I
attended a seminar recently on carbon cap-and-trade schemes. While
skeptics say such schemes are merely a licence to pollute, I have kept
an open mind about them. They are a useful subject for discussion and
learning. The idea of such schemes is that each country sets a 'cap' --
the maximum amount of carbon that all users of petrochemicals
collectively can import, produce and sell ('upstream' schemes) or can
emit ('downstream' schemes). That cap is then divided into a large
number of 'allowances' that are given out (or auctioned) to importers
and producers of petrochemicals, or to emitters of CO2. The
sum of the allowances cannot exceed the cap. To the extent you need
more allowances than you're allotted to continue to operate, you need
to buy them from those who aren't fully using theirs. Supply and demand
will then determine the 'market' price for these allowances. The lower
the cap, the higher the value of each allowance.
It's an interesting approach in theory, but is has a lot of practical problems:
- If
you use an 'upstream' approach, you are effectively just jacking up the
wholesale and retail price of petrochemicals. Some have argued that you
might as well just put a big tax on petrochemicals, use the proceeds to
fund renewable energy sources and research, and dispense with the
cap-and-trade scheme entirely.
- If you use a 'downstream'
approach, you are massively increasing the number of companies that
have to purchase allowances. Some believe the administrative cost of
such schemes could exceed the cost of the allowances, and undermine the
viability of the whole project.
- There are a lot of incentives
for cheating the system. We all know how well governments enforce
pollution laws today. It is likely the cost of bribing officials would
be less than the cost of allowances, so it is quite possible that CO2 would 'mysteriously' continue to rise far beyond the levels provided for by the cap.
What
is more interesting is that the proponents of caps, both
environmentalists and polluters (willing to do their part as long as
there's a level playing field) extol the virtues of such schemes, but
do so from utterly irreconcilable worldviews.
The polluters and
what-me-worry politicians of the Bush and Harper camps see such schemes
as a way to avoid Kyoto, implementation of which they believe would be
devastating to the endless continuation of the current growth-dependent
economy. All we need to do, they say, is set the caps high
enough that the allowances are modestly priced and provide a
measurable, gradual incremental cost to doing business-as-usual that
they can manage, and report on to shareholders and citizens with the
appropriate self-congratulation.
The naive environmentalists
and technophiles (there were a couple of these at the seminar) see such
schemes as a way to quickly and radically curtail carbon emissions by
making a 'market' that appeals to business and encourages compliance.
All we need to do, they say, is set the caps low
enough that we can meet and exceed Kyoto, and let the 'market' sort out
how to do this on its own, without the need for governments or moral
suasion. Like credit card fraud and insurance, it's just a new,
measurable cost of doing business.
So at meetings like the
seminar I attended, the attendees, at least superficially, smile and
shake hands and agree they are of one mind, that this can work if we
want it to.
But then when you talk with the attendees one-on-one
you hear some nagging doubts. The three bulleted problems above are
top-of-mind, but there is a deep sense that this is just too easy, that
it's an optical illusion, a compromise that can't hold and in fact
doesn't even exist.
And in fact they're right. It's all smoke
and mirrors. The reality is that the caps that the polluters and
right-wing business-as-usual governments want would have to be in the
stratosphere, and would be allowed to increase when new oil sources were found or to the extent population rose (and the price of allowances would also be capped, by issuing an unlimited number of additional allowances as soon as the 'market' price exceeded that cap). These caps would essentially allow CO2 levels to continue to rise,
rather than bringing them down. The minute the caps were lowered, three
things would happen: (a) it would become more profitable to circumvent
the scheme than to comply with it, even with penalties, (b) authorities
would realize that they couldn't really enforce compliance with the
scheme, and (c) the price of the allowances would rise from nominal to
astronomical. The polluters would cry foul, and say that wasn't what
they agreed to, and would pour money into the coffers of politicians
willing to rescind the scheme.
Meanwhile, the caps that the
naive environmentalists and technophiles foresee would initially be so
low that these three things would happen immediately.
The lawyers would move in to defend the polluters (including
governments, who are among the worst polluters) and tie up any attempt
to enforce the 'punitive' scheme for decades. Remember, ExxonMobil
still hasn't paid for the Exxon Valdez disaster.
I've illustrated the cognitive dissonance between the two groups with the graphic above.
At
this seminar, this was the elephant in the room. Everyone learned about
the scheme, and nodded, but just about everyone knew, deep inside, that
this was far too easy a plan to be workable.
At root, both sides
have a story in their heads, consistent with their own worldview, and
they can't conceive of any other story. On the one side, the story is
all about business-as-usual continuing forever, under the auspices of
the oxymoron of 'sustainable growth', with minor tinkering as needed,
self-regulated and governed by the market.
On the other side,
the story is about money from excessive pollution being spent on
innovation that will allow us to rise to the challenge of climate
change and radically shift from non-renewable to renewable energy in a
generation.
The problem is that, while these two stories are
close enough that they can, with a bit of nudging, overlap, they are
both fantasies. Neither is rooted in reality. The stories that are rooted in reality, like George Monbiot's Heat, like Jim Kunstler's The Long Emergency, and like Pierre Berton's The Great Depression,
are so different from the stories that all of us have been brought up
to believe, that we cannot imagine them, cannot conceive of them as
being true. The Great Depression couldn't really have been that bad,
and it could never happen again, could it? The Long Emergency is a cautionary tale, an exaggeration like 1984, right? Heat is a deliberate hyperbole designed to shake us out of our apathy and stir us to at least try to make Kyoto work, isn't it?
But
they're not. It is not these three stories of what has been and what is
to be that are fiction. It is the stories that we have taught ourselves
to believe (because it is easy and because it requires no dramatic
action on our part) that are fiction. Alas, it is only when you read
and study a lot more than most people have either the time or
inclination to do, that you realize this. Most of the world is not yet
ready to stop believing their fantasy stories and realize that books
like Monbiot's and Kunstler's and Berton's are not 'what if' stories,
but 'what was and what will be' stories. We are not yet ready to
acknowledge that continuing to behave and think the way we do, day
after day, with or without carbon trading schemes, will lead
unquestionably to the desolation of the Earth and the end of our
civilization.
I have come to grips with the fact that we do
what we must, and that by the time we realize what we must do to save
our beleaguered planet and ourselves, it will be far too late. It is
not in our nature, or in the nature of any creature, to behave
otherwise than as we do. We are preoccupied with the needs of the
moment. We have never been otherwise, and we are not wired to be
otherwise, no matter how the fervent believers in an emerging global
human consciousness deny it.
I said little at the seminar. There
didn't seem any point. But I did listen and nod when, afterwards, all
of the attendees I spoke with confessed to some cognitive dissonance,
some deep-seated doubt, and told me that it is their fears for the
world we are leaving our children and grandchildren that makes them
want to believe, yet fills them with nagging doubt, and a growing
dread. Our instincts are shouting to us. But we are not yet listening.
The elephant is still in the room, and we're beginning to sense its
presence, but we can't, and won't, see it.
|
MADE IN CANADA
trust your
instincts 
