Carbon markets are struggling. There is a huge glut of carbon credits and pollution allowances. Carbon credits created under the clean development mechanism are trading at €0.07 on the EU emissions trading system (ETS).
And the UNFCCC’s failure to impose meaningful emissions reductions internationally means that none of this is likely to change any time soon.
Meanwhile, global emissions continue to soar and the temperature continues to go up. Last month was the hottest September since records began.
You wouldn’t know any of that from an event that took place on the sidelines of the UN Climate Summit in New York. Billed as a “High-Level Carbon Pricing Dialogue”, the event featured Environment Ministers from Norway, Quebec, the Republic of Korea, and Germany, all gushing about carbon markets as the solution to climate change.
The event was organised by the International Carbon Action Partnership (ICAP) and the International Emissions Trading Association (IETA).
IETA was created in 1999 to “establish a functional international framework for trading in greenhouse gas emission reductions”. Twelve years later, ICAP was set up to “contribute to the global effort to support ETS development worldwide with view to creating a well-functioning global carbon market”.
ICAP has posted a video about the New York event on its website. It features a series of upbeat comments about how wonderful carbon markets are. Here’s a selection.
Christiana Figueres, the Executive Secretary of the UNFCCC was there. She seems to think that sleep deprivation will help:
“If anybody was intending to sleep between now and Paris, forget it. You can sleep in January 2016. This is it. If ever you thought that you are being called to a cause, you have a lot of the knowledge of what we are going to do with this very powerful instrument. This is it.”
Predictably, Rachel Kyte from the World Bank was there, looking to keep the World Bank’s carbon desks up and running.
“When you ask yourself what’s the least number of most important things that have to be done, you come to pricing pretty quickly… If there is no carbon price, carbon prices, carbon pricing systems, right, then everything else just becomes much harder, slower, it’s a work-around.”
Actually, the most important thing that has to be done involves leaving 80% of fossil fuels below the ground. Putting a price on carbon is a work-around.
Tine Sundtoft, Norway’s Climate and Environment Minister, seems to be under the illusion that carbon trading is a way of making the polluter pay:
“The simple principle is that emitters should pay for the cost of their pollution. From California to China, governments and authorities around the world are implementing emissions trading systems.”
A recent report from Sandbag includes a top ten list of “Fatcats” that are benefiting from the surplus of pollution permits on the EU ETS. The top of the list is Arcelor-Mittal, which because of its huge surplus won’t need to buy any pollution permits until 2024. Currently there are more than 2.4 billion surplus CO2 allowances on the market, according to Sandbag.
The oil and gas industry is never far away at these carbon trading shindigs.
Jorma Ollila, Chairman of Shell, thinks all we need is a PR exercise:
“We simply need a lot of hard work in making the benefits well known to the broad public as well as to the governments and the civil society.”
And Brad Neff, of Pacific Gas and Electricity Company, notes that even if there are any costs with a carbon market, it won’t be the industry that ends up paying:
“To grow a carbon market, businesses have to embrace the impact that they are having on the environment, and not be afraid to send that price signal to their customers.”
Perhaps fortunately, Neff doesn’t explain how he wants businesses to “embrace” the devastation they are wreaking on the planet. Whatever he means by that, it really doesn’t sound like polluter pays, does it?
Environmental Defense Fund send along its Vice-President, Nathaniel Keohane. In 2000, EDF set up a partnership with polluting corporations to address climate change. One of the corporations was Shell. “Market-based solutions are the most effective way of addressing environmental challenges,” according to Shell.
That argument makes no sense any more. (Not that it ever did.) Too much time has passed during which greenhouse gas emissions have continued to increase. Nevertheless, EDF’s Keohane sees no need to do anything drastic:
“Innovation is not just about big shiny new technologies, it’s also about incremental improvements that together add up. And that’s where a carbon price can make a huge difference, again by putting those decisions about how to cut emissions in the hands of the entrepreneurs, and the innovators, and the businesses that deal with it every day.”
This, no doubt, is just what EDF’s corporate partners want to hear. And that’s the whole point of carbon trading. Giving the appearance of doing something, while allowing the polluters to continue polluting.