Barnaby Is Right

I despair for this country.

Contrary to what politicians, lobbyists, and media cheerleaders for popular causes often tell us, as usual, we are behind the times.

Remember the great public argument between these hubristic folks we had to endure that preceded the introduction of our “carbon tax”, as to whether or not we were acting ahead of the rest of the world, or behind the rest of the world, with our Green-Labor government’s post-election “broken promise” decision to “put a price on carbon”?

In the last few days, we have heard a major business lobby group petition our government to cancel the carbon “tax” – it’s only been running for 8 months – and immediately make the transition to a full Emissions Trading Scheme:

Mar 7, 2013 – Ai Group has called on all sides of politics to support the immediate removal of the fixed price carbon tax and move directly to an internationally linked emissions trading scheme.

“The same environmental benefit can be achieved at a lower cost and it can be achieved simply by bringing forward by two years the date of Australia’s already-legislated move to emissions trading,” said Ai Group Chief Executive, Innes Willox.

Meanwhile, 3 weeks earlier, over in Europe a growing global movement of (now) over 100 civil society organisations began petitioning the EU member states to abandon attempts to try and fix their much-vaunted – and much-rorted – Emissions Trading Scheme, and just scrap it altogether.

From Carbon Trade Watch:

18 Feb, 2013 – A growing group of civil society organisations is calling on the EU to abolish its Emission Trading System (ETS) to open space for truly effective climate policies. Today they release a joint declaration that highlights the many structural loopholes the ETS is facing, that the proposed reform proposals put forward by EU policy makers will not be able to fix.

Tomorrow (19 Feb.) the Environmental Committee of the European Parliament will vote on the Commission’s backloading proposal. “Although advertised as a way to fix the failing ETS, it is nothing but a drop in the ocean. The EU’s flagship policy to address climate change has diverted attention from the need to transform the system’s dependency on fossil fuels and growing consumption, resulting in increased emissions. After seven lost years, it’s time to make space for effective and fair climate policies,” says Joanna Cabello, from Carbon Trade Watch.

More than 90 organisations, networks and movements from all over the world launch today the joint declaration ‘It is Time to Scrap the ETS’. It lists the structural flaws of the ETS and the risks of trying to fix it.

One of the flaws is the use of offset projects which allows companies or governments from the North to buy credits from a project in the South instead of reducing emissions at source. “The offset projects under the Clean Development Mechanism (CDM), the biggest offset scheme, has actually increased emissions while causing land grabs and human rights violations, community displacements, conflicts and increased local environmental destruction,” says Isaac Rojas, from Friends of the Earth Latin America and Caribbean (ATALC). “Other new market mechanisms and related financial products (such as forest carbon offsets and biodiversity offsets) follow the same logic which allows, and offsets, deforestation, forest degradation, biodiversity loss and water pollution,” he adds. In spite of the growing evidence of the problems, offset use in the ETS grew by 85% in 2011.

Furthermore, the EU ETS is costing the public a lot of money without serving a public purpose. Belen Balanyá, from Corporate Europe Observatory says: “At a time when EU citizens are shouldering the cost of the economic crisis, they are also being forced to bear the cost of the legislation, regulation and much of the quantification of emissions that carbon markets require, as well as the costs of measures against fraud, theft, corruption, and tax evasion. Meanwhile big polluters such as Arcellor Mittal and Lafarge make millions of windfall profits with over allocated permits.”

The EU ETS created the biggest carbon market in the world and now serves as a model for other countries. China is setting up a system with EU support and is planning to link it to the EU ETS. Other countries and regions such as Brazil, Korea, Australia, California in the US and Quebec in Canada have similar plans. The failures of the ETS will also be exported to other areas, as it will be used as a model for trading other ‘ecosystem services’ such as forests, biodiversity, water, soils and landscapes. In the meantime, civil society groups from around the world are demanding to scrap the ETS so that market mechanisms stop being used as a model for environmental protection.

The organisations supporting this declaration conclude: “It is time to stop fixating on ‘price’ as a driver for change. We need to scrap the ETS and implement effective and fair climate policies by making the necessary transition away from fossil fuel dependency.”

Here is a press release from the ‘Scrap The EU-ETS’ movement, whose logo is the image depicted above:

Brussels, February 26 – As Member States representatives continue discussing their positions regarding the ‘backloading’ of 900 million permits which attempts a ‘quick fix’ to the carbon price in the EU Emissions Trading Scheme (ETS), a declaration endorsed now by more than 100 civil society organizations, movements and networks from around the world, with support growing every day, believe that this is the wrong debate.

Larry Lohmann from The Corner House, a UK based organisation, says “We need to get our priorities straight. Only by scrapping the EU ETS can we make way for real and effective climate and energy policy that reduces emissions in Europe. The debate should be focused on how to implement strong and just policies that will work for the climate.”

