FRIENDS OF THE EARTH, NOT OF EMISSIONS TRADING

Carbon Trading: Does It Really Reduce Emissions?
Roger Harrabin, November 4, 2009 (BBC News)
and
Re-thinking the World’s Largest New Derivatives Market
September 22 and November 2, 2009 (Friends of the Earth)

"Carbon trading could trigger a financial collapse like the sub-prime loans crisis, according to [Subprime Carbon? Re-thinking the world’s largest new derivatives market] from the green group Friends of the Earth (FoE)… the latest in a series of assaults against carbon trading as the Copenhagen climate conference looms.

"The carbon trade allows dirty industries in rich countries to offset emissions targets by paying for clean development projects in poor countries…[a trade] which could reach trillions of dollars in the next few decades…But FoE says most trades are done not by polluting industries, but by speculative traders packaging carbon credits into complex financial products similar to those which triggered the sub-prime mortgage crash…[and] warns that this could lead to a future crisis of sub-prime carbon…"

Despite a tempestuous economy and an unexpected oversupply of allowances due to decreased power demand, the EU's emissions trading system has held surprisingly steady and foresees higher prices in the future. (click to enlarge)

"The allegation was instantly rejected by Patrick Birley from the European Climate Exchange, who accused Friends of the Earth of demonstrating a loose grasp of financial markets by relating carbon trading to complex sub-prime trading…Friends of the Earth's rhetoric in this case might indeed be loose - but it is inarguable that confidence in carbon trading has been eroded after investigations showed that a substantial proportion of clean energy projects in developing countries funded by carbon finance had benefited business but not the environment…

"A recent report from Greenpeace focused on what it regards as a carbon trading failure in the Noel Kempff forestry project in Bolivia…The Bolivian government is now fervently anti-trading, insisting that rich nations should take responsibility for all their own emissions themselves…American Breakthrough Institute studies of carbon trading…concluded that a straight carbon tax (if ever it could be politically achieved) would be much more effective."

From FriendsoftheEarthUS via YouTube

"The British government agrees that rich nations must make big emissions cuts - but insists emissions trading still has a cost-effective part to play…Indeed, the EU's promise of 30% emissions cuts if other nations agree tough targets is based on carbon trading…The US position relies heavily on carbon trading too - although right-wingers in the Senate insist it cannot be trusted…

"…[I]t is eminently clear that in theory it is much, much more efficient to provide clean infrastructure in a fast-emerging economy [like China] than in our sclerotic rich countries with so much of their energy infrastructure, factories and homes already set in concrete…But it will not work if people cannot trust the trade…This will have to be bolted down very firmly if agreement is to be reached on it in Copenhagen…FoE is by no means alone in its scepticism."