Carbon trading is often either seen as the clever, market-based tool by which we can save the world from global warming at the lowest cost, or as a gigantic con through which wheelers and dealers in the City can fleece us all once again.
The truth - as ever - is somewhere in the middle: it is a useful tool for cutting some types of emission, but has not been implemented well, especially in the EU Emissions trading scheme. Sandbag, a climate campaign organisation, reveals today that so-called "hot air" carbon credits – those which do not result in any actual emissions cuts – could be so numerous that companies covered by the EU Emissions Trading Scheme would not have to make any cuts to their own emissions until 2015.
The hot air permits result from the over-allocation of emissions allowances and from those going unused as the recession cuts economic activity. The key point underlying it all, and which I heard again this morning from the Prime Minister's special representative for carbon markets, Mark Lazarowicz, is that caps are the key - and the current caps are far too loose.
The potential hot air credits identified by Sandbag include 400m tonnes which industry will not need in the current 2008-12 ETS trading period. A further 300m ETS permits exist in a reserve, which supplies them to newly formed businesses. Lastly, companies have the option to offset their emissions by buying credits from outside the EU, usually from hydroelectric or other schemes in China and India. On current trends 900m of these could be available up to 2012, and bankable for use up to 2020.
Sandbag has very handily put the vast treasure trove of EU ETS data online now. It covers all 12,000 commercial installations across all the EU nations, and they have also created an emissions Google map which will launch fully on wednesday.
In the meantime, we have extracted some of the most useful as a Google spreadsheet. This data covers 50% of the continent's emissions - go and have a look - they are your emissions too.
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