By Grant P. Haugen
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Each year, the world becomes more globalized. As a direct result, we have witnessed dramatic changes in climate. Of the many solutions and fixes to the climate change problem, carbon trading is one that has recently begun to garner a lot of attention. In this paper, I examine carbon trading schemes to see if they hold the key to helping with our climate change. I conclude that carbon trading schemes are not an effective solution to the harmful climactic effects of globalization.

Global warming is becoming recognized as the greatest challenge our century will ever face. One of the “most prestigious body of climate scientists ever assembled,” the United Nations’ Intergovernmental Panel on Climate Change (IPCC) concludes that most of the observed increase in globally averaged temperatures since the mid-20th century is very likely due to the observed increase in greenhouse gas concentrations due to human activities, affirming the widely-held belief that an increase in greenhouse gases is warming the earth’s surface and lower atmosphere (Lohmann 9, 2006). With human activities altering the relative volumes of greenhouse gases, more carbon dioxide, methane, and nitrogen oxides are being added to the earth’s atmosphere every day. The resultant climate change is perhaps the most complex global environmental problem of all. There are no easy solutions to this problem in a world increasingly characterized by globalization and cross-border and cross-continental economic activity. Each purported solution to offsetting some of the harmful human impacts on our global climate has its critics and proponents, and their arguments reflect the complexity of problem at hand. This paper will focus specifically on examining the arguments both for and against one proposed solution, carbon trading schemes, to develop a clear understanding and background of the benefits and shortcomings of these schemes and to gain a sense of how effective a solution they are to the harmful environmental effects of globalization. I conclude that carbon trading schemes are an insufficient solution to reducing harmful affects and impacts of globalization and in fact are detrimental to making real progress in solving this problem.

In our increasingly globalized world, the factors driving global and national economic growth, democratization, and improved quality of life are a double-edged sword. “Climate change especially alarms environmental critics of economic globalization as the primary greenhouse gases arise from core economic activities, such as automobiles, power plants, oil refineries, factories, agriculture, and deforestation” (Dauvergne 390, 2004). Though there are clearly global economic leaders, those core economic activities transcend the boundaries of any one country at this point. As a consequence, the ecological effects of globalization introduce challenges that cannot be solved by one country alone, requiring multi-lateral cooperation regarding issues like climate change and cross-boundary water and air pollution. An Australian joint government-business Task Group on Emissions Trading states that “the warning signs cannot be ignored… while debate continues about the precise scale, consequences and costs of climate change, and the scope for long-term adaptation to global warming, there is growing acknowledgement that governments, individually and collectively, should act to mitigate the emission of greenhouse gases” (Dusevic 1, 2007).

A major argument in the debate about climate change has been about which strategies will prove most economically efficient in reducing greenhouse gases without compromising economic growth (Parker 1, 1999). As a result of the increasing awareness among parties to the 1992 United Nations Framework Convention on Climate Change (UNFCCC) of the need for pollution control, the Kyoto Protocol was established. Negotiated in December 1997, coming into force February 16th, 2005. The treaty’s objective is the “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system” (Parker 2, 1999). The Kyoto Protocol is an agreement made under which countries that ratify the protocol reduce their emissions of carbon dioxide, along with five other greenhouse gases, or engage in emissions trading if they maintain or increase emissions of these gases.

Under the Kyoto Protocol, the practice of carbon emissions has become a focal point of attention for an answer to reducing greenhouse gases (Parker 1, 1999). Countries can satisfy their obligations to reduce carbon emissions and the impact on global warming under the Kyoto Protocol by partaking in carbon emissions trading. Participating countries are then “given a number of emissions credits equivalent to their 1990 levels of emissions minus their reduction commitment” (United Nations Framework Convention on Climate Change). Their credits are measured in “units of greenhouse gas, so one ton of CO2 would equal one credit.” The credit essentially provides that country with a license to pollute up to the limits set by the commitment to achieve the average reduction of 5.2% agreed in Kyoto” (Bachram 3, 2004). Carbon trading provides economic incentives for achieving reductions in the emissions of pollutants, creating a market by establishing a monetary value to the cost of polluting the air. From a business standpoint, this turns carbon into another input towards the cost of doing business, along with such things as labor and fixed costs. In the absence of this protocol, the costs of pollution are typically externalized by polluters and shouldered by other entities, government, individuals, and other states.

