European Tribune - Community, Politics & Progress.

ETS: Emission Impossible

by ChrisCook
Mon Aug 11th, 2008 at 08:05:57 AM EST

Mark Bell, an Oxford PPE graduate and until recently a policy wonk with the UK "Liberal" Think Tank "Centre Forum" has just published a paper on

Improving the EU Emissions Trading Scheme

and of course we have this article in the "Guardian" today as a result....

Europe's vital step to make carbon markets work

This extract says it all

The European Central Bank removed governments' ability to set interest rates, and therefore to pursue short term political gains at the cost of inflation. The running of Europe's carbon market should be similarly depoliticised.
A central bank-type institution could provide both the political independence and the institutional credibility to reassure investors that a high carbon price will be sustained.
This institution - an emissions trading authority - would distribute national emissions caps to the member states and monitor emissions reductions.
These caps would be set at the level the authority deemed necessary to meet a long term politically defined target (such as a particular percentage cut in emissions by 2050).
This would be similar to the relationship between central banks and governments, with the bank setting interest rates to meet an inflation target.

I posted a comment in response to Bell's article

The measure of emissions trading as a concept was a comment a few years ago at the annual futures market conference in London
"If you want to keep a donkey healthy you don't regulate what comes out of it: you regulate what goes in".
The point is that the value of carbon in CO2 is intrinsically worthless, so that the only way to give it a value in exchange is through a political act and a suitable bureaucracy.
ie it is simply another "fiat" currency, which is why emissions trading is brought to us by the same people who have brought us the "Credit Crunch".
The solution IMHO is to create "Energy Pools" - which would be funded by levies on carbon-based energy at the point of consumption. eg petrol sales, and gas bills.
The resulting funds would then be directly invested in renewable energy (MegaWatts) and energy savings ("NegaWatts"). The key is the concept that returns on investment may be in energy, rather than conventional money..
In other words, renewable energy projects may be funded simply by selling production forward by creating "Units" in a suitable vehicle which are redeemable in energy. Likewise, energy saving investments/loans made in "Energy Units" would be repaid by the purchase of "Energy Units" in the Pool out of the value of energy savings made.
Ownership of the Redeemable Units in the "Pool" would be distributed equally to all citizens as a "Renewable Energy Dividend" and used either in exchange for renewable energy consumed, or in to repay "energy loan" investments made by the Pool in energy savings.
In this way, those with above average use of carbon based energy would make a net transfer to those with below average use, and the investment made in renewable energy and in energy savings would lead to reductions in consumption of non renewables
ie to "contraction and convergence".
The outcome would essentially be a Unit consisting of the value of energy in carbon - which has a value in exchange - rather than the value of carbon in CO2, which has none.
Why not monetise intrinsically valuable energy, therefore, rather than intrinsically worthless waste gases?
What do I know?
Well, for what it's worth I did give evidence to the Treasury Select Committee re Oil markets a couple of weeks ago, and the future of energy markets is something I have been working on for a while.

It grieves me inexpressibly to see that emissions trading continues to be taken seriously.

Can no-one see that this Emperor has no Clothes?

. Home
. About
. Contact
. New User Guide
. FAQ
. Search
. Search (Google)
. Archives (Wiki)
Art, Economics, Energy, Environment, EU Politics, Mech & Tech, By Country

Username:
Password:

. Make a new account
. Reset password

ETS: Emission Impossible | 5 comments (5 topical, 0 editorial, 0 hidden)

Re: ETS: Emission Impossible (4.00 / 2)

But you answer your own question when you note that;-

emissions trading is brought to us by the same people who have brought us the "Credit Crunch".

what they have done is create a parasitic exchange from which they make money on trading. What you propose might or might not do the same, but because it is different and closer to real world value, they may not be able to make as much in bonuses.

This, from their point of view, is a bad thing. There is comfort in the familiar (and bigger profits too)

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Aug 11th, 2008 at 11:15:02 AM EST

Re: ETS: Emission Impossible (none / 0)

"If you want to keep a donkey healthy you don't regulate what comes out of it: you regulate what goes in".

If we want to limit the use of fossile fuels to limit CO2 emissions, why don't we regulate what goes into the system, that is carbon.

I suggest a ban on coal mining in Europe, to make sure at least that coal stays in the ground. Coal burning should sort it self out once the rest of the world catches up.

by A swedish kind of death on Mon Aug 11th, 2008 at 10:19:20 PM EST

Re: ETS: Emission Impossible (none / 1)

A swedish kind of death:

If we want to limit the use of fossile fuels to limit CO2 emissions, why don't we regulate what goes into the system, that is carbon.
I suggest a ban on coal mining in Europe, to make sure at least that coal stays in the ground. Coal burning should sort it self out once the rest of the world catches up.

