EU Emissions Trading 2010: analysis of newly released figures

Once again, the EU Emissions Trading Scheme has awarded massive subsidies to the steel sector and other energy-intensive industries. It has even given out permits to pollute to factories that are partially closed. This has nothing to do with addressing climate change. Emissions trading is being used as an industrial subsidy scheme for polluters....

A provisional analysis of EU greenhouse gas emissions data for industries covered by the Emissions Trading System (ETS) shows that emissions rose by over 3.5 per cent in 2010, compared to 2009 levels.¹

For a fifth time out of the last six years, the “cap” that the ETS is supposed to imposed was set too high. Complete data is only available for 8,833 installations (77 per cent of the total), but this shows that the allocation of permits under the scheme was 3.2 per cent (57.36 MtCO2e) higher than the actual emissions measured from installations covered by it.

These figures make a mockery of the claim that emissions trading reduces emissions. Factories polluted more, and the scheme set no limit on this additional pollution.

The 10 plants with the largest surplus of permits are all from the steel sector, and account for a combined surplus of 54.7 million permits. These 10 plants alone have received a a windfall profit of around €650 million. ²

The plant with the third largest surplus (Teeside steelworks in the UK, which was sold by Tata to Sahaviriya Steel Industries, Thailand's largest producer, in February 2011) has been partially mothballed, yet still managed to accrue a surplus of 5.76 million permits. This amounts to a windfall profit of around €70 million.

The breakdown (in sequence) of the most significantly over-allocated plants is as follows:

Allocation	Actual	Surplus	Owner
19622025	8695288	10926737	ThyssenKrupp Steelworks, Duisburg, Germany
11335573	4583475	6752098	ArcelorMittal Galati, Romania
6953226	1188865	5764361	Tata, Teeside, UK (since sold)
11557631	6227169	5330462	Tata, Ijmuiden, Netherlands
9276102	4011551	5264551	Glocke Salzgitter, Salzgitter, Germany
13255657	8606105	4649552	ILVA (Riva Group), Taranto, Italy
8918495	4386583	4531912	ArcelorMittal, Gent, Belgium
9323815	5291346	4032469	ArcelorMittal, Gijon and Aviles, Spain
8655981	4771369	3884612	Krupp Mannesmann, Duisburg, Germany
5832055	2245809	3586246	ArcelorMittal Bremen, Germany

Notes

1This is based on data from 9579 installations, which account for 83.9 per cent of the total. The rest are excluded because data is not available yet. It is based on a total of 11409 installations (a figure that excludes the “closed” accounts which are listed in the EU database).

2These figures for the steel sector assume a €13 per ton price of carbon permits (EUAs), and incorporate a 10 per cent downward adjustment to take account of permit transfers relating to waste gases.

Environmental Justice Groups Win! California Air Resources Board Forced to Revisit Alternatives To Unjust Pollution Trading System

SAN FRANCISCO, CALIFORNIA - On March 17, 2011 a San Francisco Superior Court judge ruled that the California Air Resources Board violated the California Environmental Quality Act (CEQA) when it failed to properly consider alternatives to a "cap and trade" program in its plan to implement AB 32, the California Climate Solutions Act. Cap and trade is pollution trading that allows the worst polluters to continue or increase their pollution by buying "reductions." These polluters are disproportionately located in low income communities of color. Instead of reducing pollution and creating jobs in California, dirty facilities, like oil refineries, get to buy credits from often unverifiable projects in other states and countries.

"Allowing the most entrenched polluters to increase pollution violates our environmental rights and is not the way to stop poisoning our air and slow catastrophic climate change," said Bill Gallegos, CBE's Executive Director. “ARB was dogmatic in its focus on cap-and-trade even though it is not effective in reducing greenhouse gases, increases pollution in heavily polluted low-income communities and communities of color, and misses the opportunity to create jobs in California. Now the ARB has a chance to do it right and consider real alternatives to pollution trading. We continue to be willing to work with the ARB to make the whole plan work for everybody."

