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The Forum > Article Comments > Carbon trading must balance environmental, economic and legal needs > Comments

Carbon trading must balance environmental, economic and legal needs : Comments

By Nicola Durrant, published 31/3/2009

Free carbon trading permits would clearly offend the principle of environmental responsibility for the benefit of short-term economic gain.

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I think that the CPRS as planned will be perceived as unjust, inefficient and perhaps fraudulent. The allocation of free permits raises the point that perhaps we really should pay more for aluminium and brown coal fired electricity if producers are truly unable to reduce their emissions. Free permits merely postpone the crunch time. Price floors and ceilings are used in the electricity market. Therefore I suggest for the first year of the carbon trading scheme a CO2 price band of $20 to $50 per tonne should be used.

From my glance at the draft legislation it is not clear that Clean Development offsets will be allowed. An audit by the EU found that many such claimed offsets were invalid even by their weak criteria. Therefore I think offsets should be severely limited. Even outside the scheme when it comes to handing out grant money from carbon revenue I think shysters will be at the front of the queue.

Imagine this; a firm that burns tyres buys permits for 20c from another firm who got them for free. That's for half their emissions, the other half avoided by offsets for a community water supply in Peru. Those offsets cost 10c a tonne of CO2. Then the company applies for a $10m research grant into better ways to burn tyres. Only a year to go.
Posted by Taswegian, Tuesday, 31 March 2009 9:43:28 AM
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The Graduate revisited.

Mr. McGuire: I want to say two words to you. Just two words.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Carbon Trading.

The problems outlined by Ms Durrant are merely the starting point.

"First and foremost, the legal regime must include the adoption of an appropriate global emissions reduction trajectory"

I think she means that we cannot do this alone, but finds it difficult to say in straightforward terms. Basically, because she might then be accused of highlighting a loophole for government(s) to walk through.

Which of course they will, as she well knows.

But the real news is that this blindness not only extends to the legal issues, but to the realities of the process itself.

Because it will be a marvellously lucrative, impossible-to-police international market for the trading of small pieces of paper.

After the initial straighforward exchange process, where we "offset" carbon production by buying into (possibly fictitious) tracts of forest in Belize, we can move on to carbon arbitrage. That will allow us to take advantage of the different rates that will exist on the various exchanges - for example, I could set up a buy-side on the ACX in A$, and simultaneously sell it on CCX in USD.

From there we would move into carbon futures, short-selling, carbon hedge funds... green field opportunities for the savvy, given that it will take governments many years to understand the problem they have created, let alone plug all the loopholes.

Don't forget also that some of the countries involved in the "sink" part of the equation may not be particularly renowned for their fiscal probity. Huge scope, of course, for a new breed of email scams, I suspect.

I've already told my teenaged son that he has to give up his ambition to be an international tennis star. This is far less energetic, and far more lucrative.

If you doubt me, simply google "carbon emissions trading". It's already started.

Ah, 'twas bliss in that dawn to be alive, but to be young was very heaven.
Posted by Pericles, Tuesday, 31 March 2009 10:34:00 AM
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Carbon trading is a process for giving more money and freedom to pollute, to the worlds cartels, whilst charging the populace more and more and providing less and less. The results will be, impoverished populations and collapsing climate.
Posted by stormbay, Wednesday, 1 April 2009 11:19:24 AM
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Pericles
LOL, yes, the whole thing is the biggest pious fraud in the history of the world: the selling of indulgences all over again.
Posted by Wing Ah Ling, Wednesday, 1 April 2009 3:14:35 PM
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The US Senate has voted to stop a cap and trade system if it increases the price of electricity or gas. http://www.capitolhillreports.com/033109.htm

Clearly the USA is not going to go into any form of trading that increases prices. As both coalition and government policies are not to disadvantage Australian industry and as the US is unlikely to adopt any scheme that increases prices if we want to reduce ghg emissions we have to look for another way.

That way is to reduce the cost of building infrastructure that leads to a reduction in greenhouse gas concentrations in the atmosphere. This approach does not require loans, reduces the cost of all energy, will not cause inflation, and will not cost the taxpayers anything.

There is a way to do this as I pointed out at http://www.onlineopinion.com.au/view.asp?article=8692

I have put up another explanation with diagrams at http://stableproductivemoney.wordpress.com/2009/04/03/increasing-the-money-supply-without-loans/

There are other ways of solving both the financial crisis and global warming.
Posted by Fickle Pickle, Monday, 6 April 2009 11:54:52 AM
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