A Dummies Look at an Emissions Trading Scheme


Ok I admit it; I have very little understanding of what an (ETS) Emissions Trading Scheme is. I stand in the ‘camp’ that says it is all a load of political hype, done to raise money for the Government. I do not understand how it will work, and I cannot see that it will truly benefit Mother Earth….. The planet I live on currently!

Now having been open and honest about where I stand at this moment in history, does not mean I will have to stay here indefinitely does it?

If the Government truly wanted the support of the electorate in this mission of theirs, to make Australia a cleaner environment, and to show us as a pinnacle of exemplar greenness to the whole world, surely they would be running TAFE classes for adults to teach them, in simple terms, how this will all work. Even basic Adult Education seminars on the subject – no need to qualify for anything etc, would be seriously beneficial. NADA! Nothing being offered that I can find in my locality.

Not to be put off, and accepting the fact that the local bookstore has recently ‘gone under’; I am able to turn to the internet for some enlightenment. Google (and other search engines) are very older adult friendly so long as you know what terms to enter so they can ferret out results for you.

I have a few of those (whatever) ‘for Dummies’ type books around the abode, so that seemed like a good place to begin on the internet. Thank You Mr. Google!

It seems you have to agree to certain terms to get into understanding how the scheme will work, terms such as agreeing that we human beings are causing Global Warming. Let me see now, how did the author put it?

  • We must reduce our production of CO2 and other “Greenhouse Gases” (GHGs) to levels that are within the biosphere’s capacity to process them, thereby stabilizing the concentration of these gases in the atmosphere.
  • The human induced activities that produce these GHGs (as a waste stream) are set to increase dramatically as the population continues to increase and the developing world strives to attain parity with the developed world.
  • We must therefore develop, deploy and transition to technologies that have dramatically lower rates of GHG emissions per unit of production.

Being a member of the group of people who do not accept that the Earth is in fact warming due to man-made (AGW) pollution, some would call me (rather rudely) a ‘denier’, I am going to have to just play around here and pretend that I agree wholeheartedly with the author so that I can delve deeper into this ETS mystery.

But how does this ETS really work? Being a real dummy I need an introductory explanation.

Industries would need points to produce CO2. There are two types of points: permits and credits

Some businesses would be awarded a certain number of permits for CO2. Normally one permit would give permission to produce one tonne of CO2.

So if the government has given an electricity producer permission to let off 100 tonnes of CO2, then the electricity producer would need 100 permits.

But what happens if that electricity company produces 120 tonnes of CO2? It will need to somehow offset the extra 20 tonnes. It does this by buying 20 carbon credits. These it could buy from an organisation which has been pooling and raking together spare carbon credits (a bit like a bank) from businesses which produced lower than expected GHGs. Or it might go and buy credits from a company which governments or regulators declare is a “clean energy provider”.

This is where I have questions. Let me see now, ‘Industries would need points to produce CO2’. Does that mean every industry and everybody, including power stations, cattle farmers and vegetable/grain growers, chicken farmers, oil refineries, Simplot, the producer of our frozen foods here in Tasmania? What about taxi drivers, truck drivers and long haul truckers? Well they emit a vast amount of smelly substances while on their cross country trips. What about the ocean going vessels that transport goods to and from our Island? What about the local laundromat and dry cleaner? And what about the airline companies?

I am thinking that if one lot of Carbon Emitters are going to require points to produce CO2, then surely all emitters will be in this loop?

OK now we readSome businesses would be awarded a certain number of permits for CO2. Normally one permit would give permission to produce one tonne of CO2.’ So we have some industries having to? Purchase Credits while others will be awarded Permits. One wonders which industries will be given permits and will they be gratis? free, or will they have to buy these from the government?

The next statement seems simple enough to comprehend:  But what happens if that electricity company produces 120 tonnes of CO2? It will need to somehow offset the extra 20 tonnes. It does this by buying 20 carbon credits.These it could buy from an organisation which has been pooling and raking together spare carbon credits (a bit like a bank) from businesses which produced lower than expected GHGs. Or it might go and buy credits from a company which governments or regulators declare is a “clean energy provider”.

Ah I think I understand that some sort of a Carbon Credit Bank will be in operation to sell excess credits or points to those industries that have need of them, because according to the government, they are emitting too much carbon into the atmosphere.

