Thursday, January 31, 2008

European Pollution Relocated? How to Game the EU

Two of the problems the EU will be facing with the implementation of the recently announced climate-change plan are business leaving Europe and companies making more money from carbon trading than they do from production.

I've already seen a couple instances where a Spanish company would shut down, say half, of their capacity, claim carbon reductions, sell the resulting carbon credits and use the profits to build a plant in Morocco. Playing both angles!

Via PoliticalAffairs, Marxist Thought Online:

Enthusiastically hailed by some and greeted with pessimism by others, the climate-change plan revealed by the European Commission on January 23rd is dangerous for two reasons. Yet it does set ambitious targets for the European Union as concerns cuts in greenhouse-gas emissions for member countries: a 20% cut by 2020 on 1990 figures (which have soared since), and 20% of the overall amount of energy is to be produced from renewable sources by the same date, 10% of which from bio-fuels.

But what the plan will really encourage is the relocation of CO2-emissions to keep up the European mode of development and consumption patterns by transferring the factors of global warming to other climes instead of contributing to their global decrease.

So the Commission is going to cut the amounts of CO2 that companies are allowed to emit by fixing annual quotas no later than 2013 so as to cut emissions by 21% on their 2005 levels by 2020. But these companies will in no way be prevented from relocating their activities to low-wages countries where they are sure to pollute even more since pollution from power stations and industrial activities there is worse than in Europe. What will encourage them to do so is the speculative ETS or “emission-trading scheme” in Europe where industrialists will be obliged to bid for CO2-emission permits they have so far been given free.

It will therefore be profitable for a relocating company to sell the pollution-allowances it will not use in Europe to those other companies that will not relocate their activities....MORE