Kyoto provides developed countries with greenhouse gas emissions “budgets” for a specific time frame, “the compliance period 2008-2012 based on a percentage of their 1990 or 1995 emissions levels” (United Nations Framework Convention on Climate Change). If a country determined that it would exceed its emissions limit during the compliance period, emissions trading would permit it to purchase emissions reductions (credits to cover a shortfall) from another country that determined it would have achieved more emissions reductions (a surplus) than necessary to comply. Countries that make relatively inexpensive emissions reductions also have incentive to reduce emissions below the level required by the Kyoto Protocol since they can sell the extra credits to other countries whose emissions control costs are more expensive. As with most market-driven solutions, this positions countries who can both innovate and drive down costs well in the global marketplace since both “the seller and the buyer would have lower costs by virtue of the seller’s profit and the buyer’s savings” (Parker 3, 1999). Accordingly, countries then allocate their quota of credits on a nation-wide basis, known as grandfathering, by which several possibilities exist:

1. The polluter does not use its whole allowance and can either save the remaining credits for the next time period (bank them), or sell the credits to another polluter on the open market.
2. The polluter uses up its whole allowance in the allotted time period, but still pollutes more. In order to remain in compliance, spare credits must be bought from another polluter that has not used up its full allowance.
3. The polluter can invest in pollution reduction schemes in other countries or regions and in this way “earn” credits than can then be sold, or banked, or used to make up shortfalls in its original allowance (Bachram 3, 2004).

The total number of awarded tradable rights to companies, or credits, cannot exceed the cap though. Each company then decides whether they want to reduce their emissions to the level the government sets, or buy additional credits from someone else. This is also referred to as cap and trade, as governments cap the amount of carbon emissions allowed, issuing companies credits to pollute that can be traded in the free market. In effect, the buyer is being fined for polluting, while the seller is being rewarded for having reduced emissions. In typical supply-demand fashion, the more firms that need to buy credits, the higher the price of credits becomes, which makes reducing emissions cost-effective in comparison. The idea at work here is that companies that can reduce their emissions at a low cost will do so and then sell their credits on to firms that are unable to easily reduce emissions. A shortage of credits will drive up the price of credits and make it more profitable for firms to engage in carbon reduction. In this way the desired carbon reductions are met at the lowest cost possibly to society. “The higher the cost, the more pressure they will face to use energy more efficiently and to research and promote the development of alternative sources of energy that how low or no emissions” (United Nations Framework Convention on Climate Change).

Carbon emissions trading can work within a region, country, or on a global basis. Although Kyoto created a framework and a set of rules for a global carbon market, there are in practice several distinct schemes currently in operation, as shown on the diagram on the top of the next page. The largest multi-national scheme currently in operation is the European Union Emission Trading Scheme (EU ETS).

The EU ETS commenced operation January 1st, 2005 with all 27 EU member states participating. The schemes were presented in two phases, with the coverage and participants being exclusively for CO2 reductions initially. Each country has a National Allocation Plan specifying caps on greenhouse gas emissions for individual power plants and other large emission sources, with each facility receiving a maximum amount of emission allowances for each period (European Commission, 2006). This covers more than 10,000 sites, which emit roughly 46% of the EU’s CO2, with sectors ranging from electricity and heat, iron and steel, refining, glass, and building material, to pulp and paper (Philibert 14, 2004). Between 2005 and 2007, initial permit allocation has been mostly free by member states. The second phase begins in 2008 and runs until 2008, and will expand the scheme’s scope and effectiveness significantly. All greenhouse gases will be included, with the four non-EU member states of Norway, Iceland, Liechtenstein, and Switzerland expected to join (Reuters, 2006).

Here in the United States, the Chicago Climate Exchange commenced in 2003 as a “self-regulatory exchange that administers a voluntary, pilot greenhouse gas emission trading program targeting emissions and offsets in North America,” with the core being a “voluntary commitment taken by members to reduce greenhouse gas emission” (Philibert 17, 2004). The program was developed by 28 large companies, including Ford, DuPont, and BP America, covering multiple gases and multiple industrial sectors (Economist, October 17th, 2002). The member companies are issued Greenhouse Gas Emission Allowances at the beginning for a four-year period reflecting the reduction schedule: 2003, 1%; 2004, 2%, 2005, 3%, and 2006, 4% below the 1999 baseline levels (Philibert 17, 2004).

