Socialist Alternative

The Failure of Carbon Trading – System Change Needed to Stop Environmental Catastrophe

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The massive oil spill in the Gulf of Mexico – referred to by many, including President Obama, as the worst environmental disaster in U.S. history – and the nuclear power meltdown in Japan have been horrific reminders of the disastrous consequences of basing an energy policy around the interests of the big corporations that extract oil and produce nuclear power.

Just because the corporate media have moved on to other topics doesn’t mean these disasters have ended. In May, the Japanese government admitted that three of the nuclear power plants had suffered a meltdown. Sizeable areas of Japan will continue to be uninhabitable by humans.

Gulf Still Contaminated
Evidence continues to mount on the toxic side effects of the estimated two million gallons of the oil dispersant, Corexit, sprayed into the Gulf. Also, according to University of South Florida chemical oceanographer David Hollander, 75% of the estimated five million barrels of oil leaked into the Gulf are still unaccounted for.

As MSNBC reports: “Oil from the BP spill remains stuck on the bottom of the Gulf of Mexico, according to a top scientist’s video and slides that she says demonstrate the oil isn’t degrading as hoped and has decimated life on parts of the sea floor,” (2/19/11).

BP’s original neglect has been exacerbated by their corner-cutting approach to those whose lives they devastated. Families are losing their homes, boats are being repossessed, and businesses are closing.

The White House Oil Spill Commission final report concluded: “Without effective government oversight, the offshore oil and gas industry will not adequately reduce the risk of accidents, nor prepare effectively to respond in emergencies.” BP continues to fight any fines in the courts, and they continue to drill in the Gulf and other sensitive areas, like the Arctic.

Global Warming
Despite this experience, Obama is continuing the policies of the Bush administration by promoting and subsidizing oil, gas and coal exploration and extraction. Meanwhile, the burning of these fossil fuels is the main cause of the buildup of CO2 in the atmosphere. Also, Obama has prioritized wars in the Middle East over passing effective legislation to combat global warming.

Despite the attention given by the corporate media to some climate skeptics – usually funded by oil companies or extreme free-market organizations – the evidence has convinced the vast majority of scientists that unless we quickly reverse our present energy and industrial policies, the planet will be irrevocably damaged.

Climate change is already causing loss of life and increased suffering for humans. More frequent climate extremes, from heat waves in Russia to drought in Africa, are early warning signs of the impending consequences of global warming. A recent report by the charity Oxfam reported that 21,000 people died in the first nine months of 2010 as a direct result of extreme weather conditions. The Journal of Geophysical Research reports that Arctic sea ice has thinned by 40% in just the last three decades, (Vol. 14, 2009).

The UN’s Intergovernmental Panel on Climate Change chairman, Dr. R. Pachauri, said in September last year that “business as usual” could mean a global average temperature rise of up to 7°C by the end of the century. To achieve the target of a 2°C to 2.4°C rise, which is considered necessary to prevent irreversible and harmful changes to the climate, he said total global greenhouse gas emissions must stop increasing and begin to decrease by 2015.

Carbon Trading in Theory
Since the Kyoto Protocol in 1997, the cap-and-trade system has been the centerpiece of international climate policies to address global warming. Under this system, governments allow corporations a limited amount of carbon emissions but grant them the ability to buy more from other corporations who are selling their permits. In this way, supply and demand, i.e., market forces, would create a marketplace where pollution permits, called credits, are bought and sold.

Its success would depend on corporations voluntarily supplying accurate information of their polluting activities and buying credits to cover this. The idea is that they could buy credits from companies who were going to reduce their level of pollution. By continually reducing the number of carbon credits on the market, emissions would theoretically be reduced.

Many experts warned in advance that this fanciful system was so open to abuse that it would be nothing more than window dressing. Considering the record of big corporations when it comes to workplace safety, consumer safety and honest reporting about their sweatshop operations overseas, the idea that they would voluntarily own up to their own pollution and introduce costly new technologies to reduce carbon emissions was naïve to say the least.

In the February 2010 issue of Harper’s, Mark Shapiro, a senior correspondent at the Center for Investigative Reporting in Berkeley, California, has detailed many of the problems facing the carbon market. He says these carbon projects simply “have not delivered the promised amount of emissions reductions.” He argues that 15-20% of carbon offset credits should never have been issued, as they financed renewable-energy projects that would have gone ahead anyway and are not, therefore, adding to the displacement of CO2.

Shapiro continues: “The increasingly complex and far-flung projects, with developers dredging up thousands of claimed reductions in remote areas all around the world, already far outstrip the U.N.’s ability to police them adequately.”

He states that effectively regulating this market is impossible: “To maintain even the current level of monitoring would represent an undertaking of enormous scope, necessitating the coordination and management of hundreds (if not thousands) of field personnel, stationed in remote offices literally everywhere in the world.”

