When it comes to any kind of financial scam, like subprime mortgages or Bernie Madoff’s pyramid scheme, the devil is always in the details, and there are a lot of devils in the details of the cap and trade proposals on the table.

 

 

 

Devil number one is known as free permits, which is why some people call this system cap and giveaway. In this scheme, industrial polluters will get the vast majority of these valuable permits for free. Free! The more they've been polluting, the more they get. It's like we're thanking them for creating this problem in the first place.

 

 

 

In Europe, they tried the cap and giveaway system, the price of permits bounced around like crazy, energy costs jumped for consumers, and guess what? Carbon emissions actually went up! The only part that did work was that the polluters made billions of dollars in extra profits.

 

 

 

MIT economists say the same thing would likely happen here in the US. Those billions come from our pockets. A real solution would put that money to work stopping climate change. Instead of just giving permits away to polluters, we could sell them, and use the money to build a clean-energy economy, or give citizens a dividend to help pay for higher fuel prices when we transition to that clean-energy economy, or share it with those most harmed by climate change. Some people call this paying our ecological debt. 

 

 

 

Since we in the richest countries released the most carbon for centuries and lived a pretty comfy lifestyle in the process, don't we have a responsibility to help those most harmed? It's like we had a big party, didn't invite our neighbors and then stuck them with a cleanup bill. It's just not cool.

 

 

 

Did you know that in the next century, because of the changing climate, whole isle nations could end up underwater? And the UN says 9 out of 10 African farmers could lose their ability to grow food. Now wouldn’t a real solution benefit these people instead of just the polluters?

 

 

 

Devil number two is called offsetting. Offset permits are created when a company supposedly removes or reduces carbon. They then get a permit which can be sold to a polluter who wants permission to emit more carbon. In theory, one activity offsets the other.

 

 

 

The danger with offsets is it's very hard to guarantee that the real carbon is being removed to create the permit, yet these permits are worth real money. This creates a very dangerous incentive to create false offsets, to cheat. Now in some cases cheating isn't the end of the world, but in this case, it is.

 

 

 

And already, there’s a lot of cheating going on. Like in Indonesia, Sinar Mas Corporation cut down indigenous forests causing major ecological and cultural destruction, then they took the wasteland they created and planted palm oil trees. Guess what they can get for it? Yep, offset permits. Carbon out? No. Carbon in? You bet.

 

 

 

Companies can even earn offsets for not anything at all. Like operators of a polluting factory can claim they were planning to expend 200%, but reduced the plans to expend only 100%. For that meaningless claim, they get offset permits, permits that they can sell to someone else to make more pollution. That is so stupid.

 

 

 

The list of scams go on and on, and many of the worst ones happen in the so-called Third World where big business does whatever it wants, to whomever it wants. And with lax standards and regulations on offsets, they can get permits for just about anything.