A Critical Conversation on Climate Change ... - Green Choices

lessons unlearned 189of cheating possible in a global emissions trading system. As GreenspanBell remarks, ‘keeping companies honest is hard enough in a robustlegal and regulatory environment, as Enron’s sham energy trades andWorldCom’s balance-sheet fraud amply demonstrated. In a weak legalsystem, the potential for emissions trading fraud is enormous.’ 444The lack of an adequate measurement system for either carbon emissionsor so-called ‘emissions reductions’ only adds to that potential,making cheating not only easy but almost irresistible.What about the legal systems of various countries? How will they respondwhen US-style pollution trading systems are pushed on them?Greenspan Bell emphasises that many Southern countries will be unableto ‘manage or enforce complex intangible property rights concerninggoods such as polluted air escaping from a factory’ or provideenough incentives for businesses to run pollution control equipmenteven if it is installed. International standards governing CDM projectsCarbon Trading’s Unconscious Cultural AssumptionsThe theory behind carbon trading is thatfactories, power plants, and anyone elsethat generates carbon dioxide will be eagerand capable partners in deals to buy andsell emissions. Nothing seems more obviousto many middle-class Westerners.But the theory rests on several faulty assumptions.The first is that all industryeverywhere wants to save on the costs ofobeying environmental laws. But wherepollution laws are little more than paper,industry knows it need not worry muchabout these costs. Plants that aren’t beingforced to comply with requirements maynot see the point in elaborate trading regimes.A second assumption is equally intuitivefor many Westerners, but equally wrong:that the opportunity to trade will reveala natural instinct to make a profit and todo so in the most efficient way possible.In much of the world, efficiency and profitare secondary to production or employmentgoals, or the need to maintain valuabletraditions, and supposedly ‘uncompetitive’companies are kept afloat throughgovernment support.A third weak assumption behind carbontrading is that even if plants aroundthe world are not themselves motivated toembrace clean technologies, they will acceptthem if they are offered free throughthe Kyoto Protocol’s flexible mechanisms.Maybe so, but what incentives do theyhave to keep the equipment on and pay itsrunning costs? That doesn’t happen anywherewithout disinterested enforcement.In short, carbon trading rests on unexaminedcultural assumptions many of whichare unrealistic in most of the world.Source: Ruth Greenspan Bell, ‘The KyotoPlacebo’, Issues in Science and Technology,Winter 2006.