Carbon trading is still relatively young and even with the few models at work today, we can’t evaluate its efficacy with the benefit of many years of data and facts to back up the arguments in favor or against. In finding out whether or not carbon trading schemes help to reduce the harmful effects of globalization in the environment then, it is necessary to carefully review and research what other people have written about this subject. Though carbon trading is still in its infancy, there are a lot of opinions on whether or not the schemes are helpful, along with a lot of instructive advice on how they should be set up if they are to be implemented. Although few question whether the harmful effects of globalization are a major issue that need serious attention, there are passionate disagreements on what the best solutions are and how effective carbon trading is alone or as part of a broader strategy.

Proponents of carbon trading often tout the efficiency associated with these schemes since they separate those who pay for emission reductions from those who undertake the reductions. Because those buying emission “permits” or “credits” are paying someone else to reduce emissions who can do it more cheaply than they can, the benefits are extended to all that are concerned. In order to provide real environmental benefits, proponents like Carolyn Fischer, a fellow in Resources for the Future’s (RFF) Energy and Natural Resources Division believes carbon trading schemes not only have to be designed to be as efficient as possible, but also must have mechanisms for verification and accountability (Fischer 1, 1998). Fischer also believes that carbon emission trading would bring benefits such as promoting “ratification of and global compliance with the [Kyoto] Protocol by making reductions less costly; providing incentives to reduce emissions below targets levels; cutting the cost of reducing greenhouse gases by allowing the marketplace to identify the most cost-effective reductions, thereby making efficient use of scarce global resources; and quickening the pace at which countries address climate change by creating a market for innovative ways to reduce emissions cost-effectively and fostering the rapid development and diffusion of new technologies that reduce emissions” (Fischer 2, 1998).

Among proponents for carbon trading, there are those that argue that the costs of controlling carbon emissions would be significantly lower if carbon is permitted than if each country is required to meet its obligations alone. Polluters are given a choice of either reducing emissions themselves or getting someone else to do so (Davidson 2, 2006). A proponent and senior environmental research fellow at the London based think-tank Policy Studies Institute, Roger Salmons, argues that as long as the total amount of carbon being emitted is reduced, it does not matter where this is occurring around the world (Davidson 2, 2006). Politicians are quick to lend their support because the lower compliance costs make it politically less difficult on agreeing to targets like the Kyoto greenhouse gas limits, lowering the cost of attaining those targets.

The evidence and opinions against carbon trading points to environmental damage caused by it, citing that trading does little to solve pollution problems overall, which in turn cause new and severe problems that may even increase global warming. There is a growing sentiment that carbon trading encourages the industries most addicted to coal, oil, and gas to delay shifting away from fossil fuels towards renewable solutions, as they are able to get by year to year by buying pollution rights from operations that can cut their carbon easily versus making expensive plans for long-term structural change (Lohmann 1, 2006). Critics feel that the most effective and fundamental response needs to be leaving fossil fuels in the ground in the first place, where they belong. They claim that when polluters keep polluting, carbon trading fails to change the underlying behavior that causes emissions (Davidson 2, 2006). Larry Lohmann of the UK-based NGO group The Corner House launches a severe criticism of these schemes, going so far as to say that pollution trading, when applied to global warming, “features an inegalitarian system of private pollution rights that encourages rent-seeking, inaction and conflicts over property, is unable to measure either emissions or offsets adequately, leading to loss of credibility and even market collapse; tends to impede social and technological innovation and needed structural change away from fossil fuels; tends to concentrate pollution in poor communities; includes credit-generating projects that are unable to benefit the communities they are sited in; is unenforceable on a global scale; and impedes public education and discussion about the nature of the climate problem” (Lohmann 71, 2007).

Critics also point to the inefficient stage setting with carbon trading, and how it makes the job of political organizing even harder than it already is with working up a legal framework. They point to the political challenges inherent in establishing carbon trading schemes and claim that in order to work, greenhouse gas trading has to create a special system of property rights in the earth’s carbon-cycling capacity, which would account for the deep political conflicts that make effective climate action exceedingly difficult (Lohmann 72, 2007). In order for climate action to take place on a social and technological scale, much more has to be done and carbon trading is seen as a poor mechanism for stimulating this. Critics believe that in lieu of efforts designed to reduce our reliance on carbon producing fossil fuels, building a trading system reduces the political space available for education, movement-building and planning around the needed fair transition to renewable and non-polluting energy sources (Lohmann 72, 2007). By allowing polluters in the developed world to shift the burden of making cuts onto factories in the developing world, the benefits for the earth are going no where. Factory owners may be able to use the additional profits banked from carbon credits to expand dirty factories, with investments being diverted from renewable-energy technology (Vencat 1, 2007).

