Acton Institute Powerblog

Cashing in on Carbon Credits

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As Earth Day approaches (April 22), Jordan Ballor reflects on the Kyoto Protocol and some of the results of the “market-based” incentives promised to those who signed on. The Kyoto Protocol created a carbon trading system, a “cap and trade” mechanism where a set number of carbon credits were established based upon the 1990 levels of emissions from the involved countries. These credits could then be sold or bought from other countries.

So what is the problem? As Ballor explains, Kyoto is having “some unintended consequences.” “Russia,” writes Ballor, “currently one of the world’s worst pollutors and emitters of greenhouse gasses, is being rewarded by the carbon credit scheme.” Russia is able to maintain current “efficiency” levels, not curbing their pollution or emissions at all, and still has carbon credits worth some $1 billiion. The so-called market incentives are completely ineffective.

Read the rest of “Cashing in on Carbon Credits” for Ballor’s full critique of the cap and trade scheme that Kyoto has initiated.

Jonathan Spalink


  • Clay Bryant

    Check the Chicago Climate Exchange web site to see how it’s done right.I’ve tracked them for the last 3 years and more people need to be behind them.Ford Motor,DuPont,AEP Electric and 110 other corporations,cities,colleges and individuals have entered into this working agreement and are committed to getting it right.Nothing is always right from the start but the real problem is those that do nothing.I always say that theres two ways of doing things,the right way and the wrong way and 99%% of the time you can make the wrong way right.
    The only thing I have hated to see happen lately is that AEP teamed with General Motors to reforest 17,000 acres(or maybe Hectres)down in Brazil and we have the same projects at hand here in the United States that could have been done to create the same types of offsets.We have many Native Americans that could use the work and it’s also a spiritual fullfilment to them(as it should be to all of us)Let the CCX know you acknowledge what they are doing.Everyone needs to know and hear it when they’re at least headed in the right direction.Business people,read with intensity.

  • William Gissy

    So Russia is not using the initial allocation and is sitting on a surplus of credits. That would mean they are polluting less than in the past. No other nation has attempted to purchase these credits so they are operating witin their established limits. Ok..the problem is?…I know…not the Austrian view of markets therefore evil……granted, initial allocations should be purchased by nations to sell to their companies rather than alloted but if you want to dismiss this as a "market based" solution fine….you can have that trivial sematic battle

  • Brent Bartsch

    So, Mr. Gissy, just exactly how much total carbon dioxide should be allowed to be emitted? Be sure to include the carbon dioxide exhaled by humans.

  • William Gissy

    Well Brent, hopefully you would know that the allocation limits are determined by the ecology’s ablility to absorb a given toxin without generating adverse longterm effects. Perhaps you are an enviromental scientist so you would be able to answer that question for in truth that is where we economists turn for those answers. However if you believe in polluting without limits and you feel comfortable standing before God with that attitude (I wouldn’t) then go be a selfish Austrian who believes that only profit matters.

  • Johan Posthumus

    The leaders of the rest of the world should be happy that the USA refused to ratify the Kyoto protocol? Yah right, thanks for sharing that with us …… Why then is the rest of the world not exactly ecstatic about the USA’s position? Are you saying they are all misguided?

    They seem to believe that we have a real problem on our hands with this climate change thing – both in terms of the severity of the problem as well as the time we have left to do something about it. The scientific community seems to broadly agree that we have a huge problem on our hands.

    And if they are correct (which I believe they are), then you should take note that the biggest contributor to the problem of climate change – both historically as well as in the present day – is the USA.

    The rest of the world (Australia excluded) has by and large decided that humanity cannot sit on our collective hands on this one and they are doing something to address the problem. Kyoto may not be perfect, but it is a very good start – even if the Russians (potentially) make a few bob out of it.

    Personally, I am thankful that there are leaders in the rest of the world who are prepared to provide the moral leadership which we need on this one. Without leaders like them humankind would still be living in caves because the roof of the first house fell in.

    Oh – and by the way – the cap and trade mechanism was included into the Kyoto protocol because a previous USA administration insisted on it.

  • Really? That science is all settled? Only if you ignore [url=]the flaws in the arguments for human-caused global warming and a whole lot of contrary evidence[/url]…

  • Brent Bartsch

    Dear Mr. Gissy,

    "We" must turn to environmental scientists? I don’t think any scientist should be in the business of advocating an agenda and, yes, that is exactly what you are "turning to" environmental scientists for them to do.

    You just don’t seem to understand the complexity of the issue and that there is not such a number – for example, maybe the southeast portion of the United States should cut back emissions by 50%%, but the midwest might see benefits (including environmental benefits) from increasing emissions. The whole issue is not clear cut at all.

    Your resorting to name-calling shows who is really selfish.

  • William Gissy

    Bret is that the best you can do….a silly counter if there ever was one…I didn’t say scientists should be in the business of advocating…but who else would be able to answer the question "How much pollution can the ecology process with no long term harm?"

    I certaintly would pose that query to an Austrian pseudo-economist

  • Muller Nicolas

    The reason why we europeans had to accept Russia into the Kyoto protocol (which means allowing them to earn money for something that is nothing else than the collapse of the former soviet industry) is because a major country representing 5%% of the world population and 25%% of the greenhouse gases emission after suggesting the market base approach did change its mind… Threatening the whole protocoll itself. That´s how we got stuck and had no other possibility. It is truly sad that we have to try to steer alone the earth awy from the climate crash while some others who could help don´t.

    Recently Australia (which didn´t sign the protocoll) sold a wind energy facility to China subsidized by european carbon credits… if that´s not hypocrit… or at least Realpolitik… I don´t know what it is… for sure not beeing generous like Jesus wants me to be speaking about christianity.

    By the way, the market base approach shows a lot of failures but which we still try to have it working properly.

    Anyway, I heard recently the usual republican speach on the radio over here (yes I live in the US) and it was about how poor people are poor because they don´t want to take responsability and responsability primarly includes your family and your country… sounds like a broken record.

    So if you are really a responsible person, are you going to choose between having a 4" bigger giant TV and leave it as an obsolete rubbish to the future generation… or leave the same chances you had to the future generations in terms of climate, available reserves and resources or water soil and air contamination. Unfortunately this country is rather choosing the first of those two.

    Don´t worry, we all have egoisitc point of views, but acknowledge at least those are not christians. Jesus GAVE half of his jacket, didn´t give it for leasing, rent or whatever.

    It is rather sad considering the total lack of correlation between GDP per capita and the level of happiness.

    Speaking about responsability, we should acknowledge first that WE have to reduce our emissions for WE industrialized nations have been emitting it for the last centuries at high level especially the last decades which means WITH knowledge of the possible consequences. Yes it is christian to recognize your faults and that you sinned.

    And by the way Jesus didn´t tell you to limit your love and his teaching to your family and your country. there is whole world out of here. "You shall love your neighbor as yourself".