The EU needs to start discussing how to put Europe on a low-carbon pathway, instead of how to save a failed market, explain the campaigners. Markets are a means to an end, not the ultimate goal of climate change policies. If carbon markets fail to address climate change -and the ETS has a track record of failure– they need to be replaced with other means, they argue.

“For seven years we have heard that trading carbon is the ‘only option’. Yet, on closer inspection, the ETS has itself turned out to be a major obstacle to transformative action on climate change in the EU and an instrument to deepen the ecological debt with countries in the South”, says Lyda Fernanda from the Netherlands-based Transnational Institute, who adds “The EU ETS has actively weakened policies such as the Energy Efficiency Directive, the Large Combustion Plant Directive and held back expanding implementation of e.g. feed-in tariff initiatives.”

The ‘Time to scrap the ETS’ declaration takes a fundamentally different stance than that of Business Europe, Eurofer and other big energy intensive industries. Elena Gerebizza from the Italy-based Re:Common says, “Despite all its rhetoric, corporate lobby aims to keep windfall profits while avoiding meaningful emissions cuts at source and necessary structural changes in the European production and economic system. We want a transition from fossil fuels: they don’t. The ETS is an obstacle for this transition and has to be removed.”

In yesterday’s blog I highlighted a simple, brilliant solution for addressing the problem of “man-made” carbon dioxide emissions (and many other important things besides), and expressed my anger and sorrow over the many “otherwise intelligent, educated, thoughtful, well-meaning people [who] have been fooled into supporting” the idea that “putting a price on carbon” or “carbon trading” is the best way to “save the planet”.

I describe such people as “bankers’ stooges”.

Such people typically appear to be completely unaware – or, choose to willfully ignore – the undeniable and well-evidenced fact that carbon dioxide trading schemes all over the world are simply awash with rorts, scams, frauds, and worse … quite literally in some cases, these schemes are responsible for genocide of the world’s poorest people.

Here are just a few examples of the many carbon “credit” trading rorts, frauds, scams, and gross exploitation and human rights violations – by individuals, small companies, huge corporations, major global banks, the World Bank’s private investing arm, and even national governments – that one can easily find, simply by spending 5-10 min with Google Search:

Dec 20, 2012 – Last year, Clean Green Fuels in Maryland was accused of selling 32 million fake biodiesel RIN credits to oil companies and brokers. In June 2012, CEO Rodney Hailey was convicted of wire fraud, money laundering, and of violating the Clean Air Act.

Absolute Fuels in Texas, was sent an EPA Notice of Violation in February this year. On July 19, owner Jeffrey David Gunselman was arrested for having allegedly created on his computer more than $50 million in RIN credits that he then sold. He didn’t even have the facilities to produce biodiesel. Earlier this month, he pleaded guilty to a laundry list of charges and is contemplating a maximum sentence of $20 million in fines and 1,268 years in the hoosegow.

Another Texas company, Green Diesel, received a Notice of Violation on April 30. The issue: 60 million fake RINs. By then, CEO Philip Rivkin had apparently skedaddled to Europe, out of harm’s way.

…

But a small outfit in Toronto, Bioversel Trading Inc., was particularly resourceful in milking the RIN system—and may not have done anything illegal, according to an excellent investigative series by CBC News. Bioversel hired Canadian National Railways (CN) to shuttle the same trainload of biodiesel twelve times across the US-Canadian border without unloading the cargo. All in the second half of June, 2010. For $2.6 million.

To generate RINs from importing biodiesel into the US, ownership of each trainload was transferred to Bioversel’s US partner, Verdeo, which then, rather than selling the biodiesel in the US, exported it back to Canada. But by exporting the biodiesel, Verdeo would have been required to “retire” the associated RINs, instead of being able to sell them. So Verdeo retired ethanol RINs instead, which cost only a fraction. The difference, less the cost of transportation back and forth, was profit.

CBC News contacted the EPA to get some clarity, but the agency refused to comment. And the railroad? Didn’t they have a clue? Nope. “As required by law, [Canada National Railways] CN discharged its common carrier obligation regarding these biodiesel shipments,” spokesman Mark Hallman wrote to CBC News. “CN is not aware of any pending investigation of an alleged fraud. CN has and will continue to co-operate fully with….” etc. etc.

Alas, CBC News had obtained a copy of an internal CN email, dated June 14, 2010, sent by Teresa Edwards, CN’s Sarnia transportation manager. In addition to some technical details, it included these priceless words: “It will be the same cars flipping back and forth and the product will stay on the car. Target is to get at least 25 flips across the border and back by June 30.” And a word of corporate encouragement: “This move has the potential to make a lot of money for CN so need everyone’s assistance to maximize the number of trips we make and ensure that it all moves smooth.”

