If you follow my blog, you know that I am very much in favor of Jim Hansen's climate change solution. Emission Trading Schemes appear far too open to abuse, scams and even with the best will in the world (where in the world do you find the 'best will'), are likely to be ineffective. In this blog, I want to try to collect together all the scams related to ETS's that I can find. I need your help. Please add any you come across. I will either leave them as comments under your name or incorporate them into the text, as you wish. They can be ones that already exist or ones you can foresee.
For Scams, I throw the net as wide as possible and include two types.
1. A pure scam in which the participants know full well that they are rorting the system and are pocketing money dishonestly with no effect on the emissions of greenhouse gases.
2. A system in which the participants are convinced that they are doing the 'right thing' but which for some reason what they are doing is having no effect on reducing global green house gases. Strictly speaking this is not a scam but is in effect a scam against humanity as it makes us all think we are sorting the problem out while we are rushing toward the cliff.
The Basic Scam
First lets look in general at Emission Trading Schemes variously called Cap and trade or Cap and Trade with Offsets or any other name you care to call them. They allow wall street to trade in carbon credits which are part of these schemes. In case you hadn't noticed, Wall Street doesn't trade in shares to help the development of the company in question. They don't trade in currencies to help out the country that owns the currency and they won't trade in carbon credits in order to reduce global warming. They participate in all these ""investments"" in order to siphon off money and to put it into their bank accounts. In the mean time, the power company, for instance, which is buying carbon credits from, say, someone who will plant a forest, have to raise their price for electricity and we all end up paying the increased tariff. In the mean time, these hair balls are pocketing the money. Where is the money coming from. It is coming from the increase in price we are all paying during the transition to renewable energy. What hair balls am I talking about. The same lovely people who brought us the present economic crisis and who are right back at it after we, the tax payers, bailed them out. All systems to reduce green house gases are going to raise the price of energy and with it, everything else. Emission Trading Schemes puts this money in the pocket of the hair balls. Hansen's system puts the money in our pockets to compensate us for price rises during the transition. So the first scam in the list is that we even contemplate Emission Trading Schemes rather than Hansen's Tax and Dividend.
'Shifting the Problem' Scam
In this system, the problem is merely shifted somewhere else and there is no net emission reduction. An example would be a coal fired power station in America which buys carbon credits in South America. It pays to ensure that a particular block of Amazon jungle will not be cut down. Lets assume for this example that everyone in the piece is honest and the money actually is used to keeping this block of forest pristine. Since lumber is not being produced from this forest, there is a demand for lumber from some other forest. All things being equal, the same amount of wood will be harvested but simply not from this piece of forest. No added removal of CO2 has been achieved.
'Selling Twice' Scam
How about if everyone is not completely honest. Since no goods are being transferred, it is quite possible to sell the same block of forest twice or three times or........... Lets look at the above piece of forest. Once it has been sold to a coal fired power station in North America, there is nothing to stop the owners of the forest (government of the country??) from selling it to an oil company in Europe. If at some time, inspectors from the various companies that ""own"" the forest come to look, they find that all is well. The forest is pristine and both think that they are getting their money's worth.
'False Biology' Scam
A case of false biology is the selling of a piece of forest that doesn't actually sequester carbon dioxide. A mature forest, by definition, is in equilibrium. The amount of growth is balanced by the amount of decay. Trees are falling and returning their carbon to the atmosphere at the same rate as carbon is being taken out of the atmosphere. Incidentally, in cooler climates, this can be quite different. When it is cool enough, forests can continually (but rather slowly) sequester carbon as humus in the soil. In the tropics, humus breaks down and so carbon is completely recycled. The best carbon capture is in a new forest which has been growing for, say a decade so that the trees are in the prime of life, growing at their maximum rate. In fact, if you harvest a forest, build much of the lumber into long lasting constructions, carbonize the remainder and return to the soil and then plant a new forest, you are probably getting the very best, in terms of carbon capture, from the forest.
Simplicity
As has been found again and again, whenever a tax system is complicated, it is open to 'creative accounting' Jim Hansen's system can be expressed in less than a single side of an A4 piece of paper. Proposed legislation for cap and trade runs to hundreds of pages. Just on that basis, I am highly suspicious that the all tooo cleeever money men will find ways to scam the system. Following is a quote from the New York Times about an effort to bring in cap and trade to the USA. The system had lots of credit because a similar system had been successful at curbing the emissions of sulphur. From the quote you can see why the system became unworkable
"But in trying to assemble a majority to pass it, Mr. Waxman and Mr. Markey [American Senators] dished out a cornucopia of concessions and exemptions to coal companies, utilities, refiners, heavy industry and agribusinesses. The original simplicity was lost, replaced by a bazaar in which those with the most muscle got the best deals."
Quoting further from the same article.
Ms. Cantwell said that cap and trade had been discredited by the Wall Street crisis, the Enron scandal and the rocky start to a carbon credits trading system in Europe that has been subject to dizzying price fluctuations and widespread fraud.
