Features

Pass the buck

"Pass the buck" Continued...

Issue: "The yoot vote," Aug. 4, 2007

In the United States, carbon trading is wholly voluntary. Individual participation depends on personal environmental convictions. Corporate involvement hinges on public-relations benefits, i.e., making green by being green. The current credibility gap damages that public-image incentive.

Over the past several months, criticisms have surfaced from some of the world's most prominent environmentalists. Earth Day founder Denis Hayes has compared carbon-offset abuses to the Catholic Church's sale of indulgences before the Reformation, calling for a modern Martin Luther.

Scores of critics echoed that analogy when the Vatican recently accepted a large donation of carbon offsets to become the world's first carbon-neutral sovereign state (see sidebar).

But most environmentalists, including Hayes, remain committed to the idea of carbon trading, even if the real-world practice needs reform. Trexler says the viability of the voluntary market turns on the reliability of particular projects. And with the recent surge of media and consumer scrutiny, the number of projects lacking additionality are likely to decrease.

Part of the fierce commitment to a carbon-trading scheme stems from how well the market-based approach worked to phase out lead from motor fuel in the 1980s and to curb the sulfur dioxide (SO2) emissions responsible for acid rain in the 1990s. Unlike motor fuel and SO2, however, greenhouse gases come from every individual, home, and business on the planet, generating an unprecedented regulation headache.

But former New Jersey Gov. Christine Todd Whitman, who served as administrator for the Environmental Protection Agency early in the Bush administration, says a government-regulated carbon-trading scheme in the United States is inevitable-just not while George W. Bush remains in office. She told WORLD that the current system, in which 47 states have taken varied independent action to reduce emissions, far exceeds the potential regulation headaches of standardized federal action.

Whitman praises the Chicago Climate Exchange (CCX), the only legally binding greenhouse gas trading system in North America, for its stabilizing force in the carbon market absent a federal scheme. CCX has already lured such prominent companies as Ford, DuPont, and IBM, as well as six U.S. cities and the states of Illinois and New Mexico, into accepting voluntary caps on their carbon emissions.

Should these contractually obligated CCX members reduce emissions beneath their required caps, they can bank or sell the difference as allowances-a type of carbon credit far more abundant and important than offsets on the global carbon-trading scene.

The redistribution of carbon allowances provides the only potential mechanism for many European businesses to meet Kyoto's targets. But, like offsets, the system's real-world outworking has proven highly problematic. Set the number of allowances too high, as the EU did for 2005 and 2006, and emissions may actually increase. Set the number too low, and the economy could suffer dramatically.

Veronique Bugnion, managing director for the North American branch of the emissions consulting firm Point Carbon, believes such difficulties can and will dissipate with tighter, more standardized controls. She told WORLD that UN regulations have largely alleviated fraud and additionality concerns throughout 5,500 offset projects in 110 countries slated to generate 2 billion tons of carbon reductions for the Kyoto market by 2012. Such relative success on that massive scale convinces Bugnion and many other carbon-market insiders that today's practical problems with allowances and voluntary schemes are solvable.

Still, some theoretical problems remain. Offsets and allowances can create undue expectations with rapid, initial progress as emitters pick off the low-hanging fruit first. But inexpensive and relatively pain-free measures obscure the more difficult reality ahead-that businesses and individuals must eventually trim their own emissions rather than plant trees halfway around the globe. "We will be moving up a supply curve," Trexler admits. "If demand for this stuff continues to increase, these things will become more expensive. There's a certain amount of low-cost coal-mine methane that can be burned, but at some point, you run out of that."

Indeed, to exact the sweeping global emissions reductions Al Gore advocates, the former vice president may at some point need to personally adopt the lifestyle sacrifices he preaches to everyone else.

The Holy See's trees

Vatican City claims carbon neutrality through forestation efforts in Hungary

For centuries, the Roman Catholic Church has issued indulgences for the supposed removal of the temporal penalties of sin. This summer, a Hungarian environmental company returned the favor, offering to cancel out the Holy See's contribution to climate change.

Cardinal Paul Poupard, president of the Pontifical Council of Culture, presided over a brief ceremony July 5 in which the Vatican accepted a donation of Hungarian forestation efforts to offset its carbon footprint. Poupard expressed his gratitude and declared, "In this way, the Vatican will do its small part in contributing to the elimination of polluting emissions from CO2 which is threatening the survival of this planet."

Many environmentalists celebrated the announcement as one more step in the papacy's consistent leadership on the issue of global warming. In 2001, Pope John Paul II labeled climate change "an ecological crisis which is making vast areas of our planet uninhabitable and hostile to humanity." Pope Benedict XVI has recently called for international support and encouragement of a "green culture."

Alongside its leap into carbon offsets, the Vatican also now plans to replace the cement panel roofing of the 6,300-seat Paul VI auditorium with solar cells, part of a broader reform effort to increase the city-state's energy efficiency.

KlimaFa, the business responsible for donating the Vatican's offsets, cited such energy use reduction measures and general green commitments as motivation for its gift. But marketing also played a significant role. KlimaFa has undertaken an initiative to restore 250,000 acres of Hungarian land to native forests over the next decade. To make that venture profitable, the company will sell carbon offsets to help European businesses meet CO2 restrictions mandated under the Kyoto Protocol. The Holy See provides an effective celebrity endorsement to boost sales.

KlimaFa managing director Russ George underscored the marketing thrust behind his company's donation, stating that the Vatican's acceptance of the gift "eloquently makes the point that ecorestoration is a fitting climate change solution for a culture of life."

Hungary's Bükk National Park will provide the setting for the new Vatican Climate Forest. The Vatican's 2007 energy usage will determine how big the project ultimately is. KlimaFa and its mother company Planktos intend to develop further carbon-offset projects for individual Catholic churches, a proposal Poupard fully endorses: "When man forgets that he is a faithful servant of this earth, it becomes a desert that threatens the survival of all creation."

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