EU Carbon Trading Scheme Failing

In Monday’s edition, this journal reported on Australian Prime Minister John Howard’s plan to create a carbon emissions trading system in Australia that would be better than those currently in place in Europe. An investigation by the BBC’s Radio 4 suggests that he won’t have to work very hard to achieve that goal. The producers and reporters of the “File on 4” program reported yesterday that after two and half years the scheme has yet to cut in carbon dioxide emissions, but it has increased consumer costs while lining the pockets of electricity generators.

The BBC explains, “The EU's Emission Trading Scheme -- a key part of the UK Government's drive to combat climate change - began in 2005 and created a trade in carbon allowances. It is essentially a permit to pollute. Power generators received their allowances free of charge but were allowed to reflect the value of those in increased prices to customers, as if the companies had actually had to buy the allowances. Energywatch [a consumer group] believes this increased electricity bills by about 7% in 2005.” That was worth about £1.3 billion to the generators.

Fair enough, if that 7% is actually doing some environmental good, it might be worth the expense. The measure of its effectiveness is the reduction in the amount of CO₂ that winds up in the atmosphere. The Beeb also says, “Provisional government figures from the Department for Environment Food and Rural Affairs (DEFRA) suggest CO₂ output in Britain actually went up, by 1.25% last year wiping out a slight drop of 0.01% in 2005. It is also reckoned that CO₂ emissions across the EU also rose by between 1 and 1.5% over the last two years."

Now, there are other sources of carbon emissions in the atmosphere, not least of which is the family car – which isn’t covered under the trading system. Also, if there is greater economic activity, there will be greater demand for electricity, and therefore, one could expect greater carbon emissions (yes, economic depression can help the environment if one really wants to look hard enough for a silver lining).

However, the British government isn’t falling back on any of that. Minister for Climate Change, Ian Pearson, labeled the carbon trading scheme an administrative success (Sir Humphrey Appleby would be proud) but then told “File on 4” that “If you are saying to me it hasn’t achieved a massive amount so far when it comes to CO₂ reductions, well I agree with you and I think Phase Two will be a big, big improvement...and a key instrument in helping us all to achieve our carbon reduction targets across Europe.” Maybe the Australians can learn a thing or two from Europe on how not to do it before they start their system.

© Copyright 2007 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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