Enforceability is another major criticism of emission trading, and is a common theme throughout the research. There are a significant number of loopholes and incentives for industries to exaggerate their emissions in order to receive more permits and take even less action (Smith 1, 2006). They point to the Kyoto Protocol and EU ETS as being weakened by loopholes allowing big polluters to buy cheap “offset” credits from abroad to “compensate” for any emissions not covered by free pollution permits (Lohmann 2, 2006).

Regardless of whether or not those that have most closely studied carbon trading agree or disagree as to whether or not it is the best solution, they seem to agree that there are other alternatives to carbon trading in addressing climate change. These include conventional regulation, public works, green taxes, legal action, popular movements against fossil fuel extraction and fossil fuel pollution, shifting of subsidies away from fossil fuels and nuclear energy toward renewable energy (Lohmann 3, 2007).

While carbon trading schemes have both proponents and critics, the rest of the paper supports my thesis that carbon trading schemes are detrimental and an insufficient solution to reducing harmful affects and impacts of globalization. Although carbon trading proponents often claim that pollution trading has been a huge success in the US, the reality is that “US pollution trading schemes have produced no more reductions, and spurred less innovation, than traditional regulation, to say nothing of other possibly programs for cutting emissions. US pollution trading schemes have cut only short-term costs, and only for some actors, have raised many questions regarding many questions of equity, and in may ways have distracted attention from fundamental issues” (Lohmann 71, 2006).

One of the main environmental risks associated with emissions trading is that there are huge incentives for cheating, as there are many problems with enforcement. To start, there is no international regulatory authority with the power to impose penalties on parties that fail to meet their emissions limitation commitments (Haites 30, 2002). The track record for voluntary compliance by sovereign nations with their commitments under international environmental agreements is relatively poor (Haites 30, 2002). The overall effectiveness of a trading system depends on the enforceability “of the cap on emissions within all countries trading permits” (Kopp 2, 1998). However, when the countries lack the necessary institutions or lack the political will to enforce caps, the trading system becomes compromised and loses all effectiveness. It is also important to remember though that monitoring and enforcement problems exist even without trading. “Trading aggravates the problem only to the extent that ‘bad’ permits (in other words, permits that actually are needed domestically to cover emissions) are exported by some sellers without detection or subsequent sanction; And since trading can lower compliance costs, it also deters cheating” (Kopp 2, 1998).

Carbon trading schemes simply cannot work without much better global enforcement regimes. Although carbon trading claims to be efficient, the efficiencies tend to conceal a lot of inefficient stage setting, such as arranging infrastructure, and working up a legal framework. It’s also inefficient when the necessary conditions for trading, like the measurement instruments, legal institutions and so forth, are inadequate (Lohmann 72, 2006). Lohmann puts it another way saying “the efficiency that is fostered by trading is often not effective” (72, 2006). Virtually no resources are being channeled into the regulation of emission trading schemes, even though millions of dollars are being invested into setting them up around the world (Bachram 4, 2004). What this results in is a strong belief and trust that the corporations are filing accurate reports of emissions levels and reductions. Corporations demonstrated in recent years the need for more effective oversight of their financial reporting systems, and the same is necessary in order for carbon trading schemes to be successful. In order for emissions trading to work, the programs must be firmly grounded on accountability, accuracy of measurement and monitoring, and strict enforcement. The incentives for cheating are sizable and critics claim that this is inevitable in the “laissez-faire environment” in which carbon emissions trading is organized “The problem is that the fad for tradable permit systems has now far outstripped measurement ability, at least as far as greenhouse gases go” (Lohmann 94, 2006).

With carbon trading, the dilemma is inadequate direct pollution measurement and monitoring systems. This is because many countries lack the technical and institutional capability to quantify and monitor industrial greenhouse gas emissions precisely and regularly. According to one survey, doubtfulness about the quantity of greenhouse gases being emitted by national energy systems “are in the range of plus or minus 10-30 percent” (Lohmann 98, 2006). Even worse, IPCC country inventory guidelines calculate that uncertainties come to “10 percent for electricity generation, 10 percent for industrial processes including cement and fertilizer production, and 60 percent for land use change and forestry. For methane, the figures are even higher: 100 percent for biomass burning, 60 percent for oil and natural gas activities, 60 percent for coal-mining and handling, and greater than 60 percent for rice cultivation, waste, animals, and animal waste. For nitrogen dioxide, they are 50 percent for industrial processes, 100 percent for biomass burning, and two orders of magnitude for agricultural soils. In 2004, one author foresaw a ten-year delay prior to the establishment of adequate biotic carbon national monitoring systems in industrialized countries such as the US” (Lohmann 98, 2006).

