first published in weblog one hundred and thirty eight on Thursday 18th May 2006

I have been reading the Financial Times for the past couple of days to understand the European Carbon Trading Exchange. The newspaper clippings spread out on the cabin table in front of me…I am working on my Dell laptop…have headlines like Blair’s Decision Time On Nuclear Power, Carbon Credit Errors Throw Permit Scheme Into Turmoil, Independent Auditing a Must if Carbon Trading is to be a Success, The Real Story Behind the Collapse of Carbon Prices and Give the Emissions Trading Scheme a Fair Chance...written by the ceo of RWE npower. These shenanigans lend credence to those claiming that the whole point of The Kyoto Treaty is that it should fail.

I don’t believe the Global Warming Orthodoxy that sees Armageddon in carbon emissions. But that is no reason not to eliminate them. The side effects often turn out to be the main effects. It is almost a Rule of Nature. The less muck spewed into the atmosphere the better. But some of the side effects have to be seen to be believed…and many have little to do with cutting back on atmospheric pollution or reining in the emission of greenhouse gases.

My Crap Detector first began to register with the allocation of CO2 emissions permits for 2005…based on self-assessments which made Cod Quotas look like divine justice. The Dirty Half Dozen are Germany with 473 million tonnes, the UK with 242, Italy with 215, Spain with 181, France with 131 and Holland with 81. The other ten countries in the European Commission’s scheme account for just 12% of all permits and can be disregarded.

Demand on the Carbon Trading Exchange is driven by the UK, Spain and Italy …respectively 15%, 11% and 4% over quota. The UK has to buy 40 million tons-worth of CO2 emission permits, Spain 20 and Italy 10. Who has them for sale? Last week it was France and Germany. But then Angela Merkel announced that Germany would give 12 of her 21 million tonnes surplus back to Brussels. But France with her massive ‘non-polluting’ nuclear industry wants to keep her 15 for 2006. Market chaos duly ensued as carbon prices shoot up from €9 to €15 overnight. What a game!

It gets worse. Britain has enforced the toughest cuts on the electricity generators. Here’s the logic. The electricity sector is more insulated from overseas competition than sectors like chemicals, cement and steel so costs can be passed on to customers in higher prices. But the giant German polluter RWE owns Yorkshire Electricity and npower which supply UK consumers. Electricity companies have been accused of profiteering by charging customers for the free carbon permits they were given by Brussels. Now there’s a surprise. You couldn’t make it up.

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