That infers a bureaucracy, an organisation will be necessary to handle all of this buying and selling. That also infers that there is money to be made off this scheme, because as I learned many years ago, it is rare that someone does something for nothing – simply out of the kindness of their heart.

Now it’s OK for me to think or infer something might happen, but I need to be sure it either will or will not happen.Wikipedia is a good source sometimes, so I went looking there.

The total number of permits cannot exceed the cap, limiting total emissions to that level. Firms that need to increase their emission permits must buy permitsfrom those who require fewer permits.[1]

The transfer of permits is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions. Thus, in theory, those who can reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest cost to society.[2]

Yes it figures, those naughty bad polluters will have to pay a price/ premium to be allowed to continue polluting. Seems to me it would be easier to refuse to let them pollute – ban them as it were. But then that would mean that my Tassie Fish and Chips, being processed and packaged by Simplot would no longer be available. No more Friday night easy cook dinners, hundreds of employees out of a job, and another industry out of business.

But who makes the money out of this? Obviously the government will make a certain amount because whichever way you look at this scheme, it is a money raising venture – AKA another tax.

But when it comes to the business of Trading in Carbon Credits, who will make the money there?

Imagine you are a farmer in the Australian wheat belt. You need to plant trees to arrest salinity, erosion and soil acidification, but you can’t afford to – trees usually don’t earn you money for many years, if ever. Then along comes a carbon broker. He offers to pay you money up-front to plant trees. In return, he wants a credit for the carbon such trees will store. You plant the trees and pocket the cash. As more and more farmers switch to trees, the wheat belt becomes more like a belt of living carbon. (source)

I knew it – there had to be a middle man, group, organization who would ‘broker deals’ between those needing to buy carbon credits to continue polluting the planet, and those who have a few carbon credits to spare because they are eking out a cleaner greener existence.

So far I have yet to be convinced that this Emissions Trading Scheme is really for the benefit of Planet Earth to save us from poisoning ourselves ostensibly by pumping too much carbon into the atmosphere. It still looks like another government scheme to tax us one way or another.

For goodness sakes, if a major polluter can via a Carbon Broker, get their hands on the credits they need, they simply carry on pumping out the pollutant! The price of their commodity will be increased to cover the added burden of the additional credits they have purchased. The goods or service from this polluting company will naturally be more expensive, so that we the non polluting consumer end up footing the bill. Ergo – taxing the general public. And there is still a huge amount of pollution being pumped into the atmosphere.

I did find out that another term for an ETS is a Cap and Trade Scheme. Cap the amount of carbon allowed into the atmosphere, and trade in carbon (buying) certificates.

What astounded me was what I read today about the EU’s Carbon Credit Trading Scheme:

“In effect, the Commission has turned the ETS into a big Ponzi scheme with early allocation (of permits) on the top of over-allocation,” an emissions trader told Reuters.

Seems it’s not working well in Europe so why should we try and imitate the European attempt at Cap and Trade (ETS)? Did Our Government write the book on Ponzi Schemes?

Of course there must be more for me to learn, but I feel as if I have made a good start. Thanks for sharing the journey with me.

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About JustMEinT Musings

I like writing, reading and expressing my opinions. I prefer natural health and healing to pharmaceutical drugs. Jesus Christ is my Lord and Saviour.
This entry was posted in Anthropological Global Warming, Cap and Trade, Carbon Tax, Carbon Tax, CO2, ETS, GENERAL MUSINGS and tagged . Bookmark the permalink.

11 Responses to A Dummies Look at an Emissions Trading Scheme

  1. I wish that we knew some comedians who don’t accept “The Sky is Falling” story from the Greens and Labor who could present a really good ‘send up’ of the Greens/Labor claims. They now call it Climate Change as though this had never happened before in history, heck come to Melbourne, in the land of Oz, we are famous for having ‘4 changes of Climate’ in a single day.

    They can’t call it ‘Global Warming’ anymore, because they know very well that the earth is about to go through a Cooler than usual cycle’ because of the lack of Sunspots. I even heard that the Greenies were wanting to put up reflector satellites, to reflect the sunlight away from earth. They really should just all slither back under those rocks, they slithered out from. The “ETS” and the “Global Warming” must be the biggest Scams since Bernard Madoff ripped off his “Investors”, and collapsed much of the US economy. Maybe Julia and Bob Brown could share a cell with him.