The data on industrial emissions is, more often than not, provided by the polluters themselves and not by an objective third party, which raises questions about the polluters’ ability to be impartial in representing their own performance data (Lohmann 98, 2006). For example, during the first year of the UK’s trail emissions trading scheme in 2002, the Environmental Data Services exposed the main corporations involved in the scheme as having embezzled the system (Bachram 4, 2004). As well, the Integrated Pollution Prevention and Control System that monitors and controls industrial emissions in England and Wales depends upon the emitters taking samples of their emissions and reporting the results to the British Environmental Agency. A report from the Agency suggests “40 percent of sites did not have satisfactory monitoring procedures in place” (Lohmann 99, 2006). California’s Environmental Protection Agency noted in late 2005, meanwhile, that the state simply “did not have the accurate inventory of greenhouse gas emissions required for a cap-and-trade program” (Lohmann 99, 2006).

Ruth Greenspan Bell, a trading expert at the Washington think tank Resources for the Future notes that many highly industrialized countries such as China, Russia, as well as many of the other countries of the former Soviet Bloc do not have adequate monitoring equipment to detect what pollutants, and in what amounts, particular factories and power plants are releasing into the atmosphere. This again is due to the undependable environmental enforcement systems that cannot guarantee whether particular plants comply with the requirements (Lohmann 99, 2006). “The lack of an adequate measurement system can only exacerbate the opportunities for cheating that are already inherent in emissions trading systems, where both buyers and sellers have strong incentives to conceal whether reductions have actually been made” (Lohmann 100, 2006). Although the measurement technology is bound to improve over time, what reason is there to expect that countries will comply with the quotas when they cannot be effectively monitored and enforced? Market analysts Franck Schuttellar says, “We are being asked to believe that the flexibility and efficiency of the market will ensure that carbon is reduced as quickly and as effectively as possible, when experience has shown that lack of firm regulation tends to create environmental problems rather than solve them” (Smith 1, 2006). Even in the perfect world that emissions trading becomes strictly regulated; it is still unlikely to achieve even the woefully inadequate reductions in greenhouse gas emissions presented in the Kyoto Protocol. This is because the neo-liberal trends in international trade make it unlikely that emissions markets will ever be tightly regulated. Yet even if emissions trading were adequately regulated, the reality is that the trading in pollution best serves the needs of those with the most of lose from resolving the climate crisis. “Emissions trading therefore becomes an instrument by means of which the current world order, built and founded on a history of colonialism, wields a new kind of carbon colonialism” (Bachram 15, 2004).

Carbon trading is contrary to social justice. Lohmann states that “pollution trading is a poor mechanism for stimulating the social changes needed to address global warming,” and it can “get in the way of achieving changes of the kind required for breaking industrialized societies’ addiction to fossil fuels” (72, 2006). By allowing polluters to keep polluting, carbon trading fails to change the underlying behavior that causes emissions. Carbon trading encourages the industries most addicted to coal, oil, and gas to delay shifting away from fossil fuels. There is no need for these industries to make expensive plans for long-term structural change when they can get by each year buying pollution credits that can cut their carbon easily (Lohmann 1, 2006). Kevin Smith explains,

By framing the issue purely in terms of pricing, trade, and economic growth, we are reducing the scope of the response to climate change to market-based solutions. Such schemes allow us to sidestep the most fundamentally effective response to climate change that we can take, which is to leave fossil fuels in the ground. This is by no means an easy proposition for our heavily fossil fuel dependent society; however, we all know it is precisely what is needed. What incentive is there to start making these costly, long-term changes when you can simply purchase cheaper, short-term carbon credits? (2, 2006).

