Furore over Carbon Trading

Ravi LADDUWAHETTY

The introduction of a new international new concept called Carbon Trading by a Sri Lanka- British joint venture has caused uproar over permitted levels of industrial pollution where those who have less can trade them to those having excesses.

The function of Carbon Trading, a new concept, entails internationally accredited institutions which monitor the level of industrial pollution which any industry is expected to have and where limits are assigned where the buyer pays for the pollution and where the seller is rewarded, Central Bank’s Deputy Director of Economic Research Chandana Abeysinghe told Daily News Business yesterday.

What this effectively means is that if the permitted level of pollution is 50 units, the corporate having 20 units can sell the surplus 20 units to the polluted corporate having 80, which is also a 30 unit deficit, he explained.

The joint venture- Carbon Asia Pacific (Pvt) Ltd is between Asia Capital PLC and Syndicated Carbon Capital Ltd of UK, where a colourful electronic brochure has been prepared under the theme: “Endowing humanity with a greener tomorrow”, there is a lengthy presentation of emission reduction measures, auditing and a report service, waste management and landfill, afforestation and reforestation among a host of others.

“Climate change is not a risk but an opportunity. If you only eliminate the risk, we will give you the opportunity, despite it not being a gold mine,” Carbon Asia Pacific CEO Suranjan Cooray said.

However, industry sources, in vehement arguments against carbon trading, pointed out that when governments and companies trade in carbon, they establish de- facto property rights over the atmosphere and at no point have these atmospheric property rights been discussed or negotiated - their ownership is established by stealth with every carbon trade.

They said that market shares in the new carbon market will be allocated on the basis of who is already the largest polluter and who is fastest to exploit the market.

The new “carbocrats” will therefore be the global oil, chemical, and car corporations, and the richest nations; the very groups that created the problem of climate change in the first place.

What is more, with the current absence of “supplementarity”, the richest nations and corporations will be able to further increase their global share of emissions by outbidding poorer interests for carbon credits.

They pointed out that many carbon credits are scams due to the unpredictability of the future and the non assurance of any corporate project selling carbon credits has really reduced its emissions further than it would have done without the intervention.

“Profit competition and technical innovation ensures that industry consistently reduces its energy costs. A carbon market can provide an automatic cash subsidy for any investment in low energy technology. If such incentives exist they should be explicit, targeted and accountable,” they said. There are strong incentives for cheating and creating bogus credits that do not represent any real reduction in emissions.

The vendor gets the cash without having to change anything and the buyer gets cheap credits.

There are similar incentives for misdeclaration, and “leakage”- transferring polluting activities to areas that are not accounted.

The sources while claiming that carbon markets cannot be monitored, the temptation for all parties to cheat requires that every transaction to be scrutinised and every sale to be certified.