Carbon trade bandwagon

With the Democrats rise to power in Washington, climate change has risen up the agenda in the form of carbon trading. Michael Dorsey critically examines emerging US climate policy

The post-Bush political landscape in Washington could swing from a ‘head in the sand’ approach to climate change to embracing an untested and unproven global carbon market – with all the incentives and opportunities that this would offer to international institutions, venture capitalists and even green groups.

Previously, US environmental regulators paid little attention to carbon trading. As Democrats formally take over Congress, this position is set to change. Nancy Pelosi, the newly anointed first woman speaker of the House of Representatives has publicly committed to having hearings on climate change.

Machinations are already afoot to forge alliances to develop a framework ready for the eventual change in the federal attitude towards the global carbon market. In mid-November the largest US environmental pressure group, the Sierra Club, convened a gaggle of carbon trading advocates, including former vice president Al Gore, who is now a co-partner, with ex- Goldman Sachs chief executive David Blood, in a business venture called New Generations Investment.

Industry leaders and NGO executives also attended the event, which an internal Sierra Club blog dubbed ‘A Climate Exchange’ – a cute double entendre underscoring its tacit endorsement of the creation of unproven markets in the chief greenhouse gas. According to the blog, the panel’s chief recommendation included ‘the urgency of setting a “carbon price” on greenhouse gas emissions.’

US environmental groups are not just convening ‘heavyweights’ to promote the carbon market. Groups like Environmental Defense (ED) and the Sunoco Oil Company-funded Pew Center on Global Climate Change are going to great lengths to play up the viability of carbon trading, despite growing evidence of its failings. Just before Christmas Charlie Miller, the director of communications at ED, phoned me up.

‘Look,’ he said, ‘I need to have a list of all the successful carbon trading projects. Is there such a list?’ I told him that no one actually tracks all carbon trading projects. ‘Well,’ he quipped, ‘I don’t want to know about all of them, just the successful ones.’ This year ED is set to release a report profiling ‘just projects that work’ to ‘get around those that are questioning trading.’

At the Montreal climate talks in December 2005, the Pew Center’s executive director, Eileen Clausen, presented the findings of its Pocantico Climate Dialogue – a document that, among its many recommendations, argues that future multilateral dialogues over climate change should include only corporations and governments.

There may be a further, financial incentive to hype carbon trading, even if volumes of evidence are mounting against it. These include the analyses gathered in the Dag Hammarskjöld Foundation report Carbon Trading: a critical conversation on climate change, privatisation and power (see ‘Temperature Gauge’, November 2006).

Back in 2005, Google cofounder Sergey Brin acquired, through a third-party, an ‘initial offset purchase [that] corresponds to eight years’ worth of emissions from specific sources related to Google’s operations.’ The offsets selected were from the Greenhouse Gas Credit Aggregation Pool (GG-CAP), assembled by the private brokerage company Natsource. While NatSource would not confirm this directly, sources close to the deal put Brin’s purchase at approximately $100 million—in a pool valued at $550 million.

Why might this influence environmental NGOs? In October 2005, Google inaugurated its long awaited foundation, Google.org, and endowed it with three million Google.com shares – now worth about $1.42 billion – and 1 per cent of annual profits. In a July 2006 interview, Larry Brilliant, the foundation’s executive director told Wiredmagazine that Google.org has ‘three big areas: climate crisis, global public heath and global poverty, not necessarily in that order.’ Green NGOs hope to get a piece of the action.

After years of stalling in Washington, both the new ruling Democrats and US green organisations are desperate to do anything on climate change— even if ‘anything’ means becoming strange bedfellows in dubious schemes whose results are far from clear.

The question on the table is not ‘Is carbon-trading bad or good?’ but who will get rich quick promoting it? And will we be able to find out if it is effective in reducing greenhouse gases before dangerous climate change occurs?Michael Dorsey is professor of environmental studies at Dartmouth College