High-polluting industries and nations are being granted nearly as many free pollution rights as they need to cover their emissions, which they can then trade lucratively (Lohmann 1, 2006). Social change needs to come about in order to deal with climate change. Our society needs to transition away from a wasteful economic model built on fossil fuels-based energy sources and car-centered transportation, to one in which we “pragmatically reduce our emissions levels in the context of a renewable energy-based, participatory, diversified transport, reuse/recycle economy. No matter how many low-energy light bulbs you install, or how much recycling you do, there is still the need for more systemic changes to take place in society” (Smith 3, 2006). Those in lesser-developed countries have concerns with the impacts that carbon trading have on their countries’ economic viability. The International Durban Group for Climate Justice has documented that “carbon credits are being generated almost exclusively by local environmental offenders, while communities preserving local forests or defending their lands against oil exploitation or coal-fired power plants are being ignored” (Lohmann 2, 2006). Newsweek International journalist Emily Vencat explains that current emissions trading schemes have proved to be little more than a shell game, allowing polluters in the developed world to shift the burden of making cuts onto factories in the developing world (msnbc.com, 2007). “Too often factory owners use the additional profits banked from carbon credits to expand their dirty factories,” with the real winners in emissions trading being “polluting factory owners who can sell menial cuts for massive profits, and the brokers who pocket fees each time a company buys or sells the rights to pollute” (Vencat 1, 2007). With this in mind, the Centre for Science and the Environment in India claims “the rush to make profits out of carbon-fixing engenders another kind of colonialism” (Bachram 1, 2004).

Carbon emissions trading is problematic in the allocation of credits as they deal with property rights. In order to work, greenhouse gas trading has to create a special system of property rights in the earth’s carbon-cycling capacity, setting up deep political conflicts and which make effective climate action exceedingly difficult (Lohmann 72, 2006). Traders need to own what they sell in any trading system, and carbon trading is no exception. Former World Bank chief economist Sir Nicholas Stern says, “The very basis of emissions trading is assigning property rights to emitters, and then allowing these to be traded” (Lohmann 73, 2006). University of Texas Law School property specialist Gerald Torres explains that in emissions trading systems an emitter is not only legally obligated to reduce emissions down to the limit specified on its permit but also legally entitled to emit up to that amount (Lohmann 73, 2006). As a result, “legal instruments providing evidence of ownership are a universal requirement of all tradable permit systems” (Lohmann 73, 2006). The allocation of credits became a problem for the EU ETS when in 2006 the carbon market crashed, due to the governments giving their corporations too many property rights for the commodity to be sufficiently scarce (Lohmann 53, 2006). A positive item about the Chicago Climate Exchange, in regards to property rights, is that the participants themselves, “With all of their diverse interests, incentives, and backgrounds, determine the cap. Technically speaking, this collaborative process indigenizes the property right definition process. They will also set rules for changing the cap, which will create security and certainty of the property right” (Kiesling 3, 2002).

Political change may move faster than these schemes can adapt creating posing effectiveness problems for emissions trading schemes (Woerdman 2, 2005). In 1990, prior to the break-up of the former Soviet Union, the emissions of greenhouse gases by the member states were quite high, with the smokestack industries belching out masses of CO2 (Kopp 3, 1998). Since the collapse of the Soviet Union and the severe decline in economic activity that followed, the plants were shut down, causing emissions to fall and be at low levels relative to 1990 (Kopp 3, 1998). Because Kyoto Protocol targets for Russia and Ukraine are based 100% upon their 1990 emission levels, and projections to 2010 suggest that these emissions will still be below the 1990 levels, these countries have a surplus of permits they are intending to sell as international carbon credits. This block of allowances has been termed “hot air” by critics (Kopp 3, 1998). “The US and some other countries argue that the assigned amounts were agreed upon by all parties, and therefore that permits based on these amounts (1990 emission levels) are as good as any others for trade” (Kopp 3, 1998). Critics of carbon trading point out that if Russia and Ukraine were to sell their permits, allowing countries to subsidize their emissions with hot air credits, global emissions will end up being exactly the same as they would have been without a carbon market or Kyoto Protocol. This would be effectively the same “as if someone cranked these old powerhouses back up to speed” (Hopkin 2, 2004).

