diangrist’s Recent Comments

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  Carbon tax

  Thanks loads for this important article.

  For about 4 years I have considered a carbon tax the only way to go, and the cap-and-trade approach fundamentally unsound.  That was long before the availability of abundant evidence that cap-and-trade just doesn't work, and the recognition that it is based on the fallacy that corporations will in fact reduce CO2 emissions rather than find loop-holes (legitimate or illegitimate) to dodge change.

  But we may have a problem with RGGI, an organization of at least 8 NE states that has formally adopted a cap-and-trade scheme to reduce CO2 emissions*.

  The precedent RGGI has established may already have put us on the slippery slope. We may be sliding rapidly away from common sense and honesty.

  Given these concerns, I was very  heartened to find 5 Congress-people from RGGI states (NY, Conn, and Mass)who support the tax, and the others in Congress who understand the cap-and-trade problems and the need for a tax.

  Thanks for reporting a very important development that seems to have been entirely ignored by mainstream media.

  * The last time I checked, the RGGI standards were so lax they can't have any effect at all, except to provide PR cover for politicians.On Hill briefing tries to stir support for a carbon tax posted 11 months, 2 weeks ago 2 Responses

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  "My Kind of Down" and the CCX

  I fear that some very serious issues are obscured by your article, and by most of the PR issued by the Chicago Climate Exchange and its members.

  The reasons CCX emission "credits" are so cheap is that they are worth nearly nothing, except for PR purposes.  According to one knowledgeable source I contacted there are 20 sellers to every buyer on the CCX.

  At some point the US will have a cap and trade system like the EU has and all Kyoto Annex I countries will have by 2008.  It will follow the guidelines for certification of credits that were pioneered in the US Acid rain program for SO2 and NOx.  

  In a cap-and-trade system, every plant that emits fossil fuel CO2 into the atmosphere will be given permission to emit a specific amount of CO2 each year, and will be liable for fines if it emits more than its allocated amount, unless it can acquire certified emission credits to make up the difference.  These certified credits are worth real money and that is why their auction values can be large.  (SO2 emission credits are  now well over $2000 per ton.   CO2 emission credits against required renewable energy sourcing by by electric utilities in Connecticut went from nothing to over $40 per ton when the legislation came into effect).  

  But there are always rules that credits must meet to be certifiable, and tradable and--in effect, worth money.  Kyoto countries have adapted the rules that originated for acid rain contributors in the US.  

  The most important of these rules is that the CO2 reduction must result from activities that otherwise wouldn't be occurring in the absence of the cap-and-trade system.   This is called the "additionality" rule in some places, and a "surplus" rule in others.   It greatly restricts the kind of credit eligible for exchange against an unmet allocation target, but many companies ignore the issue.  I fear the Chicago Climate Exchange does, too, but it is hard to tell, as their transactions are the opposite of transparent.

  Many American corporations believe that they can get credit against greenhouse gas emissions by growing trees or through other agricultural activities that remove CO2 from the atmosphere and convert it to woody tissue.  This seems to offer a good way to dodge having to actually reduce fossil CO2 emissions, so they are happy to buy "credits"  for the CO2-removing activities of  forests and farms.  But compliance rules that include additionality all say that no credit can be given for anything that would happen anyway.  This rules out all siviculture or other forms of agriculture, all existing parks, and conservation areas, and anything you are required by law to do, or things companies and farmers were doing before the greenhouse gas issues came up.    This makes sense, because there is no point in handing out money for things that will occur even if you don't give away the money.

  Another serious problem the CCX doesn't appear to bother about is "leakage".    This is a major problem in countries like Brazil where a landowner who logs some of his land offers to preserve a section of the forest, and sells its carbon-sequestering activities as an emission reduction credit.  The sale goes through, and the landowner stops all logging in the section involved, but simply moves his logging to another part of the forest,  and all the "savings"  of CO2 stored in one part of the rainforest leaks out into the atmosphere from another part.

  This example assumes that the landowner actually does stop  logging on the land reserved for carbon sequestration.  Without costly monitoring and regular inspections, one cannot be sure any contract involving anything going on in the Brazilian rain forest is being fulfilled.  With costly monitoring and inspections, the  credits would be worth a whole lot more than $1.50 per ton.

  I think GRIST could educate us all on the issues involved here.  They are just the top of the iceberg.  More fundamental questions concern the difference between the compliance rules that the Annex II countries like Brazil want for the Kyoto Clean Development Mechanism, whereby a European corporation can obtain credit against Kyoto allocations limit by doing something in Brazil or in some other Annex II country.  The rules are established by committees composed mostly of representatives of the countries where CDM projects would occur.  The rules are written to attract projects, not to reduce CO2 emissions and some don't make sense from the global warming perspective.  Some provide loopholes for projects of questionable value for carbon-sequestering.  For example, they include short-rotation siviculture, which does not remove CO2 from the atmosphere, but only recycles it on a 20- to 30-yr cycle.  To compensate for fossil fuel greenhouse gas emissions, the sequestration should last as long as the fossil fuel CO2 remains in the atmosphere.  Calculating this is tricky, and the resulting numbers depend on policy choices, but we are talking about 100 to 200 years for CO2, not 20 to 30, and not simple farming.

  In some jurisdictions, there is or will be a limit on the maximum amount of emissions above allocations that can be compensated for by any kind of certified credit.

  The way the rules are shaping up in the 9 NE state region called RGGI or in California, each jurisdiction will have a registry where CO2 sequestration projects that could provide compliance credits are registered, as are all the greenhouse gas exchanging projects by regulated corporations.  A brief examination of the stringent rules and requirements of the California Climate Registry shows that these are going to be pretty demanding.

  When the CCX started, everything was voluntary.  Members submitted whatever they chose as projects, and no independent auditing, or certification was required, nor was there at the beginning any requirement that the applicant even inventory all the CO2 or greenhouse gas exchanges with the atmosphere it had jurisdiction over. In contrast, utilities registering in California have to list everything, including indirect emissions, and also inventory all the GHG emissions of all elements of the company.  Thus, if an electric utility sells natural gas, all the greenhouse gas emissions of the natural gas division have to be inventoried, too.

  I asked the CCX about certification and compliance rules recently, and did not get a satisfactory answer.  Maybe you could get one, and follow it up to see whether this whole CCX effort is mainly PR greenwash.

  diangrist
  On Chicago Climate Exchange paves the way for U.S. emissions trading posted 4 years, 5 months ago 1 Response