What are carbon credits? What is global warming? What is climate change? Drukuj
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Środa, 16. Kwiecień 2008 10:27

Let me introduce you to the idea of carbon credits.





It all started in Kyoto, where in 1997 governments agreed upon 'carbon dioxide emission limits'. Rich countries like UK, Germany and France would face pretty strict limits, developing countries like China and India would see no limits at all.


A country like UK would be given a limit, and then this will be divided by the government and given over to 'pollutants' like EDF, British Gas and so on. Individual company's limit is decided upon by politicians and bureaucrats, if a company exceeds it's emissions limit, it will face a huge fine. (Which obviously gives the bureaucrats power to punish a company severely by limiting it's emissions limit if the company doesn't offer them a bribe).


What are the carbon credits used for?


Company will be fined if it exceeds its emissions limit, unless the company obtains 'carbon credits' with which it can raise the limit. (Still, carbon credits are not cheap, so it is like paying a fine, only not that huge).



Where does carbon credits come from?


It all starts in a country like China, Malaysia or Indonesia or whatever. Normally a country which doesn't have 'carbon emission limits' and its politicians and bureaucrats are easy to bribe.


There's a coal mine there, oil field or maybe a landfill, which produces some sort of 'green house gases'.


Now, those 'emissions' can be reduced by means of technology: methane from coal mines can be vented and burned in generators, which produce electricity. Natural gas from oil fields, which is very often 'flared' or let into the atmosphere, could be transformed into LPG and used. Methane from landfills could be captured and burned in generators to produce electricity.


Obviously, it will cost a lot of money, millions in fact, to install and run those generators, ventilators and the rest of it. (It sometimes doesn't make any economic sense, because those generators wouldn't pay for themselves over the life of the project.)


But, here comes the idea of 'carbon credits': the owner of the coal mine, oil field, landfill or whatever it is, can earn 'carbon credits' by means of 'reducing emissions'. But he usually doesn't have the money to buy the generators, nor the expertise to install them and run them properly.


So, here comes a rich man, who's got the money to buy the generators and hire men who can install them and so on. The rich man will approach the owner of the 'greenhouse gas' emitting facility, and offer him a deal: I'll buy the generators and the rest of it, you will give me a share of the carbon credits you'll earn. 


A typical project could cost 3 millions and will return 1 million carbon credits over it's life. Current market price of a carbon credit is around 10, so we're talking big, big profits here.


The owner doesn't have to do a thing, so he will say yes.


The rich man will install the generators, and pay the money to prepare documentation, in which he will claim that the generators reduced emissions of  GHGs by this and that (Obviously, he will be interested in inflating the figures so he can earn more credits). 


This documentation is then passed over to the auditors (Which is usually a rich man's company such as PWC, they will sign almost anything you throw at them if you threat them that next time you'll go to 'other PWC'. Those audits are pricey, you know.) and then to the UN bureaucrats which are supposed to decide whether the project indeed reduced 'carbon emissions' and how much those reductions, in 'carbon credits', are worth. (If they disagree with the documentation, you can always bribe them. Holiday in Bali is a good idea, but we're talking big bucks here, so a few hundred thousand is not uncommon.) The UN authorisation costs money, obviously.


Once UN agrees, the facility owner will get his credits (after he pays a hefty tax on them obviously, which is government's share in this whole scam) and will have to share some of them with the rich man who started the project in the first place.


They will sell those credits to EDF, British Gas or some other company in the developed world, which was given too low emissions limits because they don't know how to bribe properly.



Who will profit?


The facility owner will profit from carbon credits and revenue from sales of the electricity or LPG he gets as a by-product.


The rich man who started the project will get his big share of credits and sometimes other revenues.


Governments and UN will charge for all the audits and they will tax the credits as well.


Bureaucrats and politicians will get their bribes and free Bali holidays.


China and Malaysia will get cheap electricity.



Who will have to pay the bill?


You, obviously. EDF and British Gas will have to pay for the whole scam, either by bribing politicians, paying fines or purchasing carbon credits. They will pass this cost over to you by increasing your energy bill, and it will be you paying for the rich men getting richer, politicians' holidays and their new Jaguars, and you will be subsidizing electricity for Chinese government.


You, my friend, now you know why your energy bill is so high, don't you?



Bottom line.


10000 bureaucrats having two weeks holiday on Bali on you is just the top of it. The real scam is about real money and real theft. It goes into billions. I hope you're starting to realize that. Feel free to investigate more.


Google is your friend - if you know how to use it.

Zmieniony ( Wtorek, 06. Maj 2008 09:56 )