Carbon trading

Nigel who? I was flummoxed to hear that a food writer turned chef is the author of a treatise against global warming and climate change. While preparing her delectable dishes, she must have cooked up something really big, mentally speaking. But upon closer inspection, I mixed up the pretty chef on cable TV, Nigella Lawson, with Nigel Lawson, the author who once served under Margaret Thatcher. Two different persons obviously.

Nigel Lawson, or Lord Lawson of Blaby is the antithesis of Al Gore. I’m not sure if they’ve had a face off over their pet subject but if they do a chimney stack ought to be fitted in the venue. Imagine the smoke emission from each of them!

Apart from offering a counter-argument to the “prevailing orthodoxy”, Lawson in his book An Appeal to Reason: A Cool Look at Global Warming, provides a peek into the elaborate and controversial scheme of carbon trading or the carbon cap and trade schemes. This, not the counter-argument, piqued my interest.

According to Lawson, the only substantial carbon trading system in operation today (“outside the EU, an international emissions agreement is in any event not on the cards”) is the European Union Emissions Trading Scheme, which is linked to the United Nations-administered Clean Development Mechanism set up under the Kyoto agreement. The idea behind CDM, according to Lawson, is that if a developed country with a Kyoto (carbon emission) target finds it too difficult or too costly to reduce its emissions, it can buy ‘certified emissions reductions’ (CERs) from developing countries instead. Lawson questions the aptness and real impact of CERs on climate change mitigation/reduction of greenhouse gases by focusing on China which he says currently dominates the CDM market. The production of chlorofluorocarbons (CFCs), greenhouse gases that deplete the ozone, is meant to be phased out under the Montreal Protocol, which Europe and the US have done. China, according to Lawson, has been much slower. In the CDM market, Chinese CFC producers sell ‘certified emissions reductions’ gained from reducing their CFC output below what it might otherwise have been. The revenue flow from the transaction is purportedly huge that a special tax was imposed on it and the proceeds used to help finance China’s massive coal-fired power stations. Under another mechanism, Joint Implementation (JI), developing countries with Kyoto targets which they more than fulfil can sell the resulting ‘carbon credits’, known as ‘hot air’ in the trade (carbon trading like stock trading has developed its own language), to developed countries who have difficulty achieving their Kyoto targets, in effect relieving developed countries’ need to reduce by reducing their own emissions.

Lawson also cites the carbon offsetting scheme practised by the private sector, which he says is a creation of politicians and scientists. Corporation can promote themselves as ‘carbon neutral’ by claiming to have purchased ‘offsets’ in the form of either emissions reductions elsewhere or of carbon absorption through, usually, tree planting. Individuals who want to salve their consciences could do too by offsetting their ‘carbon footprint’ whenever they, say, fly by, usually, planting trees.

The author frequently refers to the schemes as a perfectly legal scam and carbon offsetting as a victimless scam. He says that it does infinitely less harm to the economy than a genuine reduction in emissions is likely to cause. Moreover, “if you create a system in which there is a financial reward for reducing emissions but no penalty for increasing them, businessmen are incentivised to generate increased emissions in order to collect the money from subsequently reducing them.”

On the other hand, Lawson is one with the few proponents of doing away with the cap-and-trade schemes and instead tax carbon across the board as the genuine market solution and remedy for carbon emission reduction.

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