Carbon Credit merry-go-round
In theory the carbon-credit trading scheme is a thoroughly modern and intelligent approach to reducing world pollution. The graphic above explains the system – in a nutshell, rich First World companies are financially encouraged to help poorer Third World companies clean up their manufacturing processes. They do this by accepting ‘carbon caps’, or limits, which if exceeded can be replenished by purchasing carbon credits – via specialist traders – from manufacturers in the developing world.
In practice, however, there are loopholes that seriously threaten the schemes’ credibility. The most significant are these: they take into account only greenhouse gases, money made through trading credits can be used to expand a business so increasing pollution and, perhaps most questionably, auditors of the scheme are paid for by the companies.
Carbon credits have become such a profitable commodity that market speculators – hedge funds, banks and pension funds – have enthusiastically bought into them. Traders buy and sell credits issued by both the UN and EU schemes. For trading purposes, one allowance or Certified Emission Reduction
(CER) is equivalent to one ton of CO2 emissions.
These credits can be sold privately or on the international market. Louis Redshaw, head of environmental markets at Barclays Capital predicts that ‘carbon will be the world’s biggest commodity market – and it could become the world’s biggest market overall.’
But that was before the recession. A global fall-off in manufacturing means that companies are producing far less carbon. In recent months, companies in this position have dumped their credits on the market. This has not only provided heavily polluting firms with funds to plug gaps in their balance sheets but has also pushed down prices. Carbon has now dropped to such a level it’s cheaper to burn polluting fossil fuels and buy up credits than find ways of reducing emissions.
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round and round we go..but only one player wins a prize..can you guess who?..if you visit the above link you will see a great example of how wrong this whole scam is..thanks to metric for the lead
401
Excellent Find. I really think seeker and others within your circle use the Austrian Business Cycle to figure this out. Since interest rates are low somebody posted in the Mises forum about what the next bubble is since we all know the interest rates are still low. I remembered chatting with you on Carbon Credits and posted about them. I posted this link you gave and even put that graphic up on the post I submitted – THANKS!
cap n trade ( carbon credits) is the new bubble..the bonds bubble is always around as well..inflation is coming..no doubt
spread the knowledge is the name of the game wildy
cap n trade ( carbon credits) is the new bubble..the bonds bubble is always around as well..inflation is coming..no doubt
OH! You’re my new favorite blogger fyi
to kind 333, thx
seeker401,
What do you think about this? I’m wondering how much the U.S. government itself is playing the carbon credit game. The U.S. has been giving a lot of money to the IMF to be redistributed to Third World countries. Now a new war fund is being considered (new…lol seems like every week a new one is being considered) and amended to the war fund bill is more money going to the IMF to be redistributed to Third World countries. This mimics the carbon credit cycle, and since that’s the new big game I wouldn’t doubt this is how the IMF gives the money to Third World countries via their “Certified Emissions Reduction” (I know that’s what the UN calls them but the IMF has to be involved somehow). What do you think? Here’s the news link to this new war fund consideration:
http://www.campaignforliberty.com/wire.php?view=5643
will check that out soon thanks wilderness
thanks, it was something I thought about while reading that article so I’m not too sure if this directly fits.
ok read the link..its quite plausible that funds will be ciphoned off into 3rd world countries on the back of “carbon”..the daming part of all this cap n trade bs is that the worst polluers stand to gain the most..and the best and cleanest operations will have to buy carbon to play on the market..sort of crazy eh?
yeah it’s crazy. That’s that “unintended consequences” we hear about so often by the State. The State can never decided anything without harming something, it’s bias in all of it’s opinions cause it makes an opinion. Only under liberty can the free market work without bias opinions coming down from centralized planning. It’s either liberty or State intervention… I choose liberty.
im with you!