Will Criminals Exploit Cap and Trade?
By Marshall Auerback, courtesy of New Deal 2.0
Cap and trade promises to be a broken system, easy to exploit.
The story below is certainly not surprising, but it is yet another strong illustration as to why the carbon trading proposals embodied in the Obama Administration’s cap and trade proposals are misguided. Money laundering is very easy when you have an opaque pricing structure with little in the way of regulatory protections. It’s the environmental equivalent of credit default swaps. Worse, the cap and trade system doesn’t work.
The European model introduced a quantity-based (capped) carbon trading system (CTS) with offsets. And, as Bill Mitchell has pointed out, Phase I was a disaster because more permits were issued than there was pollution and the market collapsed from the excess supply of permits. Phase II of the scheme was fatally compromised by heavy lobbying from large polluters who were able to gain under priced pollution permits.
The reality is that Carbon Trading Schemes amount to nothing more than a privatization of the atmosphere. Cap schemes assume that we have a known pollution level that is safe. Are we truly confident about that? Does the science support such an assumption? There may be a point — that we certainly cannot predict with any accuracy — beyond which there is no trade-off between pollution and other goods and services. After that point the planet dies.
If we are serious about climate change and carbon emissions, nuclear power has got to be part of the discussion, as Robert Bryce points out in his seminal new book Power Hungry. In the book, Bryce notes that, “To meet baseload demand in the U.S. requires using fossil fuels, mainly coal, and nuclear power. Nuclear plants, which provide about 20 percent to the grid, now supply 73 percent of the nation’s emissions-free electricity. That’s the equivalent of taking 100 million cars off the road every year.”
But in the meantime, the criminals can have a field day, as the article below illustrates:
Carbon trading a front for money-laundering: experts
Agence France-PresssOrganised crime gangs are using carbon emissions trading schemes as fronts for money-laundering, experts warned on Friday. The experts who attended a meeting of the Asia Pacific Money Laundering Group (APG) said crime syndicates are resorting to new methods to hide their illegal proceeds.
One “issue that we’ve looked at closely is money laundering associated with carbon emissions trading schemes”, APG executive secretary Gordon Hook told a news conference after the five-day meeting.
Hook did not elaborate on how crime syndicates were using carbon emissions trading schemes to launder money.Emissions trading schemes place a limit on the amount of greenhouse gas pollution which companies can produce, forcing heavy polluters to buy credits from companies that pollute less – thereby creating financial incentives to fight global warming.
Read the full article here.
Marshall Auerback is a Senior Fellow at the Roosevelt Institute, and a market analyst and commentator.
[Note: the link in the original article lead to an error, but I think I replaced it with the same article from another site.]
