ridge Forest Cooperative, the non-profit, member-owned business with which he is involved, aims to counter the spread of sprawl through easements to farmers. This strategy has been coined the Land care movement. The cooperative helps its members improve the value of their forest lands and increase the returns on their timber harvests. Members of the Coop must own at least ten acres of forestland and have their principle place of business or residence in the Commonwealth of Virginia. Representative Rick Boucher has contributed much of his time, energy and clout in the enterprise.

The tragedy of the commons shows why public ownership is undesirable. The cooperative seeks to make the conservation of privately owned lands economically viable and less of a burden to children or, future generations. He claims that economic viability of farming practices can be restored through technological increases in productivity and alternative uses such as agro-tourism, which provide additional income.

Landcare cooperatives strive to increase the income and community services received by farmers. They do this by facilitating planning sessions where the community can sit down and figure out ways to stabilize their region. This restores motivation to conserve land as opposed to selling it to be developed. This, in turn, will help restore environmental balance, stability or resiliency in landscapes, according to Moles. The reassessment of assets associated with development is crucial to realigning growth with markets and markets with the environment.

 

 

 

This is quite good, aside from a context setting lead.  The only thing I would change overall is the lack of direct quotes in the story. Those help us know exactly what these guys are saying and adds color to the article.