Isramart : Carbon credits ‘cure could be worse than the disease’

Isramart news:
Carbon credits — to package and trade offsets to greenhouse gas emissions–won’t work, says McGill University economist Christopher Green.

“This cure could be worse than the disease,” says Green, rejecting the argument of Quebec Premier Jean Charest, who wants the Montreal Exchange to be the carbon market for all of Canada.

As an alternative to Charest’s “cap and trade” proposal for carbon credits, Green proposes a carbon tax.

A carbon tax would cost less, he says, and would pay for “an energy-technology revolution,” finding ways to use less carbon, or no carbon for industrial processes, transportation, heating and cooling.

And he laments that the Copenhagen conference this December, the followup to the 1997 Kyoto gathering on climate change, seems bent on setting “absolutely unrealistic targets” for greenhouse gas reduction, relying on the carbon markets he distrusts.

“We are going to waste another decade,” Green said.

In June, the National Assembly adopted Bill 42, which empowers the province to call on industrial emitters to quantify the greenhouse gases they spew out.

By 2012, Quebec will impose caps on the level of greenhouse gases industries can emit, forcing them to turn to the carbon market.

To explain his plan, Charest harkens back to the 1990s, when Canada took the initiative in dealing with sulphur dioxide given off by coal-fired power generators in the United States, creating acid rain.

“The government of Canada and the provinces decided this issue had to be addressed,” Charest said. “Canada went ahead with a cap on sulphur dioxide emissions and did the regional distribution within Canada and didn’t wait for the Americans to act on this issue.” Subsequently, the Americans adopted cap and trade.

This time the Quebec tail wants to wag the Canadian dog, in co-ordination with Ontario, Manitoba and British Columbia.

The four provinces belong to the Western Climate Initiative, started by California Gov. Arnold Schwarzenegger, to push the cap-and-trade agenda.

Six states–Arizona, New Mexico, Utah, Montana, Washington and Oregon–have joined California in using the WCI to sway the U. S. government to cap and trade.

Green rejects the parallel Charest has drawn between cap and trade for climate change and the success of cap and trade in resolving the acid rain problem.

In 2007, sulphur dioxide emissions had fallen 50 per cent from 1980 levels.

“It certainly worked very well,” Green admitted, noting that reducing sulphur dioxide was limited to about 300 coal-fired plants.

“There are too many emitters to put a price on carbon,” Green said, adding that cap and trade “sounds like something neat,” at first glance.

“But the devil is in the details.” With our cars, lawn mowers and gas barbecues, we are all carbon emitters. As well, major industries and Alberta’s oilsands, which consume the equivalent of one barrel of oil to produce three barrels of synthetic crude oil, make a carbon cap-and-trade system more complex.

Green is also worried about the “subprime” potential of carbon offsets in developing countries.

For instance, banks could package the non-tillage of agricultural land, a way to absorb carbon, just as they packaged dubious mortgages in asset-backed commercial paper.

Planting trees, generating wind energy and carbon capture would also generate tradable carbon credits.

But Green wonders whether the United Nations policing process, to vouch for carbon credits in developing countries, would work.

“There could be counterfeit bills in the carbon market,” he said.