Carbon Trading in Practice
Numerous examples of massive fraud have been unearthed. Award-winning journalist Will Evans’ recent article, “Global Carbon Market’s Dirty Secret,” describes how Chemplast Sanmar, a chemical company in India, received lucrative carbon credits for halting its release of an especially potent greenhouse gas. He showed how Chemplast has earned $10 million a year selling the credits to American and European companies, which in turn can use them to offset their own pollution, (, 5/21/2011).

He states: “Sounds like good news for Chemplast, but not to many of the villagers that live in Mettur. They blame Chemplast for a slew of health problems. They say Chemplast’s water and air pollution causes their breathing problems, rashes and stillbirths, and leaves their crops stunted and bitter. They were outraged to learn that the company earns millions from the global effort to fight climate change.”

This example can be repeated, as the carbon credit market has become a new arena for corporate speculation and abuse. The auditor Deloitte as well as the EU law enforcement agency Europol have been warning that carbon trading markets are “a fraudster’s dream come true” because they deal in an “intangible commodity” called CO2.

Probe International, a pollution-reporting organization, wrote: “Last year, European authorities admitted that 90% of the carbon trading volume occurred for the purpose of value-added-tax fraud. At its root, the problem with CO2 markets is that, unlike other commodities, CO2 has no inherent value. Parties to carbon permits have no interest in the CO2 per se, but in the permit. If no CO2 is actually offset, neither buyer nor seller would suffer a loss. Without an army of regulators to check on the veracity of every carbon offset permit, right back to the Third World where the project originates, there will be virtually no way to protect the value of permits,” (“Gasping for Air, Carbon Markets Stumble Again,” 4/13/2010).

This has been confirmed by a recent report by the International Energy Agency (IEA) which stated that greenhouse gas emissions increased by a record amount in 2010 to the highest carbon output in history, (“Global warming: Bleaker and bleaker,” The Guardian, 5/30/11). This demonstrates the complete failure of recent conferences and international agreements to meet the targets necessary to prevent an increase in world temperatures by 2°C.

Fatih Birol, chief economist of the IEA, stated: “This should be a wake-up call. A chance [of staying below two degrees] would be if we had a legally binding international agreement or major moves on clean energy technologies, energy efficiency and other technologies.”

Failure of Market-Based Solutions
The question is: How can such fundamental changes be enforced? Corporations are created to maximize profits for their shareholders. They have no social responsibility. Witness BP’s actions in the Gulf and the orgy of subprime mortgage speculation inflicted on our society by the big banks in their drive for short-term profit. Any new regulations face an immediate barrage of attacks by affected corporations, who go into feverish activity to subvert the law or pay lawyers to find loopholes in the regulations.

This demonstrates the complete failure of relying on market-based solutions like global credits peddled by our politicians, including Obama, to solve the problem. The solutions to our escalating environmental catastrophe are well known. The technologies of solar, wind and tidal power, along with a massive high-quality public transportation system, are non-polluting potential long-term solutions to the environmental crisis. Also, converting our energy system would create tens of millions of jobs for those now unemployed while providing retraining with full pay and benefits for workers in polluting industries.

However, implementing such technologies on a colossal scale comes up against powerful corporate interests. These include not only oil, mining and nuclear power companies, but auto manufacturers driven to maximize short-term profit. Also, both major corporate political parties have expressly shut the door on the kind of federal investment needed to jumpstart and underwrite the mass introduction of such technologies.

Socialists call for a massive and urgent retooling of the economy based on new technologies and the massive expansion of mass transit programs, but we understand that individual pro-capitalist governments around the world will not take steps that are necessary to force corporations to comply.

The Socialist Solution
Socialist Alternative and the Committee for a Workers’ International argue that we need to build mass movements in the streets that call for massive investment in non-carbon technology to provide jobs and to seriously start to address climate change. We call for a 50% cut in greenhouse gas emissions by the year 2020, leading to a minimum cut of 90% by 2050.

The environmental movement should be putting its energies into building mass movements. Over 100,000 demonstrated outside the recent Copenhagen Conference. Their slogans – “Our planet, not your profits!” and “System change, not climate change!” – pointed to the need to challenge the capitalist system to achieve sustainable transformation. This should be an example to the environmental movement here, which should call for a massive program of green jobs and the transformation of society, rather than lobbying Democrats who will never deliver.

We need to create a mass movement that calls for an end to the chaotic profit-driven system of capitalism and the building of an economy planned and administered by the overwhelming majority of the population: genuine democratic socialism. Only this can provide a real basis for international cooperation, based on the satisfaction of human needs. The waste of military production could end. Scientists whose minds now think up better weapons could work on alternative energy. We could begin to heal the ecological havoc wreaked by capitalism’s blind pursuit of profit.

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