- JoNova - https://www.joannenova.com.au -

The carbon casino caught with its pants down (again)

carbon credits catch fire

Another major carbon auditor goes down.

Norways’ DNV (Det Norse Veritas, “The Norwegian Truth”) was the largest auditor of the infamous CDMs (Clean Development Mechanisms) until it was suspended last December when it was caught selling carbon credits for projects it hadn’t checked. At the time it was so large it had approved fully half of all CDM credits on the market. Its excess workload was transferred to number two auditor, SGS, and shock, this week, SGS has been caught and suspended because it couldn’t prove it’s staff had properly vetted projects either. Indeed it couldn’t show that they were even trained to do that vetting. (Did SGS not see this coming?)

When the West offered money to buy the rights to air-with-slightly-less-carbon-dioxide-than-it-could-have-had, China and India put up their hands and said “Yes please” 900 times. And why wouldn’t they? CDMs are worth about 20% of all emissions trades, which amounted to $126 billion in 2008. Up until the global financial crisis it was doubling annually, like all good ponzi schemes do.

This supposedly “free market” has none of the normal limits which make it hard for companies to get away with cheating … namely a connection to real material goods: usually if you don’t have it, you can’t sell it. But with carbon credits, customers can buy fake products and never know the difference — even after it’s “delivered”. That’s what you get when you deal in atmospheric nullities.

…with carbon credits, customers can buy fake products and never know the difference — even after it’s “delivered”.

It might be called a “carbon market”, but remember that no one actually trades carbon, they trade rights to emit air with less carbon, and it’s not even as physical as air with less carbon than it used to have (something we can measure). No, it’s worse than that: it’s air with less carbon than it might have had.

So it’s an underwhelming surprise that the top two auditors have both been caught selling “Credits for emitting air that might-have-had-more-carbon-in-it, which might-have-been-checked by people who might-have-been-qualified to check these things”. Selling bridges in Boston has more respectability.

Fortunately, because carbon doesn’t appear to make much difference to the climate, whether the schemes work or not is a moot point. Arguably, if The Point is assuaging western guilt for our successes, then an imaginary credit is just as good as a real one. It’s one of those rare occasions where the placebo effect is 90% effective.

Ultimately this is a market that depends on unknowable, unprovable motivations: I wouldn’t have cleaned up or closed down my dirty factory without all that money. Really. And by the way, I’m thinking of building another one just like it… (Oi! want to pay me not to build it?)

Mass marketing meets the Emperors new clothes —  with undertones of extortion. This is how we save the world?

Recent legislation has tried to close some of the loopholes, and like everything, there are honest operators out there among the crooks. But seriously. It’s like knitting a battleship and hoping to make it waterproof with bureaucrats. It’s not a question of closing loopholes — it IS a loophole. There is almost nothing we can actually pin down — it’s an open invitation for scammers and con-artists. The mat at the door says: “All Rorters Welcome. If we catch you cheating we’ll change the rules.  Next time you’ll have to cheat differently.”

“It’s not as if we’re printing money in a garage,” Yvo de Boer, U.N. climate chief, said of the credits. Which is true, there are no garages involved. Just large multinational corporations.

Mass marketing meets the Emperors new clothes —  with undertones of extortion. This is how we save the world?

And it’s not as if the funds transfer from the West to the Third world is helping the poor people in the street. The billions of dollars in payments often end up with the financial brokers in London, and with potentially corrupt bureaucrats in China. Interviews with locals near the Xiaoxi dam project suggest people were evicted from their homes, and were not paid enough compensation to buy new homes. The money for the credits associated with the  dam was supposed to reduce carbon emissions, yet construction for the Dam started a full two years before the application for CDM funding was even entered. (Before!) What looks like a Dam, acts like a Dam, but isn’t…?

Bureaucrat-ite may work like a glue plugging holes, but it repels free-markets. Too many bureaucrats and too many rules makes a free market “fixed” in every sense of the word. But the carbon-that-might-have-been-released market can’t be a bureaucrat-free, free-market. It has to be a bureaucrat-rich. The only thing “free” about this market is the price people would pay for carbon-which-might-have-been-released-but-wasn’t.

Full stories:

DNV gets pinged Dec 2008

SGS busted Sept 2009

(Yvo de Boer’s quote about printing money.)

10 out of 10 based on 1 rating