IS EMISSIONS TRADING FAILING NEW ENERGY?

56% of World Bank emissions-reduction funds have gone to two hydrofluorocarbon (HFC)-cutting projects in China. HFCs, an industrial pollutant, have 11,000 times the greenhouse impact as CO2, Janet Redman points out in World Bank: Climate Proifteer, written for the Institute for Policy Studies.

Although the HFC projects verifiably cut greenhouse gas emissions, they have been a significant part of the failure of the Kyoto accords' intention to use profits from emissions trading to build New Energy infrastructure. Redman's paper is a description of and complaint about that failure.

Why did the World Bank go this route? Joelle Chassard, manager, Carbon Finance Unit/World Bank: ``We did not do the HFC projects in China purely to get [emission credits]…''

The World Bank pursued the HFC projects in China in 2005 to get China involved. Chassard again: ``There would be a problem if we were to keep on doing these types of projects…''

Redman’s “complaint” against the World Bank highlights the difficulty of judging the international community’s actions.

Redman says emissions trading markets do nothing in the efforts to fight global climate change by changing fundamental methods and habits. Instead, emissions markets allow big institutions to profit and perpetuate dependence on Old Energy.

The Bank was obviously focused on a different objective. It could have invested billions in wind and solar and there is no doubt such investment is urgently needed. On the other hand, New Energy supply chains are presently overburdened. Perhaps opening up China is not such a bad idea for right now.

Does this make emissions trading markets a failure, a scam or both?

Elliot Diringer, director of international strategies, Pew Center on Global Climate Change: ``No one is looking at the credit market as the solution…[It's] part of a large portfolio.''

As Chassard points out: ``There is nothing wrong with wanting to destroy HFCs…[The Kyoto process] is meant to invest in climate- friendly investments, not solely in renewable energy.''

The greenhouse gases. HFC is a small but potent part. (click to enlarge)

Income from the sale of credits is heavily taxed in China so the World Bank money indirectly goes to the Chinese government, which is investing heavily in New Energy – among other things.

The same attack on emissions trading is leveled at the the European Union (EU)'s Emissions Trading Scheme (ETS). In fact, it is too soon to decide how effective a tool emissions trading is against global climate change. The EU ETS is still getting "best practices" worked out - and there are some big, selfish governments who are making the process more difficult.

The facts. (click to enlarge)

World Bank Investments Fail to Promote Clean Energy
Jim Efstatthiou, April 10, 2008 (Bloomberg News)

WHO
Carbon Finance Unit of the World Bank (Joelle Chassard, manager); Institute for Policy Studies (Janet Redman, researcher/author); Pew Center on Global Climate Change (Elliot Diringer, director of international strategies and Joanna Lewis, senior international fellow)

Fortunately, venture capital has flowed into New Energy development. (click to enlarge)

WHAT
In World bank: Climate Proifteer, Redman reports the World Bank has made more than half of its emissions-reductions investments in retrofitting plants to remove greenhouse gas (GhGs) from coal, chemical, iron and steel industrial processes and argues the bank is using its role as carbon trader to earn profits and not to invest in New Energy.

WHEN
- 2007: World emissions trading market value rose to 40.4 billion euros ($64 billion), an 80% increase.
- 2007: World emissions trading market volume tripled.

UNFCCC monies HAVE gone into New Energy projects. (click to enlarge)

WHERE
The Institute for Policy Studies’ Redman belives the World Bank should get out of emissions trading and invest in New Energy.

WHY
- The World Bank manages of $2.1 billion in 10 carbon funds. It is funded by governments and companies. It has invested $1.6 billion in emissions-reduction projects.
- Income from the sale of credits to the World Bank is taxed a t 65% in China.

If investment in New Energy were inadequate, there would be greater cause for concern. (click to enlarge)

QUOTES
- Redman: ``This does nothing for increasing access to clean energy, the development of the low-carbon economy or sustainable…It leaves behind the bank's mandate as a public institution.''
- Statement, Carbon Finance Unit/World Bank: ``[The investments have] helped to develop a burgeoning carbon market, providing a new source of financing for development that is benefiting many developing countries…''
- Redman: ``Carbon trading is really not the most effective way of lowering greenhouse-gas emissions…By outsourcing emission reductions, you may or may not be doing anything to help lower the risk of climate change.''