In a follow-up email, dated June 28, 2010, of which CBC News also obtained a copy, Edwards wrote: “The Bioversal move back and forth across the border at Sarnia has now completed. Records show that we moved 1984 cars total…. This equates to approximately 2.6 million dollars of revenue….”

Though the Canada Border Services Agency and the EPA are investigating, CBC News emphasized that it “has found no evidence Bioversel or its partners broke any laws.” Apparently, regulations at the time permitted importing biofuels to generate RIN credits, re-export the fuel, retire cheaper ethanol credits instead of biodiesel credits, and laugh all the way to the bank…

***

Dec 14, 2012 – Five hundred German police and tax inspectors raided offices and residences connected with Deutsche Bank in Berlin, Frankfurt and Dusseldorf, Wednesday over allegations of conspiracy involving over €300 million in carbon trading tax fraud.

***

May 1, 2011 – Europe’s biggest polluters have made billions out of the European Emissions Trading System (ETS). But a new briefing by Carbon Trade Watch (CTW) says the scheme will ensure industry will not have to cut its emissions until at least 2017.

The first phase of the ETS ran from 2005 to 2007. It made no dent in emissions. But power companies made about 19 billion euros by charging customers for the “cost” of permits they were given for free.

Manufacturers made about 14 billion euros in windfall profits with the same trick.

…The polluters stand to make more money for doing nothing in the ETS’s second phase. By 2012, power companies will make between 23 billion and 71 billion euros from passing on the cost of their free permits.

The third phase of the ETS, which will run from 2013 to 2020, won’t solve the problems.

***

Mar 6, 2011 – The environmental performance of the EU ETS is so bad that one wonders if emissions would be lower if the EU had followed the US example and did nothing.

But there are winners from this disaster. Along with traders, investment bankers and financial services providers that profit from a financial market created by government regulation, polluting industries have earned windfall profits.

…But the list of people who profit from carbon trading wouldn’t be complete without mentioning fraudsters.

Rogue traders have managed to buy permits from countries that don’t charge value-added tax (VAT). The traders then sell the permits in countries that charge the tax, pocketing the VAT and disappearing with the money.

Known as “carousel fraud”, it has cost European taxpayers an estimated €5 billion, a December 28 Europol report said.

***

Feb 25, 2011 – Another more recent tactic for swindling money from the market involves “phishing” scams. In a phishing scam, the criminal attempts to obtain an account holder’s user name, password and any other necessary information to steal their identity. Account holders on the German registry were the first to be hit by a major phishing scam in January 2010. BBC News reported that the criminals involved with the scam obtained access codes for registry accounts through emails that led targeted account holders to forged websites asking them to input security codes. The criminals then accessed the registry accounts and sold the permits held in the accounts on Danish and British registries for $4 million.

In Australia, the Auditor-General’s report into the government’s “OSCAR” computer system used by “polluters” to self-report their emissions, warned that it contained ”significant security vulnerabilities” that could allow an outside person to fiddle the data, and showed that “three-quarters of major polluters’ self-assessments – on which the government will depend for calculating how much carbon tax they owe – had errors and 17 per cent had ‘significant errors’“. Buried in the footnotes we found the definition of a “significant error” – apparently, a “biggest polluter” has only made a “significant error” in their self-reporting if it is “greater than 40%” of the total annual emissions that qualified them as being a “biggest polluter” in the first place.

The Auditor-General’s report also stated that, “The department [of Climate Change and Energy Efficiency] does not verify the data reported by corporations. It is expected that audits undertaken as part of the compliance and audit program will examine energy and greenhouse data”. It further stated that, “Compliance is defined by DCCEE as: ‘providing the ability for the regulator to encourage affected parties to comply… This definition recognises that the onus for compliance rests primarily with registered corporations.”

And the government’s own Regulatory Impact Statement (RIS) tacitly conceded that the auditing process to check whether “polluters” are accurately and honestly reporting their CO2 emissions and energy use, is little more than an exercise in ‘perceptions management’ (ie, propaganda); a Public Relations exercise to maintain public confidence in the scheme. The RIS stated that, “If there was a perception of widespread non-compliance, community support for the scheme would be much harder to maintain (in the absence of community acceptance and support, the long term future of the scheme could be called into question)” … “In closing, it is important to note that, in considering impacts on the credibility of the scheme, perceptions of non-compliance can be more important than the actual level of non-compliance.”

