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 read ‘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 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.
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.
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.