And finally:
She [Ms Cantwell] said her bill would require every pollution permit to be auctioned rather than given away and was 39 pages long, compared with Waxman-Markey, which weighs in at some 1,400 pages.
We have only started. Please help me.
For Scams, I throw the net as wide as possible and include two types.
1. A pure scam in which the participants know full well that they are rorting the system and are pocketing money dishonestly with no effect on the emissions of greenhouse gases.
2. A system in which the participants are convinced that they are doing the 'right thing' but which for some reason what they are doing is having no effect on reducing global green house gases. Strictly speaking this is not a scam but is in effect a scam against humanity as it makes us all think we are sorting the problem out while we are rushing toward the cliff.
The Basic Scam
First lets look in general at Emission Trading Schemes variously called Cap and trade or Cap and Trade with Offsets or any other name you care to call them. They allow wall street to trade in carbon credits which are part of these schemes. In case you hadn't noticed, Wall Street doesn't trade in shares to help the development of the company in question. They don't trade in currencies to help out the country that owns the currency and they won't trade in carbon credits in order to reduce global warming. They participate in all these ""investments"" in order to siphon off money and to put it into their bank accounts. In the mean time, the power company, for instance, which is buying carbon credits from, say, someone who will plant a forest, have to raise their price for electricity and we all end up paying the increased tariff. In the mean time, these hair balls are pocketing the money. Where is the money coming from. It is coming from the increase in price we are all paying during the transition to renewable energy. What hair balls am I talking about. The same lovely people who brought us the present economic crisis and who are right back at it after we, the tax payers, bailed them out. All systems to reduce green house gases are going to raise the price of energy and with it, everything else. Emission Trading Schemes puts this money in the pocket of the hair balls. Hansen's system puts the money in our pockets to compensate us for price rises during the transition. So the first scam in the list is that we even contemplate Emission Trading Schemes rather than Hansen's Tax and Dividend.
'Shifting the Problem' Scam
In this system, the problem is merely shifted somewhere else and there is no net emission reduction. An example would be a coal fired power station in America which buys carbon credits in South America. It pays to ensure that a particular block of Amazon jungle will not be cut down. Lets assume for this example that everyone in the piece is honest and the money actually is used to keeping this block of forest pristine. Since lumber is not being produced from this forest, there is a demand for lumber from some other forest. All things being equal, the same amount of wood will be harvested but simply not from this piece of forest. No added removal of CO2 has been achieved.
'Selling Twice' Scam
How about if everyone is not completely honest. Since no goods are being transferred, it is quite possible to sell the same block of forest twice or three times or........... Lets look at the above piece of forest. Once it has been sold to a coal fired power station in North America, there is nothing to stop the owners of the forest (government of the country??) from selling it to an oil company in Europe. If at some time, inspectors from the various companies that ""own"" the forest come to look, they find that all is well. The forest is pristine and both think that they are getting their money's worth.
'False Biology' Scam
A case of false biology is the selling of a piece of forest that doesn't actually sequester carbon dioxide. A mature forest, by definition, is in equilibrium. The amount of growth is balanced by the amount of decay. Trees are falling and returning their carbon to the atmosphere at the same rate as carbon is being taken out of the atmosphere. Incidentally, in cooler climates, this can be quite different. When it is cool enough, forests can continually (but rather slowly) sequester carbon as humus in the soil. In the tropics, humus breaks down and so carbon is completely recycled. The best carbon capture is in a new forest which has been growing for, say a decade so that the trees are in the prime of life, growing at their maximum rate. In fact, if you harvest a forest, build much of the lumber into long lasting constructions, carbonize the remainder and return to the soil and then plant a new forest, you are probably getting the very best, in terms of carbon capture, from the forest.
Simplicity
As has been found again and again, whenever a tax system is complicated, it is open to 'creative accounting' Jim Hansen's system can be expressed in less than a single side of an A4 piece of paper. Proposed legislation for cap and trade runs to hundreds of pages. Just on that basis, I am highly suspicious that the all tooo cleeever money men will find ways to scam the system. Following is a quote from the New York Times about an effort to bring in cap and trade to the USA. The system had lots of credit because a similar system had been successful at curbing the emissions of sulphur. From the quote you can see why the system became unworkable
"But in trying to assemble a majority to pass it, Mr. Waxman and Mr. Markey [American Senators] dished out a cornucopia of concessions and exemptions to coal companies, utilities, refiners, heavy industry and agribusinesses. The original simplicity was lost, replaced by a bazaar in which those with the most muscle got the best deals."
Quoting further from the same article.
Ms. Cantwell said that cap and trade had been discredited by the Wall Street crisis, the Enron scandal and the rocky start to a carbon credits trading system in Europe that has been subject to dizzying price fluctuations and widespread fraud.
And finally:
She [Ms Cantwell] said her bill would require every pollution permit to be auctioned rather than given away and was 39 pages long, compared with Waxman-Markey, which weighs in at some 1,400 pages.
We have only started. Please help me.
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