Trading In Pollution - Turning Pollution Into A Commodity

Under the Kyoto a program is in place known as the carbon development mechanism or CDM. It sets up a mechanism for developed nations to trade their carbon emissions by investing in less polluting development in in developing nations. In this way, the nations contributing most heavily to greenhouse gases can meet their Kyoto reduction targets. CDM has been described as "A Market Approach to the Environmental Crisis.." This concept was reaffirmed at the most recent meetings of the Kyoto Protocol and being implemented by the European Union.

The idea of "trading" is not new.

Carbon trading allows industries in developed countries to off-set their emissions of carbon dioxide by investing in reforestation and clean energy projects in developing countries.Future Harvest

Carbon trading (or clean development) was part of the 1995 Kyoto Protocol. It has evolved since then into a "market of its own. Private companies (for example, COe2) are moving in to shape the hub of this new market place.

Under the trading mechanism, a company receives a pollution allotment. They can either operate within their limits, or cut their emissions (and have a credit which they may then sell to another company), or they may sponsor projects to reduce emissions somewhere else. As is noted in the January 2005 NewScientist:

While the system was initially designed only for industrial installations in Europe, the US-based corporation DuPont says it believes the EU's trading system could become the hub of a global carbon trading market. Countries outside the EU, such as Norway, have already said they would like to join and issue their companies with emissions allocations that could, in future, be traded on the EU market.

Maybe it is just that I am not a good enough capitalist to embrace a market in pollution, but I have a number of conceptual problems with the whole issue.

First, while greenhouse gases effect globally regardless of where they are emitted, the direct effect is more local. The people living next to a chemical plant are going to directly feel the impact of that even if the company has a trade 10,000 miles away that "reduces" its overall emissions.

Second, trades are not necessarily environmentally equivalent - let's say the trade in trees. You have (let's say) Chiquita who is wanting to cut down portions of a rainforest to expand a banana plantation. For every tree they cut for the plantation, they plant a tree in Chicago. A rainforest has been decimated in one area, and replaced by decorative flowering plums in the median in Chicago. Little trees for big trees. Habitat destruction in one area is replaced by a greener view in another.

Third, development itself can become a marketable resource. If you have a nation that is already desperately poor or exploited and abandoned, cash could be raised by selling your nation's emission "rights."

Fourth is the issue of whether such strategies ultimately reduce the level of emissions. If there is "saving" in one area matched by "spending" in another, the overall level of emissions does not necessarily drop. Measuring the equivalencies would also seem difficult. For example, do 500 trees scattered across Chicago have the same CO2 absorption capacity of 500 old growth trees in a rainforest?

Lastly, are the impacts on human populations - particularly in the developing world. These are nations that have not reaped the benefits of the industrialized world. Indeed, they have been the fodder for that development. They may get some "good" projects out of the trades, or they may be victims of it. Modern industry has become transnational (in part) because of the looser environmental restrictions outside the industrialized nations.

Trading has also allowed polluting industries to present a "green" image for shareholders and consumers. In the US, these trades are rarely talked about directly. Instead, they are promoted by corporations as part of their commitment to the environment.

Well, I guess we wait and see, what evolves in this new "market place," and whether the conceptual base of capitalism can save the world from greenhouse gases. Somehow it seems a poor model to use. Capitalism is based on private ownership and accumulation. It concentrates wealth and power. It is structured to be unequal. Taking that foundation to an arena that is aimed at consuming less and polluting less seems counter-logical.

Articles of Interest
10/08/02 Future Harvest, Carbon Trading, Climate Change, and the Kyoto Protocol

Alberta Cattle Feeders Association, Carbon Sequestration and Trading Implications for Canadian Agriculture

11/10/00 BBC, Carbon-trading in Bolivia

January 2005, NewScientist, European trading in carbon-emission permits begins

5/13/05 Connonr, Independent/UK, Why global warming puts bib on the menu

5/13/05 Balch, Guardian/UK, Carbon trade-off

5/11/05 Byravan & Rajan, IHT, Before the Flood

5/11/05 Mark, AlterNet, Harvesting Chaos

Posted by rowan at May 16, 2005 5:35 AM | TrackBack | [eMail this article!] |