Tuesday 12 February 2008

Can Carbon Credits Save the Planet?

As part of a series of lectures on climate change, Keele paid host to three speakers last night looking at what can be done. Richard Davies of the Marches Energy Agency charity restated the uncontroversial facts (at least among the majority of climatologists) about global warming. At the moment CO2 stands at around 350 parts per million - this means even if we stop all human-sourced carbon emissions tomorrow the global average temperature will still increase by up to two degrees celsius. Unfortunately if carbon is released at the present rate we will hit 450 parts per million within a generation. That means dangerous and rapid climate change. John Vogler of Keele showed where we're at with international regimes of emission regulation and reduction (Kyoto, Bali). Without going into them, pitiful progress has been made compared with what needs to be done.

Speaking for the Green Party, Emily Heath's presentation on carbon credits was the most interesting for a couple of reasons. Carbon trading is a market-based solution to problems engendered by the market in the first place and so is superficially attractive to Neoliberals and compatible with their doctrine. But at the same time it claims to significantly reduce carbon emissions in a short space of time as well as securing a number of social justice outcomes. A market that benefits the poor and is kind to the planet, while keeping the disciples of Von Hayek and Friedman happy? Is such a thing possible or is it, as Green Male Speaker Derek Wall says, a pile of crap?

Assuming the existence of an international regime of carbon credit markets, in the UK a body would be set up (preferably independent of the state) responsible for regulating and overseeing the market. But its primary function is to calculate a carbon budget for the whole country based on targets stretching 20 years into the future. The "currency" budgeted for are Tradeable Energy Quotas (TEQs), which are equivalent to one kilogram of carbon at ground level. These are rationed out to every adult equally and then "spent" whenever you receive a gas bill, fill up your car, or take a flight. If you do not use all your ration surplus TEQs can be sold on the credit markets to companies, institutions, and individuals who've exceeded their quota. As the years go by the overall TEQ budget decreases in line with emission reduction targets so allowances shrink, TEQs become more scarce and the costs of buying them when one goes over quota becomes more prohibitive. In short, there is a real material incentive to reduce energy consumption.

The winners in this market will initially be the poor. As you go down the socio-economic scale less energy is consumed per head. The disadvantaged will therefore be swimming in surplus TEQs that can be sold on to the rich, who are far more profligate with their energy consumption. For the first time in history, a market will redistribute wealth from the bourgeoisie to the workers. The market will also drive innovation in carbon capture, energy saving and efficiency, and renewable technologies. And the transition to a low carbon economy will drag social attitudes in its wake. Conspicuous consumption will give way to more modest lifestyles. In Heath's vision the country 30 years hence will be a land of retro-fitted houses, micro power generation, and decent public transport. The economies of carbon will force motorists into shared car clubs. Cheap holidays and trips abroad on flights will be very rare indeed and the UK seaside resorts will undergo a renaissance (except for Blackpool's Illuminations of course). Food production will be more localised and commodities from as far a field as China and India will be a thing of the past. And carbon emissions will be severely down on present day levels.

It's not socialism ... but this green capitalism doesn't sound too bad does it? But is it possible? To my mind there are a number of problems. First is the issue of political control. Whether the carbon credit body is independent of government it will face massive pressure from government and business to relax its targets. Capital will always seek a way around the regime. Second, how will TEQs be managed across borders? Because of past emissions by the developed nations will their TEQs be more expensive than those in the global south? Will this open them up to speculation? Third, and more problematic, is the question of transferability. Will TEQs have a limited lifespan, like Tesco club card points? Or will dealers be able to build up stocks of credits while they're still relatively cheap and then used up when they're more expensive? Fourth the rich, being the rich, may have a financial incentive to tone down their lavish lifestyles but they can absorb the extra costs. A culture of resentment could quickly build up - but I'm not complaining if it radicalises masses of people. And to repeat, it isn't socialism. The same exploitation, the same power relationships, the same injustices that have motivated socialists in the past will still be there, and our class will be too. A green capitalism might just be possible, but there's no market-based solution to the coming of its gravediggers.


Frank Partisan said...

The Cuban government in no time, switched to energy saving lightbulbs. Energy conservation and fighting emissions, requires a planned economy.

Anonymous said...

Saw your link on www.transitionculture.org and thought I'd come over for a peek. I'm the TEQs Development Director at The Lean Economy Connection.

There is a key distinction between Kyoto/EU ETS style carbon trading (as criticised by Derek Wall, and so brilliantly dissected by Larry Lohmann and co here: http://tinyurl.com/yxjcu6 ) and the TEQs scheme, which is a very different beast.

TEQs are a purely national scheme that involves no international trading (unlike the EU ETS), they involve a sealed cap (unlike the EU ETS), allow no offsetting (unlike the EU ETS), are defined in terms of energy (unlike the EU ETS), address issues of fossil fuel depletion... I could go on. They are simply fundamentally different, although certainly they both utilise markets.

In fact, the existence of the deeply-flawed EU ETS presents a challenge to the implementation of national TEQs schemes in Europe, as the EU ETS affects certain sections of the national economy and so disrupts the clean 'systems thinking' design of the national TEQs scheme. There would be overlap.

TEQs certainly do not "assume the existence of an international regime of carbon credit markets". They provide a way for a nation to guarantee that it meets its carbon reduction targets within the context of whatever international agreements pertain on the issue.

