Cap and trade: "inefficent and ineffective"

Logo of the United Nation’s Permanent Forum of Indigenous Peoples, which held its seventh session: Climate change, bio-cultural diversity and livelihoods: the stewardship role of indigenous peoples and new challenges from April 21 to 2 May, 2008 in NYC.

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There are human costs to climate change, especially among indigenous peoples, as noted by the United Nations:

Indigenous peoples are among the first to face the direct consequences of climate change, owing to their dependence upon, and close relationship with the environment and its resources. Climate change exacerbates the difficulties already faced by vulnerable indigenous communities, including political and economic marginalization, loss of land and resources, human rights violations, discrimination and unemployment.

Cap and trade strategies to decrease global warming set a maximum for carbon emissions; those that are able to reduce emissions at a low cost sell their extra permits to companies who would rather not make reductions themselves. Often, at least in the experience of the European Union, the permits are bought from companies operating in the undeveloped world.

British researchers such as Larry Lohman at Corner House and Kevin Smith of Transnational Institute, have criticized that system. Smith wrote in the March/April 2008 Resurgence Magazine,

So when the Dutch FACE Foundation plants trees in Kibale national park in Uganda to offset consumer flights, it ignores the fact that the land has been the site of violent evictions in the recent past and is still hotly contested by the people who once lived there. When companies buy carbon credits in the EU Emissions Trading scheme, the cheapness of the supposed emissions reductions is all that is important. But, any offsetting in Southern countries to justify emissions in Northern countries completely bypasses the issue of the extreme disparity in the levels of per capita carbon consumption and assumes that emissions reductions in the South can be treated like another colonial commodity to be extracted and traded.

But cap and trade has deleterious effects on those in the developed world, too. Consider how the policy, if enacted, will prolong our dependence on fossil fuels. And, as a group of environmental and social justice leaders wrote the Sierra Club in January , 2007,

…carbon credits are being generated almost exclusively by local polluters, while communities preserving local forests or defending their lands against oil exploitation, mountaintop removal or coal-fired power plants receive no such credits for their efforts. It is big polluters, after all, who tend to be in the best position to hire carbon consultants, liaise with officials and pay money to get projects registered with the UN carbon market. Worldwide, many communities interviewed were shocked and dismayed to learn that their local corporate bad citizens were getting extra cash from the carbon market.

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Presidential candidates Senators Clinton, Obama and McCain all support cap and trade. Resources for the Future prepared a chart in January of this year that compares the major congressional proposals. All the Senate bills embrace cap and trade. The House has several carbon tax measures which instead would tax all emissions, providing an incentive to reduce emissions.

Over the weekend, Laurie Williams and Allan Zabel, two Oakland, CA EPA attorneys, speaking as private citizens, sent an open letter to every member of Congress indicating that the cap and trade approach, such as espoused in the Lieberman-Warner America’s Climate Security Act of 2007 (S. 2191), would be “inherently inferior to a carbon tax.”

The Wall Street Journal Environmental Capital blog noted yesterday,

But if the muzzle is strapped on, it apparently can also be removed–like when a chance arises to criticize the climate-change bills in Congress that the administration dislikes.

I’m not sure that the Bush Administration favors a carbon tax. November 29 2006, Presidents of 22 Local Unions representing over 10,000 United States Environmental Protection Agency (EPA) environmental engineers, environmental scientists, environmental protection specialists and support staff sent a joint letter to the House Committee on Energy and Commerce and the Senate Committee on Environment and Public Works urging Congress to take immediate action against global warming. The letter also called for an end to censorship of scientists and other specialists on topics of climate change and the effects of air pollution.

In December 2007, the EPA’s chief went against the recommendations of his staff to veto state action to directly regulate greenhouse gases from auto emissions and is delaying development of any federal approach to the problem, apart from voluntary incentives.

Williams and Zabel say the agency’s inability to verify greenhouse gas emissions or effectively police a cap-and-trade market makes for an “inefficient and ineffective strategy” for combating global warming. While tracking may be possible in the industrial sector, “there are many other sectors of the economy from which it will be difficult or impossible to insure accurate reporting.”

  • The determination of the initial cap is “extremely contentious and has resulted in a cap that was significantly inflated above actual emissions”; and EPA is not equipped to enforce market protections that ensure “true reductions, not just paper credits” as exist now in many carbon offset schemes.
  • The cap-and-trade market will confer “tremendous financial incentives to understate actual emissions and overstate the amount of emission reductions or carbon sequestration offsets.”
  • There has been an absence of any technological innovations that have resulted from U.S. emission trading programs, yet technological innovation is seen as the consensus path for long-term greenhouse gas reductions.

The Center for Budget and Policy Priorities has sketched out how to protect low and moderate income consumers under either plan. Supporters of S. 2191, following the lead of Environmental Defense, argue that market forces will curb emissions. I wrote about environmental groups’ critique of the bill on February 13, as well as the Congressional Budget Office report favoring a carbon tax on February 15. They argue that cap and trade amounts to a huge giveaway to polluters with questionable results. Some opponents of the bill, such as James Inhofe (R-OK) argued:

Less than half of all published scientists endorse the global warming theory….[and this measure will] cost the average taxpayer something like 10 times the largest tax increase we have experienced in this country.

In the coming days, I will be covering the bills in Congress, But first tomorrow, I want to tell you about when the World Bank looked at the human costs of its energy investments.

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