Friday, November 06, 2009

Carbon Trading

It seems carbon trading is in the news again; it's a rum business to be sure.

For starters there's the Clean Development Mechanism (CDM). It provides a way for rich countries to fund projects in poor countries in exchange for carbon credits, provided that the projects wouldn't have happened anyway.

This last bit is known as the additionality criterion and it's fraught with opportunities for abuse.

In China for example it appears that companies producing refrigerant gases can earn more money from selling the carbon credits associated with cleaning up their own pollution than they can from selling their main product - leading to a perverse incentive to build extra refrigerant plants whose sole purpose is the creation of a valuable cleanup opportunity.

If we're going to have additionality, it seems only reasonable to include the complementary principle - what one might term abstentionality. This would be a way of earning carbon credits by agreeing to stop doing something really bad that otherwise you might carry on with.

Since the way these mechanisms work is by first establishing a baseline defining normal behaviour, perhaps we should all go mad buying massive, inefficient cars and de-insulating our homes on the grounds that the more outrageous our behaviour now, the better the deal we will be able to reach later for agreeing to improve it.

Anyway, if this is the way things are headed, I want in. After all, I'm capable of emitting a bit of carbon dioxide and I think it's only fair that I should be allowed to choose what I do with it.

It's given me an idea. Watch this space.

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