If Europe bans it, the price goes up, and the coal used by China and everyone else who relies upon it is mined elsewhere, giving those producer countries greater windfall profits.

I recommend rationing by price, and for Europe and other producing nations to form a cartel - an International Coal Producers Association.

Market prices would be periodically (maybe daily) set with a cartel of coal buyers - an International Coal Buyers Association, within a coal market framework of an "International Coal Trade Association" and "Coal Clearing Union".

A proportion of this price - say 30% - would go into a "Carbon Pool". Part would go to the service providers who extract and transport the coal.

The balance would remain with the producer.

The funds in the Carbon Pool would then be invested in the way I propose.

Firstly, to build renewable energy projects in coal consuming nations, giving rise to streams of megawatts replacing those from coal-fired power stations, and therefore lowering demand for coal.

Secondly, to make coal use more efficient eg by ensuring that the heat produced as a by product is used effectively. Again lowering demand for coal.

Such "NegaWatts" could be produced by retrofitting Combined Heat and Power, by installing solar and Ground Source water heating wherever possible, and so on.

The Carbon Pool would be "Unitised" into Redeemable "Carbon Units" or perhaps "Carbon Dollars" consisting of the amount of Carbon energy value in the different qualities of coal which one US Dollar would buy on the system launch date.

These "Carbon Dollars" would be distributed appropriately between Carbon users as a "Carbon Dividend" and would be redeemable against:

(a) renewable energy produced by whatever projects have been financed by the funds; or

(b) energy investments/ interest-free "energy loans" made to produce efficiency savings.

If and when coal use declines, the price will be maintained nevertheless, by increasing the proportion of the levy, so that producers may be compensated with carbon dollars for reduced production.

"Carbon Dollars" would have a real objective value in exchange, unlike either conventional US dollars and the proposed Carbon Credits, both of which only have a value imposed by "fiat".

Such a Carbon Pool could then be extended to other carbon-based forms of fuel.

Development of the concept of carbon-based energy value units is going on in several places, including here in Scotland at the Crichton Campus near Dumfries.

International Carbon Units

by ChrisCook (cojockathotmaildotcom) on Tue Aug 12th, 2008 at 04:42:21 AM EST
[ Parent ]

While political bickering goes on (4.00 / 4)

On a planet 4C hotter, all we can prepare for is extinction | The Guardian

The collapse of the polar ice caps would become inevitable, bringing long-term sea level rises of 70-80 metres. All the world's coastal plains would be lost, complete with ports, cities, transport and industrial infrastructure, and much of the world's most productive farmland. The world's geography would be transformed much as it was at the end of the last ice age, when sea levels rose by about 120 metres to create the Channel, the North Sea and Cardigan Bay out of dry land. Weather would become extreme and unpredictable, with more frequent and severe droughts, floods and hurricanes. The Earth's carrying capacity would be hugely reduced. Billions would undoubtedly die.
Watson's call was supported by the government's former chief scientific adviser, Sir David King, who warned that "if we get to a four-degree rise it is quite possible that we would begin to see a runaway increase". This is a remarkable understatement. The climate system is already experiencing significant feedbacks, notably the summer melting of the Arctic sea ice. The more the ice melts, the more sunshine is absorbed by the sea, and the more the Arctic warms. And as the Arctic warms, the release of billions of tonnes of methane - a greenhouse gas 70 times stronger than carbon dioxide over 20 years - captured under melting permafrost is already under way.

by das monde on Tue Aug 12th, 2008 at 06:15:53 AM EST

Re: ETS: Emission Impossible (4.00 / 2)

I'm not sure I understand the logic of this. What we are trying to do is reduce global warming by reducing greenhouse gases - of which CO2 is one - but by only means the only component.

We are trying to achieve this by increasing the cost of CO2 producing processes thus giving a competitive price advantage to processes which don't generate CO2 - e.g. windmills.

Whether the CO2 producing process is penalised at the input or the output side of the equation is surely immaterial - it is the process which is being penalised?

Indeed a process which uses coal to produce polymer plastic may not create CO2 at all. So why should it be penalised by an input tax - when it is the output of CO2 which is the problem?

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."

by Frank Schnittger (mail Frankschnittger at hot dotty communists) on Tue Aug 12th, 2008 at 06:38:15 AM EST

ETS: Emission Impossible | 5 comments (5 topical, 0 editorial, 0 hidden)

Go to: [ European Tribune Homepage : Top of page : Top of comments ]