Environmental justice and air quality organizations have been fighting for years to get ARB to protect low-income communities of color in its efforts to reduce greenhouse gas emissions. In 2009, these groups filed suit to enforce their rights under AB32 and CEQA.

Full press release from California EJ groups is here

Carbon Capture and Storage in the Clean Development Mechanism

The inclusion of Carbon Capture and Storage (CCS) in the UN's Clean Development Mechanism (CDM) is a boon for the Middle East and North Sea oil industries, which would use the scheme to subsidise the extraction of even more oil from the ground.

What was agreed?

“Carbon dioxide capture and storage in geological formations” is now eligible as a basis for CDM projects, as a result of the UN Climate Change Conference (COP16) in Cancun. This is likely to be of greatest benefit to oil companies, which are hastily rebranding techniques known as Enhanced Oil Recovery (EOR) as a means to store carbon underground.

EOR was originally developed as a means to extract more oil from fields that were reaching the end of their lifespan. This is still its primary purpose, rather than reducing emissions. If included in the CDM, a calculation of “reductions” would be made in relation to the amount of CO2 pumped into old oil wells. The calculation would not consider the far larger volume of CO2 released into the atmosphere through the extraction and burning of more oil. As has been seen with other CDM methodologies, the “lock in” effect of subsidising a fossil-fuel based energy model is not considered relevant to how offset “reductions” are calculated.

Looking further ahead, CCS is being promoted as “clean coal” in the electricity sector, as well as attracting interest from a variety of industrial sectors (notably, steel) that are keen to claim emissions reductions without engaging in a fundamentally cleaner development path or technological overhaul. What all of these technologies have in common is an assumption that the capture, transport and storage of carbon can be viably achieved on a large scale. This has not yet been proven, and there are many reasons to believe that this will be neither technically feasible nor economically viable.

The Cancun decision is not the end of the story of CCS in CDM. Implementing the agreement requires that a series of issues are “resolved in a satisfactory manner.” The decision catalogues a series of pitfalls, including the risk that CO2 storage is not permanent and could leak from underground geological formations. Other environmental and public health risks, and legal liabilities in the case of leaks or “damage to the environment, property or public health” remain to be addressed. The text of the decision also claims that projects will need to make “adequate provision for restoration of damaged ecosystems and full compensation for affected communities in the event of a release of carbon dioxide.” The CDM contains no mechanism to enforce such provisions, and the nature of the scheme (which is primarily a means for subsidising polluting industries) makes it unlikely that such provisions will emerge.

Read the rest of the article here

Two Pluses Don't Make a Positive: REDD and agriculture

It is one of the first laws of diplomacy: when it is hard to agree on an answer, change the question. Reducing Emissions from Deforestation and Degradation (REDD) schemes are the product of two of these diplomatic back-flips.

First, whereas the Kyoto Protocol included no forestry or land-use emissions targets or mechanisms, such measures are a central feature in negotiations for a continuation or successor climate treaty. The former caution resulted from the complexity and uncertainty of accounting for reductions in these sectors, but the fact that significant measurement challenges remain has not slowed the rush to develop REDD. This new enthusiasm is largely driven by economic calculations. According to cost-benefit analyses like the influential Stern Review on The Economics of Climate Change, reducing tropical deforestation would be far cheaper than curbing fossil fuel use in the industrialised world.

A second switch concerns the framing of the question of how best to tackle deforestation. REDD puts a cash value on forests on the assumption that this will result in their preservation and, in turn, a "carbon saving." In other words, these schemes do not ask "how best might forests be protected?" but presume that carbon pricing mechanisms are the leading solution. Negotiations on REDD are then narrowed to questions of whether it is better to make forest payments through direct financial transfers or to develop forest carbon offsets. These are more often presented as a sequence, rather than a set of alternatives: almost all potential funders view their initial outlay as a means to "kick start" what will eventually be an offset scheme. The eventual extension of REDD to encompass all forms of land use is also under consideration.

