Global Warming on FreeRepublic
Latest from Global Warming News Site
Posted on 05/04/2007 3:20:19 AM PDT by jsh3180
COLOGNE, Germany - Windfall profits that power generators are making from Europe's carbon market are damaging the integrity of the scheme, a senior European Commission official said on Thursday.
"It's undermining the credibility of the scheme. It would be helpful if participants think very hard about it," said Jos Delbeke, director at the EC's climate change directorate, speaking at a World Bank-sponsored carbon conference.
Europe wants to show the world its flagship climate policy is working, ahead of global climate change talks in December in Bali, Indonesia, on a deal to extend the Kyoto Protocol.
"A working European emissions trading scheme is a key for international negotiations," said Matthias Machnig, State Secretary at Germany's environment ministry.
Power generators are Europe's biggest carbon emitters, but analysts say they will make annual profits from the trading scheme well in excess of 5 billion euros (US$7 billion), assuming a steady carbon price of 20 euros where the price is now.
Under the scheme governments hand companies free quotas for emissions. If businesses exceed these they will have to buy extra permits on the market. If they emit less they can sell the surplus.
Utilities use the carbon emissions permits when they burn fossil fuels to produce power, and are passing on this cost to power prices though they got most permits for free, handing them profits and limiting incentives to cut emissions.
"Nobody is changing investments," said Guy Tuner, analyst at New Carbon Finance. "In Germany they're still building coal-fired lignite power stations."
The European Commission is now consulting on the rules for its carbon market after 2012, the end of its next trading phase. One way of curbing windfall profits would be to auction rather than hand out emissions permits free.
"As an economist I'd say it's easier to use more auctioning to tackle it, rather than taxing the profits," said Delbeke.
KYOTO
The aviation sector joins the European carbon scheme in 2011, after many airlines had lobbied for that, and analysts suspect airlines are eyeing windfall profits too.
"The passing through of costs (to airline ticket prices) is going to be an issue," said Delbeke.
Auctioning of airlines' emissions permits would limit such profits. German airline Lufthansa opposes auctioning.
"Mandatory auctioning doesn't make any sense," said Luthansa's head of environmental issues Karl-Heinz Haag.
"It works like a tax."
Other possible changes to Europe's carbon market from 2013 include extending the target period to eight years from five now, including road transport, linking to other markets outside Europe and centralising permit allocation to Brussels.
The European Commission has not yet decided how far companies will be able to meet their emissions limits under the scheme by buying cheap carbon credits from developing nations.
Such carbon trade under the Kyoto Protocol's clean development mechanism (CDM) is seen as vital to cut the cost for European business of meeting tough EU emissions targets.
Such trade after 2012 depended on other industrialised countries outside Europe taking part, said Delbeke. The present Kyoto cap and trading framework expires in 2012.
Story by Gerard Wynn
“Scam” is a better term.
Sounds like they have. Looks like the wrong people have figured out how to make a profit.
This is hysterical. Carbon-trading cannot produce wealth - so (I guess) what is actually happening with these “profits” is that some businesses are finding ways to shuck off some of their tax burden.
Which would be pretty funny, if I wasn’t sure that some gormless Civil Servants a) owe their existence to this Anthropogenic GW nonsense, and b) are living off my taxes.
The math doesn’t work here.
How can the utilities be making windfall profits? Who is paying them for the carbon credits in “windfall” amounts? Who is paying 20 Euros per tonne of CO2?
I’m sure a few gullible greenies are buying up credits (to offset their personal emissions) but this would only add up to 50 Euros to 100 Euros per person. The numbers don’t add up.
It’s a wonder that USA utilities aren’t clammoring for us to join kyoto. Sounds like free money for them and a big shaft for the consumers, who have bought into it hook line and sinker.
The thing about auctioning off the carbon credits won’t fix it either, because the companies are again just passing it all along to the consumer. What they will do is time their trades to try to make trading profits, which they do not need to pass onto consumers, and if they screw up and lose money trading credits then they will just pass that along. It’s a no-lose game for them.
Only the con artists are supposed to make money on the scam.
haha!
You don't think that perhaps the USA companies have (GASP!) ethical standards!
Global Warming on FreeRepublic
Latest from Global Warming News Site
The short answer is Banks and investement companies. Utilities get credits for new technology or for adding pollution controls that have nothing to do with limiting carbon emissions. They also get credits for closing down old plants. If they build a new plant, they are exempt or get credit for shutting down the plants. Thus...making a boatload of money and not limiting their carbon footprint at all.
Many companies here in the US want to do this because they have already closed plant or they are in the process of doing so.
The number of carbon credits a company has is related to their baseline numbers. Whoever is in charge of setting those baseline numbers I can guarantee you that they will make millions!
.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.