But let us briefly return to the EU-ETS, which clearly doesn’t work, and is a veritable festival of rorts. Including by national governments:

Feb 2, 2011 – This marks the second time in the past year that carbon trading has been shut down. Last year, the U.N.’s carbon market halted for several days when authorities discovered that the Hungarian government had—legally—been reselling allowances that had already been used. In 2009 Europol reported that in certain countries, 90% of the ETS’s trading volume was taken up by value-added-tax scams. Europe’s system has also been plagued by smaller thefts since its founding in 2005, and some companies in the Third World have spewed pollutants simply to eliminate them and sell the carbon allowances to European companies.

And then there are the violations of human rights, including acts of genocide, being imposed on the world’s poorest people by some of the world’s biggest, wealthiest corporations (including the World Bank’s private investment arm); all in the pursuit of profit from carbon dioxide trading schemes:

Sep 21, 2011 KICUCULA, Uganda — According to the company’s proposal to join a United Nations clean-air program, the settlers living in this area left in a “peaceful” and “voluntary” manner.

People here remember it quite differently.

“I heard people being beaten, so I ran outside,” said Emmanuel Cyicyima, 33. “The houses were being burnt down.”

Other villagers described gun-toting soldiers and an 8-year-old child burning to death when his home was set ablaze by security officers.

“They said if we hesitated they would shoot us,” said William Bakeshisha, adding that he hid in his coffee plantation, watching his house burn down. “Smoke and fire.”

According to a report released by the aid group Oxfam on Wednesday, more than 20,000 people say they were evicted from their homes here in recent years to make way for a tree plantation run by a British forestry company…

“Too many investments have resulted in dispossession, deception, violation of human rights and destruction of livelihoods,” Oxfam said in the report.

… Across Africa, some of the world’s poorest people have been thrown off land to make way for foreign investors, often uprooting local farmers so that food can be grown on a commercial scale and shipped to richer countries overseas.

But in this case, the government and the company said the settlers were illegal and evicted for a good cause: to protect the environment and help fight global warming.

The case twists around an emerging multibillion-dollar market trading carbon-credits under the Kyoto Protocol, which contains mechanisms for outsourcing environmental protection to developing nations.

The company involved, New Forests Company, grows forests in African countries with the purpose of selling credits from the carbon-dioxide its trees soak up to polluters abroad. Its investors include the World Bank, through its private investment arm, and the Hongkong and Shanghai Banking Corporation, HSBC.

And this:

Nov 30, 2011 AGUAN VALLEY, HONDURAS – At 3,000 square miles, the Aguan River Valley in northeastern Honduras is about the same size as California’s Death Valley. But despite being green and fertile, the Aguan basin is becoming famous as a “valley of death.” Since January 2010, at least 45 displaced peasants have been killed in clashes over land rights in Aguan, and “the actual number of killings is probably much higher,” according to Annie Bird, co-director of the human rights advocacy group Rights Action (RA), who visited Honduras in September.

Bird and other critics say that the violence in Aguan is driven by competition over resources between local farmers and large-scale, biofuel production facilities. The valley is home to more than a dozen African palm plantations that supply “green” energy to Europe and Asia, as well as a pair of biogas plants that operate as part of a United Nations carbon-credit initiative.

“The agribusinesses are after all the prime farmland in Aguan,” Bird says. “That’s what’s driving the conflict here.”

African palm plantations have also been linked to land-based violence in Indonesia, Africa, and elsewhere in Latin America, as worldwide demand for biofuels has soared in recent years. But using arable land for fuels, as opposed to food production, has caused a spike in global food prices. In October 2011, the U.N. Committee on Food Security issued a report citing biofuel production as one of the leading causes of food shortages worldwide.

Ignoring its own committee’s report, the U.N. continues to endorse the two biogas plants attached to African palm plantations in the Aguan Valley as part of its controversial Clean Development Mechanism (CDM) program. A product of the Kyoto Protocol, CDMs allow governments and companies from Western countries to trade carbon credits with businesses in developing nations that utilize renewable energy and other carbon-saving techniques. Critics of the CDM program point to the food-vs-fuel dilemma, as well as the issue of “additionality” – that is, whether or not a given CDM would exist without U.N.-sanctioned investments. But Bird says there is a moral component as well.

“By approving investment in these projects, the U.N. has made itself an accomplice to a human rights crisis,” Bird says. “It’s just shameful.”

Is it any wonder that there is a growing global movement calling for the abolishing of Emissions Trading Schemes?!?

And yet, here in behind-the-times Australia, our leaders (and cheerleaders) still want to press on with “moving forward” to an internationally-linked ETS.

Weep, laugh, and gnash your teeth along with me, dear reader.

What a risible tragi-comedy our leaders and “experts” are staging here in behind-the-times Australia.

For bankers’ benefit.

At our expense.

Tags: AGW, carbon credits, carbon trade watch, emissions trading, EU ETS, EU Parliament, scrap the eu-ets movement