The Story of Cap and Trade

A new film, The Story of Cap and Trade, released last week on the internet illustrates the profit motives and flawed logic that are behind carbon trading schemes. In ten minutes viewers are given a simple tour of the flawed insight behind this approach, and why we must all work to oppose it.

It's amazing that as we struggle to get our hands around the current financial crisis, the recipes and schemes that precipitated the global economic dow nturn are being championed in Copenhagen this week as a core strategy to tackle climate change.

Along with the trading of stocks, bonds, mortgages and other financial instruments, the world's financial leaders want to bring carbon to the trading floor. They can't wait to get their hands on the transaction fees and other rewards from the estimated $3 trillion global market for pollution permits, forest management, afforestation programss and other carbon--offset schemes that would materialize if climate change negotiators give them the nod.

The theory behind this looming market-based monster is that if the world can agree on caps for the total amount of carbon we release into the atmosphere, carbon emitters can then work within the market to buy and sell emission credits that equal the total emissions below the caps. Taken together the solution is known as Cap and Trade.

While few in the world disagree with the need to establish caps on emissions, there are a host of reasons, especially here in Thailand, to oppose the institutionalization of carbon markets.

1) Carbon emitters, especially in developed countries, will be rewarded for their planet-destroying behavior with valuable, tradable carbon credits to add to their assets. As the atmosphere is a public good, it's the public sector that should be controlling these assets.

2) Under a trading scheme known as Reduced Emissions from Degradation and Deforestation (REDD), management of much of our forests lands could be put in the hands of carbon traders, further reducing forest peoples' rights. Moreover, the uncertainty surrounding how to accurately calculate forests' contribution to C02 absorption renders the use of such scheme as part of the mathematical solution quite dangerous.

3) For any chance of success, such schemes require strong oversight, verification and regulation, all of which have proven lacking in the current financial markets. Even the limited carbon trading operating now under the United Nation's Clean Development Mechanism (CDM) has been wrought with verification and valuation problems.

4) Thailand's own involvement in carbon markets to date illustrates that profit, not carbon reductions, is the government's priority. This was made clear in a review of the country's most celebrated biogas CDM projects. Such misguided priorities are far from the exception around the world, especially in developing countries.

While we may be able to recover from the current economic problems caused by poorly regulated financial markets, we don't have time to experiment with cutting carbon emissions. We certainly don't want to hand the fate of the planet over to the same parties that are responsible for perpetuating the climate crisis and their compatriots that have recently brought down the world economy.