Surplus carbon credits - consumer subsidise the polluters
This is not how carbon trading is supposed to work. Roger Harrabin has a new column on the BBC news site and his first piece looks at alleged weaknesses and distortions in the nascent market for carbon credits - the EU emissions trading scheme
Australia delays carbon trading because of recession
Here is an interesting example of environmental policy coming into conflict with short run macroeconomic priorities. The Financial Times reports that “In an effort to ease the strain on an economy now on the edge of recession, Prime Minister Kevin Rudd said the government would delay the start of the world’s most sweeping cap and trade scheme outside of Europe until mid-2011, but still aimed to push the emissions trading laws through parliament this year.” The government has come under huge pressure from organised business who have argued that in a recession, imposing extra costs through a carbon allowance scheme could damage profits, jobs and investment in the short run.
And given the volatility of carbon prices within the EU emissions trading scheme, it worth noting that Mr Rudd has said there would be a fixed carbon price within the embryonic Australian scheme for 1 year to July 2012. According to this BBC report, “Australia has the highest per capita emissions in the developed world and coal is its biggest export.”
Global airlines nudge towards carbon emissions trading
In 2012 European airlines are scheduled to be included in the carbon emissions trading scheme for the first time. Aviation is a industry responsible for 650 million tonnes of CO2 annually - around two percent of global greenhouse gas pollution but this share is expected to rise in the years ahead and the industry has been under sustained pressure from stakeholders including the EU Commission and green pressure groups to do something to tackle carbon emissions.
The airlines have complained about being included in the EU scheme - they complain that participation will damage their competitiveness during a difficult time for airline businesses. Swiss International Airlines chief executive Christoph Franz has argued that including airlines in the EU-ETS could actually lead to more greenhouse gas emissions as airlines sought to fly around EU airspace.
But without signs of an active commitment to reducing their emissions, the industry may well find that it is subject to even tougher regulation in the years ahead and/or a specific pollution tax on aviation fuel as a means of ‘making the polluter pay’.
This week four of the world’s biggest airlines have supported a global scheme to curb carbon emissions - they are Air France/KLM, British Airways, Cathay Pacific, Virgin Atlantic together with the under-fire airport operator BAA.
The Aviation Global Deal Group is pushing for a global cap on aviation emissions to take effect in 2013 when the new climate deal to replace the Kyoto Protocol must be in place. A UN body would be charged with auctioning the C02 allowances with some of the revenue earmarked for financing lower carbon investments in developing countries and some to help fund development of sustainable second-generation biofuels for use in aviation.
Watch this airspace .... this is a really important aspect of the climate change policy domain within the European Union.
Economic slump cuts EU carbon emissions
First the good news - greenhouse-gas emissions from heavy industry and utilities in the European Union fell 6% last year raising hopes that the EU will be able to meet and possible exceed their targets for cutting emissions as part of the Kyoto protocol. Cement factories, steel works and power stations are among over 10,000 industrial installations that are covered by the EU carbon emissions trading scheme which was launched in January 2005.
But how much of this welcome decline in emissions is down to the working of the carbon market is open to question. The price of carbon permits has slumped as the EU economy has nose dived into a deep recession. Indeed the price for a 2009 carbon permit is currently hovering just above Euro 12 a tonne - hardly the short of price that will give businesses the incentive to spend big sums of money on adoption of low-carbon technologies in factories and power plants. Putting a price on carbon is designed to change behaviour - but the price needs to make a difference and be sustained over a long enough period of time.
UK emissions decreased 6.8% to 254 million tonnes, while German emissions dropped 3.2% to 457 million tonnes - German industry is suffering greatly from the collapse in world trade and decline in demand for manufactured goods and capital equipment.
A quick extra point - under Phase 2 of the EU ETS, up to 10 per cent of carbon emission allocations can be auctioned off. The UK Debt Management Office has this responsibility for the UK and this section of their web site might be a useful port of call for teachers and students wanting to know more.
Coal and CO2 emissions - Poland
Almost all of Poland’s power comes from coal and much of the cheap brown coal is very expensive in terms of CO2 emissions.
This level of dependency on a dirty fossil fuel has been headlined this week as the climate change conference in Poland confronts how best to cut emissions. The BBC environment correspondent David Shukman has been at Poland’s largest mine in Belchatow and his report provides a good resource on the issue of how best to encourage some of Europe’s emerging market economies to lower their emissions.
Back to the cave or a brave new world?
I popped over to a meeting of Eton’s Geography Society tonight to hear a talk from Mike Mason, the climate change entrepreneur and founder of Climate Care the carbon offsetting business which has recently been swallowed up by JP Morgan Chase to form part of their JPMorgan’s Environmental Markets group.
read more...»
Windfall gains for the biggest polluters
The Guardian has been critical of the EU carbon trading system in the past and a new report available here claims that some of Britain’s biggest polluters are set to reap a windfall gain because of an over-allocation of C02 permits in the first phase of the EU-ETS. The early fault-lines in the EU_ETS system are tantamount to government failure. The Guardian’s special reports on emissions trading provide a good point of reference for students and teachers.
Drax feels the heat of rising carbon prices
It is impossible to miss - the giant Drax coal-fired power station that straddles the A1 near Ferrybridge in Yorkshire and dominates the landscape for miles around is the largest in Western Europe and supplies about 7 per cent of the UK’s electricity. Of course generating electricity from coal necessitates plenty of carbon emissions - figures show that every six months Drax creates nearly 10 million tonnes of CO2 and, under the terms of the EU’s carbon trading scheme, it must not only pay for coal but also purchase emission allowances.
It has just announced that the combined cost of coal and CO2 permits has nearly doubled over the last year from £222m to £413m.
read more...»Tim Harford on carbon negativity
Too good a post not to mention. We should never underestimate the power of innovative thinking and ideas when approaching some of the most intractable issues of our age. For me, what matters is (pardon the pun) creating the right climate for innovation to flourish - incentives matter enormously when it comes to developing ideas to reduce CO2 emissions. Can open source be a catalyst for effective and viable solutions?
Oil sands - an enviromental catastrophe?
“The Caterpillar 797B heavy hauler is the world’s biggest truck. It’s taller than a four-storey house, as wide as a tennis court and it removes nearly 35,000 tonnes of oily sand a day from a deep open cast mine in northern Alberta in western Canada.”
John Vidal heads to Canada to ask some tough questions of the oil industry and its intentions in northern Alberta in this Guardian video report. This video is backed up by this report. Some of the photos of the plant and equipment being used are truly stunning - I will certainly be using this when I teach about economies of scale next autumn. The size of the oil sands exploration is astounding and the economic boom hitting this northern wilderness in places such as Fort McMurray beggars belief. But so too are the environmental consequences of this black gold rush
“The downside is ecological devastation and soaring greenhouse gas emissions on a scale that is beginning to alarm Canadians and other western countries trying to reduce the intensity of their carbon economies to counter climate change. Canada, alone, of developed countries, is expecting to increase emissions for 30 years and ignore its commitments to Kyoto.”
Peter Day looked at this issue a couple of years ago and his In Business report is still available on the BBC web site
Image from creative commons licence on Flickr.com
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