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Green Fussing: What Do Left Environmentalists Really Want? (except to cap capitalism with cap-and-trade)

Ultra-clarifying moments of truth are sometimes possible when environmental groups and their so-called allies end up in “family” squabbles, disagreeing over implementation of their ill-conceived schemes. The disarray, aptly described in prior posts at MasterResource by economist Robert Murphy and others as a civil war on the Left,” has become commonplace with respect to cap-and-trade proposals. And this is part of what Ken Green calls the death spiral of climate alarmism.

Just maybe the Coercion Crowd should throw up their hands and just say: give peace a chance!

Gaming the Carbon Market – Say It Isn’t So!

Yet another example of this discord, reported in a recent issue of E&E News PM, Climate: Enviro group outlines 10 schemes for gaming carbon markets — 05/18/2010 — www.eenews.net (access with free trial subscr.) involves Friends of the Earth (FOE), which recently released a strongly worded critique of the Kerry-Lieberman climate bill. In its guide, FOE inconveniently details how “carbon offsets are especially prone to corruption and fraud” and directly questions whether carbon markets are an appropriate mechanism to reduce greenhouse gases (GHGs).

The guide derisively attacks cap-and-trade schemes detailing the ten ways carbon markets can be scammed “at the expense of both our economy and our climate.” The scams enumerated carry such unflattering headings as, “Ponzi carbon,” “Carbon bribery,” and “Sell fake carbon offset credits,” among other derogatory descriptions. Ouch!

I Can’t Believe You Said That!

Henry Derwent, President and CEO of the International Emissions Trading Association (IETA), is none too happy with the publication of the FOE guide. As reported in the E&E News article, Derwent complains that FOE is undermining and “attacking” the very scheme that will make addressing climate change “palatable” to business and lawmakers alike. And further, “FOE is undoing the very work it claims to support.”

What likely upsets Derwent and others most, however, is that FOE has the audacity to expose the flaws, risks, inefficiencies, and damage to be caused by this faux “market” for GHG allowances and carbon credits. They’re not following the almighty “script” and are exposing environmentalists’ proclamations for the frauds they really are.

It’s an interesting dichotomy indeed to witness those who want to impose their anti-market, growth-stifling, draconian regulatory regimes upon our economy actually pause to ponder that which constitutes a real market.

The Scams Already Exist

Is FOE engaging in a bit of hyperbole in its analysis? On the contrary, it carefully documents that the empirical evidence shows such scams already exist in practice, particularly in Europe. In another scam the guide refers to as “Boost the baselines,” firms inflate their projected emissions in order to claim a greater allocation of carbon permits.

FOE explains that this trickery is already well-known under the European Union Emissions Trading Scheme (EUETS). Citing various reports, FOE explains how exaggerated baselines under EUETS allow large corporations to rake in huge windfall profits noting, “as a result of over-allocated permits…ten companies now have 35 million tons of surplus emissions…”

FOE states, “Over the five year trading period (2008-2012), we estimate that the value of permits accruing to these ten companies will rise to €3.2 billion (approximately $4.17 billion).” All of this with little to no actual emissions reductions made in order to receive the surplus permits. Hey, what about the environment?

The Claims are Old News

The fact that proposed cap-and-trade schemes lack real market legitimacy is not a new revelation, however. More than two and a half years ago, economists Arthur Laffer and Wayne Winegarden, in their September 2007 report,  concluded: “Technical difficulties in measuring and verifying the validity of traded GHG allowances imply that the global market will be inefficient and subject to manipulation and fraud.”

Laffer explains, “As a quantity constraint, cap-and-trade regulations inherently create more price volatility in the GHG allowance market, as has already been observed in Europe.” These conclusions lend support to the claims in the FOE guide.

Aside from these supposed “mechanical” problems of carbon trading, others point out how this house-of-cards-like market could be the next derivatives bubble blow up. For example see; Could Cap and Trade Cause Another Market Meltdown? | Mother Jones

The Triumph of Politics over Science

An underlying theme of the disagreement over cap-and-trade among environmental groups boils down to political expediency rather than concern for the environment. This is best exemplified by the frequent refrain regarding the paramount need to “get 60 votes” (in the Senate) or a reach a “global deal” no matter what the legislation may end up looking like. The end game is just to pass something regardless of efficacy.

