The Sky is Not the Limit: - Carbon Trade Watch

ased on the “successful” PCF modeland describes itself as “an opportunityto attract private capital to biodiversityprotection, soil conservation andsustainable community development.” 4The Fund works on the same principleas the PCF by managing a pool ofinvestment money, which iscontributed by partners. Thesepartners so far include commitmentsfrom fourteen private companies fromthe banking, energy, and consultingsectors. 5The Prototype Carbon Fund (PCF):The Prototype Carbon Fund has beenoperating since 1999 and aims tostimulate the carbon markets,specifically the project-basedmechanisms CDM and JI. It acts asany other project-based investmentfund would and provides returns to its‘partners’ from profits generated inprojects. It is based in the World Bankheadquarters in Washington and hastwenty staff. 6 The PCF is intended forlarger renewable energy and efficiencyprojects with a particular emphasis on‘public-private partnerships’. Alongwith the Dutch government’s JI andCDM programmes (CERUPT andERUPT), PCF is considered the mostsignificant influence on marketexpectations of price and verificationrules. The PCF states ratherdefensively on its website that theWorld Bank ”does not intend to remainas a player in this market”, “neitherseeks a favoured nor monopolisticposition under the UNFCCC” and“does not wish to position itself as theinstitution which will implement theCDM.” 7 Sources report there iscriticism from outside and within thebank that brokerage and marketdevelopment do not fit within the WorldBank’s mandate of poverty alleviation.5.2 CorporationsBP-Amoco: The BP pilot scheme,designed in collaboration with USNGO Environmental Defense in 1999,was the beginning of the first majorcorporate ‘cap-and-trade’ greenhousegas trading scheme. BP-Amoco’soverall target is a 10 per centreduction below 1990 levels by 2010(tougher than the average 5.2 per centKyoto target). They claim to alreadyhave achieved 5 per cent of thattarget, mostly through reducing gasflaring in offshore activities. 1Enron: The bruised, battered andbankrupt corporate giant is not downfor the count yet. Despite a disastrousyear for energy trader, Enron stillranks number five on the Fortune 500list for 2002, 2 and intends to re-openfor business. Despite being widelyknown as one of the largestbankruptcies in corporate history, ithas also been an early player in theemissions trading markets, particularlyin the USA where it offered brokerageand consultancy services to powerutilities and industrial consumers.Its subsidiary, Enron Global Markets,specialised in SO2 and NOX trading inNorth America. The companypioneered the use of many financialinstruments in the emissions markets.It also promoted the concept of crosscommodityswaps, whereby emissionspermits could be traded for quantitiesof gas and coal. It lobbied aggressivelyto expand emissions trading markets,particularly in greenhouse gases. 3Breaking ranks with other energycorporations, Enron came out insupport of the Kyoto Protocol, excitedmore by the opportunity to expand itsemissions trading services to cover aglobal market, than the more limitedsingle gas markets in North America.Shell: Internal cap-and-trade systemlaunched in 1998, which developedinto the Shell Tradable Emission30