No to carbon trading: make the polluters pay

November 22, 2006

Glenn Albrecht correctly identifies coal as the biggest contributor to greenhouse gases. But his support for a type of carbon credit scheme, whereby the rest of the world pays Australia not to mine its coal, implies confidence that the market will correct itself. However, the decisions made over the last 100 years of capitalism are precisely what has led to today's climate crisis.

Getting dirty industry to clean up its act can and has to be a partial solution. But carbon trading schemes won't achieve that. In fact, carbon credits, or tradeable pollution rights, entrench "business as usual" for the dirtiest industries. Giving corporations the "right to pollute", or the ability to buy pollution rights, might encourage some efficiencies, but it will not force the radical departure from coal and oil that we need.

According to Dick Nichols, author of Environment, Capitalism and Socialism (Resistance Books, 1999), in theory a market-based mechanism could have an impact — if the total quota is small enough and the price of buying extra quotas (i.e. the right to pollute) is high enough. "However", he adds, "the difficulties encountered with Kyoto and in establishing a Europe-wide system of tradeable quotas reveal a huge gap between the theory and practice.

"In the European case, the total level of tradeable carbon quotas has been reduced by harsh pressure from business. It has now reached the point where it is having a negligible impact on greenhouse gas emissions."

Carbon trading — a critical conversation on climate change, privatisation and power, released on October 4 by the Sweden's Dag Hammarskjold Foundation, the international Durban Group for Climate Justice and the Britain-based NGO The Corner House, argues that carbon trading has actually slowed the social and technological change needed to cope with global warming by unnecessarily prolonging the world's dependence on oil, coal and gas ().

It argues that carbon trading "dispossesses ordinary people in the South of their lands and futures without resulting in appreciable progress toward alternative energy systems". Editor Larry Lohmann believes: "The huge blocks of tradeable emissions rights handed out to Northern polluters allow them to profit from business as usual, yet the market is not promoting alternative energy in the South, either."

This is because most of the carbon credits being sold to industrialised countries come from polluting projects that do nothing to wean the world off fossil fuels, such as schemes that burn methane from coalmines or waste dumps. The bulk of fossil fuels must be left in the ground if climate chaos is to be avoided, the book warns.

Jutta Kill of Sinks Watch argues in the book that carbon trading "impedes the further development of already-existing positive approaches such as conventional regulation, public investment in energy alternatives, taxes, and movements against subsidies for fossil fuel extraction". The authors conclude that carbon trading schemes "cannot eliminate the need for hard decisions and hard political organising".

In the United States, where carbon trading schemes have been in place for years, there have been some efficiency gains in some industries. But there has been no fundamental change in the carbon-producing industries due to their purchase of "off-site carbon reduction schemes", such as investing in carbon dioxide-absorbing tree plantations somewhere else on the planet.

The costs of any carbon trading schemes are also more likely to be passed on to the consumer. There will be little choice for the millions of homes and businesses connected to the coal-powered electricity grids in NSW, Victoria and Queensland but to shoulder this "environmental levy".

Environmentalists' primary concern should not be to guarantee the "rights" of corporations to pollute, but to push for the necessary transformation to clean fuels. This means putting society's needs ahead of corporations' drive for profits.

Coal is the most carbon-intensive, or dirty, fossil fuel. It is also the most abundant. According to the Worldwatch Institute, coal releases 29% more carbon per unit of energy than oil and 80% more than natural gas, and it accounts for 43% of annual global carbon emissions — approximately 2.7 billion tons.

The Australian Coal Association estimated that in 2005 Australia's coal industry produced 30% of the world's total coal, making $24.5 billion for mining companies and employing around 25,000 people. Using the same economic modelling as the UK Stern report, which attempted to put a cost on the impact of climate chaos, the November 2 Sydney Morning Herald calculated that "Australia is exporting at least $61.5 billion worth of climate change every year in the form of coal shipments", a figure that is set to rise with the push for new mines and bigger coal loaders.

There is no question that coal needs to be phased out. This can only sensibly be done by reducing overall energy consumption while phasing in renewable energy systems, and retraining and redeploying workers who have relied on the coal industry.

The Age's analysis of the federal budget found that polluters will receive $8 billion in subsidies in the 2006-07 financial year. Just $280 million was allocated to activities that directly reduce emissions. Compensation and retraining for displaced workers is a much better use of our tax dollars than paying carbon credits to dirty industries.

Cuba, an impoverished country suffering under a punishing US economic embargo, has shown the rest of the world how it is possible to make this rapid transition. This year, Cubans have been taking part in energy conservation programs as part of the "Year of the Energy Revolution". Thousands of social workers have been visiting homes to compile energy inventories of appliances, educating people on energy efficiency and placing people on building priority lists.

Cuba is also decentralising its power system, and supplementing regional plants with solar and wind power. There has been a proliferation of urban gardens and rural organic farms, bringing food closer to where it is needed and lessening the reliance on fossil-fuel transport infrastructure.

This is the level of national and local organising required if we are to force the radical change needed to avert a calamitous build-up of greenhouse gases.

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