This week, the British courts have established that a belief in manmade global warming can constitute a religious faith.
Not for me it isn’t. I don’t know whether global warming is manmade. Although there seems to be significant scientific evidence in that direction, there are experts who disagree and I don’t feel qualified to judge, nor ready to make a leap of faith.
On one issue, though, I am extremely sceptical, and that is the effectiveness of trading the rights to emit carbon emissions – known for short as carbon trading – as a means of reducing greenhouse gasses.
In its new report “A Dangerous Obsession”, Friends of the Earth explains just why this approach is so flawed – for one thing, it creates perverse incentives to increase carbon emissions, and even for climate change sceptics, more pollution is surely a bad thing. Furthermore it may discourage other more effective steps – such as better agriculture and foresty practices – because the relative benefit of investing in these things is insufficient.
But what really concerns me is that the rapidly expanding carbon trading market creates all sorts of opportunities for banks, traders and others to make big profits out of government-backed programmes which distort the market. Sounds horribly familiar, doesn’t it?
I also worry that the vested financial interests of powerful institutions in the proliferation of carbon trading may skew analysis of the science of global warming. To have government-backed carbon trading requires a belief not only that it will curb emissions, but that cutting emissions is vital to reduce global warming. Both those convictions are at the core of European Union policy, despite the horrendous problems encountered in the first phase of emissions trading; and the same approach is now increasingly accepted in the US. Those beliefs make it seem justifiable to build a massive system which will hugely benefit intermediaries and various other parties. As it happens, according to the Center for Public Integrity’s analysis of Senate disclosure forms, banks and other financial groups, which were silent on this issue as recently as 2003, had about 130 climate lobbyists in Washington last year.
There are growing fears that the rapid growth of this market could create a new bubble, according to the Economist Intelligence Unit , followed by an inevitable bust. The Commodity Futures Trading Commission, the US regulator, says that environmental markets have grown on average 329 per cent annually since 2002. Commissioner Bart Chilton observed recently: “We don’t want to see the largest commodity markets in the world–these Green CAT Markets–become a private jungle gym for speculators and fraudsters.”
Indeed we don’t. Yet we are creating huge, highly complex, artificial markets which will be far more difficult to regulate, in my view, than a straightforward product like, say, subprime mortgages.