Let’s hit the pause button for a moment and cut to the chase. While politicians and environmental groups have been busy focusing the debate on process and procedure, it’s nothing more than a big side show to the biggest inconvenient truth of all. While it’s interesting sport to see numerous environmental groups in disarray over the finer points of implementation, the science simply doesn’t support the need for any of this nonsense. It is the very big elephant in the room they’ve all tried to ignore.

The sense of urgency to pass something, anything, is directly proportional to the beating the global warmies have been taking (for some time now) due to the lack of scientific evidence supporting the theory (and that’s all it is) that man-made CO2 is a major contributor to warming.

While space does not permit addressing the science here on CO2 and GHGs, for reference see this excellent handbook The Heartland Institute: The Skeptic’s Handbook made available by the Heartland Institute in Chicago, that eloquently makes the case in straight-forward, understandable language.

Conclusion

I have long believed “gridlock” in Washington D.C. is a good thing, often a really, really good thing. This position, on occasion, draws perplexed looks from colleagues who believe Washington should just “do something.”

I prefer gridlock precisely because politicians cannot agree to do that “something.” When they do achieve the overrated “bi-partisan” agreement on an issue, it usually involves attacks on our wallets and individual liberties simultaneously.

I am equally pleased, therefore, to see the gridlock that has emerged among environmental groups over cap-and-trade schemes. Gridlock is indeed good if it prevents any of the cap-and-trade abominations from ever becoming law.

6 comments

1 Mark Krebs { 06.09.10 at 11:54 am }

Cap & Trade: Brought to you by the same fine folks who represent sub-prime mortgages and credit default swaps. In case anyone wants to read the FOE’s “Ten Ways To Game The Carbon market” heres the link:
http://www.foe.org/sites/default/files/10WaystoGametheCarbonMarkets_Web.pdf

2 William Griesinger { 06.09.10 at 12:26 pm }

Mark,
Thanks much for the comment and link.
I also provided a link to the FOE guide in the post in about para. 3 where it says “guide”

Bill

3 Ed Reid { 06.09.10 at 1:51 pm }

They seek to establish a global government with the power to force cessation of carbon emissions, elimination of animal husbandry and implementation of population controls; and, the “just” re-distribution of wealth.

This “three legged stool” of AGW would arguably be the most expensive piece of truly ugly furniture ever constructed. It would truly be a “stool” which could not be picked up by its clean end.

4 Tom Tanton { 06.09.10 at 9:24 pm }

Mr. Griesinger, I’ve long suspected the cap-and-traders were after something other than saving the planet, or creating a green economy, or even reducing fossil use (and my post yesterday was a microcosm of the contortions suffered in California)…

Your post makes the process/procedural machinations all the more easily understood (and for one soldier in the trenches more easily countered). Thank You!

For another example of the perversity of cap/trade permits, I suggest looking at the history of South Coast AQMD’s “Reclaim” trading of NOx. After spending millions buying permits, electric generators were told the permits were no longer required during the energy crisis that hit us in 2000. (The program also had wide spread fraud involved.) Of course the erasure of $millions in property rights (the right to emit) was never fully acknowledged nor compensated. There are property right and takings considerations here as well.

After 40 years, I’ve finally figured out what business California Government is in, and they excel in it. California builds stranded assets.

5 Jon Boone { 06.11.10 at 8:58 am }

Or stranded liabilities…. LLCs, of course.

6 Death to the Chicago Climate Exchange ($7.40 to a nickel per CO2 ton, the market has spoken) « 21st Century Wire { 11.19.10 at 10:44 am }

[...] is not confined to so-called “global warming skeptics.” As I pointed out in my June 9 post, mainstream environmental groups such as Friends of the Earth (FOE) have harshly criticized the [...]

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