forest can absorb differ vastly. ‘Carbon sinks are still incredibly difficult to calculate,’ says Oscar Reyes, a researcher with Carbon Trade Watch who is concerned at the prospect of reduced deforestation being part of the CDM. ‘Forest carbon would become a commodity; there would be less emphasis on discouraging logging or deforestation per se. You also see jatropha plantations for biofuel that are claiming to be forests.’ While 335 CDM projects have been rejected by the UNFCCC, Abbass counters that the vast majority of such schemes are valid. ‘People have very different ideas about what constitutes sustainable development,’ he admits. ‘Some people picture wind farms or cooking stoves. It’s fine that expectations are so high. The scale of the problem is such that people should have high expectations. But Kyoto says countries can use CDM to cover only a part of their commitment under Kyoto. The projects must show that they reduce emissions in a way that is real, measurable and additional – the reduction would not otherwise have occurred.’ Attempts to scale back the abuse of the CDM have included the creation of a gold standard of projects that have a high level of environmental integrity, an initiative pushed by WWF and others.
The ETS and the CDM have also been beset by a succession of scandals. Carbon trading creates a fiendishly complicated paper trail, sometimes handled by undisclosed intermediaries. WWF and FoE believe a number of CDM projects have not been properly verified – a claim that the UNFCCC rejects – but in some instances, pollution permits have merely been recycled, instead of being taken out of the system when they’ve been sold. In March this year, the Hungarian government was accused of ‘double-capping’ when CERs were exchanged in a transaction, even though they had been previously surrendered by Hungarian firms to comply with their emission constraints. ‘It looks dreadful,’ admits Derwent. ‘It’s difficult to disagree with the statement that there seems to be a lot of fraud around the ETS.’
Derwent prefers to call such incidents ‘a terrible run of bad luck’, and points to a lack of co-ordination between the ETS and CDM. Others are less diplomatic, and FoE has consequently lost patience with the way loopholes are manipulated. ‘Some FoE groups held that carbon trading could work if you took out offsets and tightened the cap – that there then wouldn’t be too much harm in allowing trading within business,’ says Clifton. ‘But in the past couple of years, we’ve seen that this theoretical market doesn’t happen in practice.’
Greenhouse-gas emissions from EU businesses participating in the EU Emissions Trading System (million tonnes; 2009) Germany: 428.2 UK: 231.9 Poland: 190.9 Italy: 184.8 Spain: 136.9 France: 111.1 Greece: 63.6 Romania: 48.6 Belgium: 46.2 Finland: 34.2 Bulgaria: 32.0 Austria: 27.3 Denmark: 25.5 Sweden: 17.5 Estonia: 10.3 Latvia: 2.5 Malta: 1.9
harsh choices Yet the problem with emissions trading, says Derwent, is not that it doesn’t work, but that it has the potential to work all too well – and that it shines a light on the harsh choices that humanity must confront in the face of climate change. Describing cap and trade as ‘a cold bath’ delivering a shock to the economic system, he adds: ‘The problems with cap and trade are entirely political. Cap and trade looks like being the way that we are most likely to address the cost of electricity and energy-intensive manufacturing. That’s what has made it the focus of every political lobby you can think of. The problem is not about cap and trade, but everything to do with imposing costs on carbon – that’s why it was objected to so ferociously.
‘At the moment, a lot of the world is in denial about climate change,’ he continues. ‘Cap and trade is caught right in the firing line of this anger and denial. But when we get a succession of extremely unpleasant physical catastrophes, in which denials that they are linked to climate change sound increasingly hollow – people will start to come around.’
Delbeke also suspects that the complaints coming from industry suggest that carbon trading may, belatedly, be starting to bite. ‘The decision to auction permits, and for them to be governed by benchmarks from the ten per cent lowest emitters, is causing some emotion within industry,’ he says. Emissions trading, he
48 www.geographical.co.uk december 2010