The reality of REDD is likely to be far messier, more expensive and damaging than the economists claim. It will also prove fundamentally unjust - a concept that is alien to cost-benefit modelling. Indeed, the very idea that REDD offsets could be used to allow continued greenhouse emissions from industrialised countries turns the ethical responsibility for climate change upside down: it outsources responsibilities that should rest with the very countries and corporations that have disproportionately caused climate change. Such concerns are not simply ethical but practical too. Deforestation cannot be reduced to a question of cost without losing sight of the complexity of social factors and power relations that underlie why it is happening. Agriculture is at the forefront of this debate because its encroachment into previously forested areas is generally presented as the major cause of tropical deforestation.

This article will show that REDD could favour large-scale farming and do considerable damage to the lives and livelihoods of small farmers, who play a vital role in food sovereignty. REDD "readiness plans" already include plantations and perverse incentives for the conversion of forested land for export-led agriculture. As such, REDD will not necessarily reduce deforestation, but can be characterised as a form of "structural adjustment" programme for land use.


Read the rest of the article here

World Bank Partnership for Market Readiness: a critical introduction

When the World Bank gets busy, it usually spells bad news for people and the planet. The UN Climate Change Conference (COP16) in Cancún was no exception, with the Bank launching a flurry of new climate-related initiatives. Chief amongst these was the Partnership for Market Readiness (PMR), a new Fund which encourages the “scaling up” of carbon trading in middle-income countries. The aim is to develop carbon offsets “beyond existing CDM.” This pre-empts international negotiations on controversial new carbon markets, which made little progress in Cancún. In launching the PMR, it is clear that the World Bank is prepared to push ahead with new carbon markets regardless of the outcome of multilateral negotiations, using bilateral agreements if necessary, and bankrolling its initiative with “fast-start” climate financing. A closer examination of the financial assumptions behind the new Fund reveals that the major costs of the initiative will have to be met by the countries listed as “beneficiaries,” whilst the Bank and industrialised country donors retain significant control over how “market readiness” is implemented.

Read the rest of my article about this here.

Climate Justice after Bolivia

This new book has just been released:

Space for Movement?
Reflections from Bolivia on climate justice, social movements and the state

Built around a series of interviews, it takes a critical look at the World People’s Conference on Climate Change and the Rights of Mother Earth (CMPCC) in Bolivia that took place last April. More than that, though, it reflects on how climate justice activists can negotiate the relationship between social movements and the state.

Click here to download Space for Movement? for free

New articles on carbon trading

A bit of cross-promotion here... a series of new articles on carbon trading, from the Carbon trade Watch newsletter

Carbon market “growth” is mainly fraudulent, World Bank report shows
The global carbon market grew in 2009. Far from signalling a success, this reflects a massive increase in fraud, the dumping of surplus emissions permits by industry, and a rise in financial speculation.

Read more...

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Creating new from the old: how the REDD+ Partnership plans to create a REDD market, plus!
The REDD+ Partnership intends to facilitate controversial forest payment schemes in advance of any UN climate agreement on an international framework to tackling deforestation.

Read more...


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Industrial gases in CDM: fixing a hole?
The majority of Clean Development Mechanism (CDM) offset credits issued to date are bogus, according to new research on industrial gas destruction projects.

Read more...

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The UN Boys Club tasked with redefining climate finance
Climate finance is a central element to any future international framework for tackling climate change, but a closed-door UN panel could redefine the terms of the debate away from the responsibilities of industrialised countries and encourage the further expansion of carbon markets.

Read more...

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More on Plantar as the struggle continues
The Plantar project was one of the first to be supported by the World Bank Prototype Carbon Fund (PCF). Some aspects of the project have since entered the Clean Development Mechanism, but the battle continues to keep more of this plantation scheme out of the CDM.

Read more...

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New Zealand's new carbon market: a taxpayer subsidy for plantations and energy companies
New Zealand has a new carbon market, the first national scheme to be launched outside Europe. It looks set to award profits to forest plantation owners, help power companies avoid emissions reductions, and pass the costs of tackling climate change from big business to individual consumers.

Read more...