Carbon emissions trading is also rigged by problems with the Kyoto Protocol. For starters, progress under the Protocol is coming at a rate too little and too slow. Only small fractions of greenhouse gas emissions are mandated to help with climate change, and it required a decade to move to the point where it could be adopted (Speth 97, 2004). The Protocol is further weakened by loopholes allowing countries unable or unwilling to achieve the set targets to buy credits from abroad to compensate for any emissions not covered by their pollution permits, and their failure in curbing them. They are allowed to buy emissions rights from countries that have permits to spare, bringing up the issue of “hot air trading.” As well, industrialized countries can escape the need to reduce emissions by putting money into carbon-absorbing forestry or soil conservation (Lal 1623, 2004). The Kyoto Protocol also fails to deal with the 50% emissions from houses and personal transport, as these forms of industry are exempt from and excluded from the carbon markets set up to help regulate it.

Perhaps of greater concern are the emissions expected from other areas of industry that are exempt from the Kyoto Protocol and excluded from the carbon markets set up to help regulate it. Emissions from cars and planes, for example, are not included in national allocations, yet are growing at a fast rate (Hopkin 3, 2004). British Airways’ chief economist admitted, “Greenhouse gas emissions from aircraft, increasingly implicated in climate change, will continue to grow even if airlines join Europe’s emissions trading scheme, which is designed to cut them” (Lohmann 118, 2006).

Carbon emissions trading also fails to stimulate investments into green and sustainable technologies. “Even more worrying, emissions trading may have set back the battle against climate change by diverting investment from renewable-energy technology, which arguably is essential to any long-term solution” (Vencat 2, 2007). By building a carbon emissions trading system, the political space available for education, movement building and planning around the needed fair transition away from fossil fuels is reduced (Lohmann 72, 2006). This is because emissions trading schemes slow and block many technological developments by downplaying creative problem solving and resources on making small adjustments that extend the life of an overwhelmingly fossil-oriented energy and transport sector, rather than buying time for governments or corporations to make structural changes (Lohmann 118, 2006). In doing this, they make it more likely that when governments like the US are finally panicked into taking action on global warming, “they will grasp at extreme, technical-fix solutions such as creating new life forms to produce hydrogen, re-engineer hurricane prone seas, or absorb carbon dioxide; seeding the oceans with nano-particles to promote plant growth; dispersing nano-particles in the upper atmosphere to reflect light; or putting continent-sized mirrors into space” (Lohmann 118, 2006). Another downside to emissions trading is that it allows industrialized countries to get by using international permits and credits, which will allow them to act too slowly in making the long-term changes in their energy and economic systems necessary for stricter and more aggressive greenhouse gas emissions, such as greater energy conservation and more rapid development and spread of new technologies (Kopp 2, 1998). A study published in the scientific journal Nature showed that of the nearly “$6 billion already spent on projects to curb emissions of HFC-23, a potent greenhouse gas, had the same impact on the environment as would $132 million worth of equipment upgrades” (Vencat 2, 2007).

Although presented as an efficient and effective economic answer to reducing 
the harmful effects of globalization, carbon trading schemes are in fact 
detrimental and an insufficient solution to reducing harmful affects and 
impacts of globalization. Carbon trading is often seen as an epicycle, 
"keeping an oppressive fossil-centered industrial model going at a time when 
society should already be abandoning it." There are better ways to tackle 
the world's pollution problems and climate change than by privatizing the 
earth's carbon-cycling capacity. Public investments, shifting subsidies 
away from fossil fuels and towards 
renewable energy option, along with conventional regulation and support for 
the work of communities already following or pioneering low-carbon ways of 
life are all more direct and effective ways of bringing about structural 
change (Lohmann 3, 2006). Industrialized countries need to take 
the first steps in creating solutions to the problems posed by globalization 
and climate change, as they produce 75% of world's C02, even though they 
house 20% of population (Dauvergne 4, 2004). Carbon emissions trading draws 
our focus away from investing in green and sustainable technologies, a 
key to not only a healthy planet, but a sustainable future. Developing 
countries, put at a disadvantage in emissions trading schemes, need to be 
involved in emissions reductions as soon as possible since they are most 
likely to be using old, 
inefficient, and environmentally unsound technologies to fuel their economic 
growth. The evidence against carbon trading schemes points to the relatively 
small impact it has on solving pollution problems overall, and may even 
attribute new and more severe problems to these schemes. Without major 
structural social change, enforcement, and consistency, no global warming 
solution will have a chance of working for businesses, policy-makers, 
environmentalists and the public across schemes, companies, and countries. 
By delaying the industries most addicted to coal, oil, and gas to delay 
shifting away from fossil fuels and towards more renewable solutions and 
failing to address systemic social issues, these schemes won't meaningfully 
turn back the clock on global warming.

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