I agree that there will be business pressure to relax carbon reduction targets, but this is really nothing to do with TEQs. TEQs provide the means to achieve whatever targets are agreed on. The political will to set strict enough targets is a separate matter.

I strongly suggest reading David Fleming's booklet on TEQs (edited by myself, and available here: http://tinyurl.com/ys8fc2 ), which addresses the points you raise, and should help you gain a fuller understanding of the scheme.

But yes, I have to agree, it never claimed to be socialism. Needless to say, if that is the only thing that interests you, you won't find it there. The fact that if people want to use more than the average amount of energy they have to pay extra *to the people who use less* is simply a major revision of the capitalist model. To my mind it's a very important one. And incidentally it is one that seems far more likely to breed resentment among 'the rich' than the energy-thrifty!

thene said...

Carbon credits can't save the planet for the simple reason that there's no one to trade emissions WITH. We need to reduce global emissions by, at the very least, 80%; in other words, rather than rewarding someone who creates less than the current average amount of energy, we should only reward those who use less than 20% of the current average. Now, if you can reduce your personal usage by 81% and sell on the extra %, more power to you, but in general making a market of it wouldn't make much inroads into that required 80% cut. Very few individuals (or nations) are currently emitting less than their 'share' of the global target. (The moonbat jokingly suggested, at the last major CCC meeting, back in November, that we will have to start trading carbon credits with Jupiter and Mars if we want the scheme to work).

Then there's the simple fact that cutting emissions in one country often directly causes a rise in emissions in another country. Note that emissions are attributed to the country where they occur rather than the country where they are caused - so China creates a lot of emissions in the process of making products that are consumed in the UK, products that in the past would have been made in the UK, so it looks like China has rising emissions and the UK has falling emissions, but really it's still us who are overconsuming. (and due to both transport emissions and China's coal-fired energy grid, the total emissions caused are far more than would be the case if these products were still made in the UK). In your green capitalist vision, these products would once again be made in the UK, which would up our emissions again.

And if you've been to a developing country recently (flying away on holiday, how naughty), you've probably seen a lot of ageing second-hand cars shipped over from Europe or Japan - gas-guzzlers given up by their owners because they cause too much emissions, now being used as literal vehicles of development elsewhere. Once again, we've passed the parcel rather than actually solving the problem.

The CCC advocates 'total war' on climate change, with our economy revalued around the issue in the same way it was revalued around the war effort back in the 1940s. If they're right about the radical cuts necessary and the horrible consequences if we don't carry out those cuts, then there's really no other solution.


We are almost at 400 ppm now. See my climate clock blog here:


Feel free to blog link to it, too.

Also, re polar cities: have you ever heard of this idea or seen the images? see my blog and feel free to post on it too, pro or con. Criticism welcome.



Crafty Green Poet said...

Interesting post and discussion, carbon credits could offer a partial solution if managed properly, but the management is the issue and thene makes a good point about the need for greater reductions than carbon credits would encourage

Phil said...

Thanks for replying back Shaun, and clarifying the differences between carbon trading and carbon credits. As I said I think it sounds like a very elegant approach and I love the irony of using the market to undermine the market. When I get the time I'll take a look at the booklet you recommend and give it a full review. However I am sceptical of how any government in the present global political and economic climate would willingly hobble "their" capital by adopting the TEQ scheme - unless it is forced on them by either mass movements or the whip hand of nature. But I will say is the proposals demonstrate a serious and creative approach to climate change.

Thene, I remember pointing out to a New Labourite (I forget who) a while back that the "export" of manufacturing jobs = a displacement of UK emissions, even though it will still be UK markets driving these emissions. As an unreconstructed Marxist, I'm with Ren on this - democratic planning is the best way forward. You've got to change society to stop irreversible change to our climate.

Cheers Danny, I'll have a look at your blog after Ashes to Ashes ;)

Anonymous said...

Carbon trading and carbon credits both sound like bad ideas to me - both appear to be two different forms of rationing

The truth is, in order to make TEQs work, we in the advanced West would be expected to welcome with open arms harsh austerity.

Indeed, as pointed out by a comment above, I challenge anyone here to reduce their carbon footprint by 80% - ok, it's not exactly an impossible demand, but, to all intents and purposes, it might as well be.

Ultimately, such schemes end up just pussyfooting around the main issue, which is how can we transform our society, and maintain our high standard of living, without the use of oil and gas? The answer is nuclear power, on a worldwide scale, and especially in China who are currently building two coal fired power station a week.

Phil said...

Just very quickly, Courtney, you're mistaken about nuclear power. Let's leave aside the objections around safety - I too believe current designs would be a lot more secure than the dinosaurs still linked up to the national grid. The problem for me is:

1) It is not a carbon clean technology. The mining, production, transportation, and storage of uranium is very far from carbon neutral.

2) Uranium stocks are limited. I once read (sorry, haven't got the source) that on present capacity, there's 40 years of commerically viable stocks left. A massive investment programme in nuclear is short termist - resources would be better spent at developing alternate forms of energy, from renewables to nuclear fusion.

ChrisG said...

Although as far as safety goes, I doubt you'd find too many people who've suffered the environmental (and social) consequences of uranium mining willing to support a 'worldwide expansion' of the industry.

Some of the most critical political issues around nuclear have to do with the way it redistributes harms and risks of harms onto those who will not benefit from it and who have not consented to this distribution: namely, future generations and some of the poorest among those alive now, who have no say about what happens to the land on which they live. But these are precisely the problems that do not enter the mainstream discussion.