CNN attempts to discuss carbon trading

But, as one might expect, they do a poor job. Why is science reporting always so bad in the mainstream media?

The CNN article suffers from two flaws: 1) artificial two-sidedness, and 2) lack of context. In the first instance, the article attempts to present the issue of an institutionalized carbon trading market in the US as another “teach both sides” issue, where proponents and opponents get equal time. Fair enough, you might say, except that without a skeptical examination both for- and against-claims can seem equally viable when they’re not. In the CNN article the opponents get free reign to vent their reflexive opposition to a sensibly-regulated proposed market solution to a transnational problem.

Critics of carbon trading have often referred to it as a “zero-sum” game, as any C02 saving gained from the investment is effectively neutralized by the fact that the purchaser has avoided having to decrease its own C02 emissions.

“The real question is whether carbon trading in the end will have any impact on greenhouse gas emissions,” says David St Maur Sheil, director and co-founder of the Association for Sustainable and Responsible Investment in Asia (ASrIA) in Hong Kong.

This claim can be easily dismissed. A cap-trade system is supposed to be a zero-sums game. That isn’t a shortcoming of the proposal, it’s a primary motivator of the entire thing. With carbon emissions capped overall, and each power plant needing to buy a certain number of carbon credits to pay for its exhaust, the market will decide how valuable carbon really is. Does a company spend all its C-credits on outdated coal-burning technology, then spend all its profits on buying more credits to pay for its pollution? Or does a company get off its lazy posterior and work to develop more efficient techonologies that force it to buy fewer C-credits in the first place? The latter company would be more than happy to sell its extra C-credits to the former company… meaning the latter, more vigorous company can see an immediate return on its R&D investment in the form of dollars for un-spewed carbon. As the years march on, the overall C ceiling drops gradually, forcing a continuous series of new innovations to spring from curious and agile minds.

Problem two with the CNN article is related to problem one. An easy way the author could have countered opponents to carbon trading would have been to point out that sulfur trading is alive and well in the US, and has proven to be an effective goad for creating lots of new, innovative, and less-expensive ways to deal with sulfur emissions from power plants. Under the US EPA’s Acid Rain Program, sulfur dioxide allowances (credits) can be bought and sold as a commodity. Power plants or anyone else who wants to emit sulfur dioxide in their exhaust must acquire and spend SO2 credits, and there are only so many credits to go around. If a company needs more, it can buy a few more. If a company cuts its SO2 emissions and wants to sell its unused credits, it can. Anyone can buy SO2 credits, meaning that the public can organize to force companies into being more efficient and emitting less SO2…. but to do so the public must put their money where their mouths are. The system works, and has both decreased sulfur emissions in the US and promoted a whole new bag of industrial tricks for keeping SO2 out of the atmosphere.

The SO2 trading system is a perfect example of government using the minimum necessary influence to spawn a technological arms race of innovation and creativity, using the adaptive power of the market to provide solutions to real-world problems. A carbon cap-trade system would most likely work just as beneficially. I only wish CNN could have taken the time to make that point.

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~ by Planetologist on December 21, 2008.

2 Responses to “CNN attempts to discuss carbon trading”

  1. The biggest problem with carbon trading, it seems to me, is how easily it’s gamed. As the article states, “the vast majority of CDM business has gone to China.” How likely is it that this has improved matters in any way? Or even broken even?

    In general, I think I’d prefer a carbon tax, with the revenues distributed uniformly (so that it’s actually tax neutral). But politically, that’s much more difficult, I’m sure.

    When sulfur trading was proposed, if I remember correctly, companies forecast huge expenses for cutting pollution. There were a lot of scare tactics used to defeat the proposal. Once implemented, though, pollution permits were FAR less valuable than forecast. It turned out to be relatively cheap to refit old power plants, compared to what the companies had claimed. [Note: I’m no expert, so I could be confusing this with another cap-and-trade system.]

    In that case, it worked. But cap-and-trade of sulfur emissions is almost certainly not as easily gamed as with carbon dioxide. Is this really an appropriate comparison? Carbon is everywhere, after all. Should I claim my houseplant as a credit? I have my doubts that this will work very well, though it’s certainly better than doing nothing.

    • Yes, that’s exactly how industry tried to kill sulfur-trading, by claiming it would bankrupt the economy. Business always underestimates its own ingenuity and adaptability.

      It’s true that carbon is more complicated than sulfur in this regard, but it’s probably not as bad as you might think. Companies can’t ship electrical power generation to China, for example, and that’s one of the biggest sources of CO2 emissions in the US… simple production of electrical power. For coal plants it’s pretty straightforward; burn X tons of coal releases X tons of CO2 (C + O2 => CO2 + heat/power). Any form of electrical generation that relies on burning a carbon fuel would work similarly, and credits would apply. For cars and trucks it’s more complicated, but still manageable. A practical solution would be to tax a gallon of gasoline according to how much of a fractional C-credit it would use when burned, at current market value for C-credits. If the end-user (the driver) paid that cost, it would place the onus of carbon conservation squarely on the shoulders of the consumer driving the car (and the market).

      The complications come in when one tries to decide what is a carbon offset and what isn’t. This is where the sulfur cap/trade system presents a useful example, and I hope the carbon cap/trade system uses it: don’t use offsets at all. In the sulfur trading system one uses credits to emit SO2, and the only way to emit SO2 is to use credits. There are no offsets as such – as far as I understand the regs. For a carbon system, if someone wants to burn coal and emit CO2, they would do so but only by using C-credits. No planting trees instead, no nothing. Because you’re right… it’s too easy to game a system where you have easy shortcuts on the side. CO2 exists naturally, but so does SO2 – both come from volcanoes, for example. I get frustrated with all the industry negative hype about CO2, with the oil companies posing as martyrs because of evil government regulators who want to treat clean, pretty, natural happy-squirrels CO2 as a bad old pollutant. Well, sorry, but CO2 is a pollutant when its old carbon from fossil fuels that have been out of atmospheric circulation for millions of years.

      Maybe that’s one shortcut we should have in a carbon cap/trade system: it doesn’t count against you if the carbon you emit has a modern C-14 concentration. Modern carbon – carbon already in the global cycle – can be swapped in and out of the atmosphere without really affecting climate. Thus, you can grow trees for paper, then burn the paper for heat, and the whole thing is carbon-neutral because the C you’re using is only 20 years out of the atmosphere. The reason we’re seeing climate change is because fossil fuel use takes geologically isolated C from deep crustal storage and injects it into the atmosphere so quickly that natural processes can’t scrub it out, so it builds up and changes the infrared-trapping capacity of the atmosphere as a whole. It’s old carbon, being used to buff the greenhouse effect. But if instead you just used current carbon – carbon already moving in the system – you don’t make a net lasting change in the bulk atmospheric C budget.

      Carbon-14 comes in because modern C has a constant C-14 fraction, but old dead carbon has been sitting in the crust long enough for all its C-14 to decay. Oil, coal and geologic natural gas are made up solely of dead carbon, old carbon. Natural gas from fermenting garbage today is fresh, still full of modern C-14. It would be easy to use C-14 as a quantitative discriminator, where you use up credits burning old carbon but not when you burn new carbon. That would push innovations in using ethanol, making methane, etc… which are carbon-neutral escapades.

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