  2. If you’re a dummy, what do we call the ones who think the scheme is either necessary, or going to work?
    I hadn’t felt the need to bother to find out as it is a bit away from my reality.
    You have done well. Perhaps a bit cynical and biassed, but why not? That seems to be the pattern in the whole AGW scenario.
    I hope you are rewarded with a few free “permits”.

  3. Douglas says:

    Of course, when someone tries to bamboozle by rabbiting on about ETS, ‘trading’ in bits of paper, racking up brownie points or is that whitie points and so on and and son. You just yawn and then turn around and say:

    Oh, the euphemism for a carbon tax. Why don’t you just say so, don’t be shy, just come right out with it, we’re adults too you know. And why not be candid and state the fact of the matter, it wipes out energy because it wipes out the means of generating it, plant and, good grief, that’s why my power bills are through the ceiling and no-one turns up to work anymore because the firm can’t operate anymore and everyone’s wondering whether they’ll ever pay a mortgage again, let alone enjoy a little bit of lighting, cooking and heating. Then we’ll turn round and wipe your clock.

    Then sit back and watch their faces turn whiter then the whitest sheet.

  4. paul says:

    another well done piece of writing . interesting you refer to it as a ‘ponzi scheme’ towards the end , last time looked ponzi schemes were illegal ,,,,,, time for this fascist government to come clean or is it don’t do as i do do as i say 😉

    • Hi Paul,
      I believe there must be a case to answer, if there are any Lawyers out there who would be prepared to start a class action against Julia Gillard & Labor, an aside here, (Q. why have they changed it from Labour to Labor?) and Bob Brown of the Greens, you could throw in GetUp.org too for being their advertisers. If the other political parties are too scared to take legal action about them seizing power when there was no result for Gillard, and she chose to join forces with the Greens & the so called Indpendents in order to seize power. When by rights it should have gone back to the Polls again. Julia is leading an illicit government, but I guess she and Bob Brown are no strangers to illicit relationships. So why not just Rape Australians of our rights to a fair election?

  5. paul says:

    thanks frances , times like this i wish i’d listened to my mother & studied law , lol .
    now how do we publish this little fact & encourage said lawyers to form a case ,,, they are probably eating out of the same trough or have their hands tied & a gag stuck in their mouth .
    it’s about time the govenor general did her job or is she in on it too .

  6. Yes! The Governor General’s son-in-law is Bill Shorten who is a member of the Labor Party. is that a Conflict of interest? I think so. She is very tight with Julia Gillard too, Julia Gillard and she attended some dinner together, where Julia Gillard leaned over to the wife of the man being honored and told her that ‘I and Quentin Bryce’ are a little bit in love with her husband.’ or words to that effect. I was listening to the radio MTR 1377 where this was reported. It is a wonder that the wife of the soldier didn’t slap her face.

  7. paul says:

    wow , now that is a conflict of interest , i think it’s too late , we may have been secretly taken over from inside like a house full of termites ,,, i’m not sure how i as a single person can make a difference , if you frances , or anyone else have any ideas let me know

  8. Listen to MTR 1377 if it is available in your State, it is Talkback Radio and they love to hear from the public about the Global Warming Lie. You can express your opinions direct to air there. They publicize Public Protests against the Gillard Govt. lies particularly that Climate Change policy. They helped to arrange for buses from Melbourne to take people to Canberra for a protest, the Protestors paid a nominal sum for their tickets to travel there and back. If I had been able to go I would have done so.

  9. I was listening to MTR 1377 today and a caller mentioned this Dr. David Evans who originally supported the Global Warming theory, but has now changed his mind.
    His full speech is at this link.
    http://sciencespeak.com/rally.pdf

  10. ABC tonightEmma Alberici reported this story on Friday, July 8, 2011 18:18:00
    http://www.abc.net.au/pm/content/2011/s3264996.htm
    SCAMS AND MONEY MAKING FOR THE BANKS, no help for the climate!
    Don’t do it Julia YOU HAVE BEEN WARNED

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