Carbon offsets have already run out of credit

//Carbon offsets have already run out of credit

Carbon offsets have already run out of credit

Published on Fairfax’s National Times website

A key element of Prime Minister Julia Gillard’s carbon tax policy is designed to ensure that Australia reaches the target of a 5 per cent reduction in greenhouse gas emissions by 2020, not by cutting that volume in emissions from Australia, but by purchasing carbon credit offsets from other countries.

When asked recently about the purchase of offshore permits Julia Gillard said: “Yes, this is going to be an internationally-linked scheme, and so it should be.”

It is alarming that the Prime Minister has given no indication that she is aware or has any understanding of the recent history of the operations of international carbon credit markets.

Just six weeks ago, the World Bank reported that the international market in carbon credits has suffered a debilitating collapse and expressed doubt about the ongoing viability of global markets.

According to the World Bank, trading in credits commenced after the Kyoto Protocol was adopted in 2005, and about $25 billion was generated over the years to 2009.

However, that market collapsed to $1.5 billion last year, due to ongoing concerns about the commitment of nations after the expiry of the Kyoto Protocol in 2012.

The United States withdrew from the Kyoto Protocol in March 2001 and has indicated it will not commit to any replacement treaty, while Russia, Japan and Canada have all stated recently that they will not continue with the Protocol after it expires.

On 28 December 2010, the European law enforcement agency EuroPol issued a media release about extensive defrauding of the European Union emissions trading system.

EuroPol reported that it had raided several hundred offices throughout Europe and had arrested more than 100 people.

In one operation in Italy, the police conducted raids on 150 companies in eight regions as part of an investigation into huge volumes of suspected fraudulent transactions on the Italian Power Exchange.

EuroPol reported that raids also occurred in Norway, Switzerland, Belgium, Czech Republic, Denmark, Latvia, the Netherlands, Slovak Republic and Portugal.

After these actions, trading volumes in Europe dropped by 90 per cent.

It appears that 90 per cent of trades in the European Union emissions trading system were fraudulent, resulting in a loss to European taxpayers of more than $6.6 billion.

The Wall Street Journal concluded that the EU emissions trading system was not actually a functional scheme at all but was a “political smokescreen” to enable European politicians to claim “green” credentials, while avoiding the difficult decisions on reducing emissions.

A former correspondent for Australian Associated Press based in Port Moresby wrote this week of his observations of the “cowboys” who flocked to Papua New Guinea in pursuit of carbon credit riches.

He detailed the first arrival in 2009 of “carbon cowboys” offering villagers “sky money” for the right to use their land in international carbon trading schemes.

This led to alleged corruption of local officials who also stood to gain from these get-rich quick schemes.

Prime Minister Gillard is proposing in her carbon tax policy that an estimated $57 billion of Australian taxpayer funds will be sent offshore to buy “carbon offsets” to enable this country to reach Labor’s new target of an 80 per cent reduction in emissions by 2050.

The logic of her proposal is that Australians should pay people overseas tens of billions of dollars for the right to burn our own coal and to meet her commitment that the coal industry has a “bright future”.

This is apparently to be achieved through a non-existent (at this stage) international trading system.

It is naïve at best for the Prime Minister to assume that such a scheme will emerge given the clear signals internationally that major emitting nations are moving away from trading in carbon credits.

Of more concern is that Julia Gillard appears blithely or wilfully unconcerned about the fraud and criminal activity that has beset trading in carbon credits in developed countries of the European Union, let alone what is taking place in developing countries.

Deloittes Australia has warned that carbon credit fraud is “the white collar crime of the future”.

The Prime Minister must explain clearly why it is that her carbon tax on what she terms “the big polluters” in Australia will not meet the emissions reduction target by 2020, and why billions of taxpayer funds need to be sent offshore in order to do so.

She must also detail the measures and safeguards which will have to be put in place to ensure that the tens of billions of Australian taxpayer dollars committed to purchasing international carbon credits do not end up in the clutches of the carbon cowboys.

 

2011-07-20T00:17:45+00:00July 20th, 2011|