The Truth about Carbon Credits

April 1, 2008
By Vincent Gioia
Achieving a global carbon credit mechanism continues to be at the top of the agenda of the three contenders for their party’s presidential nomination despite numerous scientific studies concluding that warming of the entire solar system is part of a natural cycle. Non-stop propaganda from the news media and politicians continue to blame man made carbon emissions for warming the planet.


The European Parliament Peter Liese of Germany said “We want a worldwide system as soon as possible”. . There must be an end to the status quo that nothing is done . which has predominated for many years now.”




So what is this about “carbon credits”, sometimes also referred to as “carbon off-sets”?

The bill sets up a carbon credit system whereby credits may be issued on a yearly basis to allow “covered facilities” to continue to emit climate-changing carbon dioxide. A “Climate Change Credit Corporation” is established in the bill which would collect large amounts of money by auctioning off increasingly more valuable carbon credits. The bill authorizes this corporation to auction off an increasing amount of carbon credits over time. The bill also mandates that fewer and fewer carbon credits will be made available over time, so these carbon credits will become increasingly more valuable and more money will be funneled into this tax exempt corporation.


In the Lieberman-Warner bill something called The “Carbon Market Efficiency Board” is supposed to be established. This board would become price fixers for the market of carbon credits, just as the Federal Reserve manipulates the value of Federal Reserve Notes, the Carbon Market Efficiency Board will manipulate the value of carbon credits.



Gore buys his carbon off-sets from himself–the Generation Investment Management LLP, “an independent, private, owner-managed partnership established in 2004 with offices in London and Washington, D.C.” of which he is both chairman and founding partner. If Gore’s motivation in pushing Global Warming is so altruistic, why did he establish a multi-million dollar corporation to cash in on it? Another question is did Gore create his business before the international global warming reports came out because he knew in advance what they would say?


Believe it or not, TerraPass started as a class project at the University of Pennsylvania’s Wharton School; Tom Arnold is TerraPass’s chief environmental officer and sole full-time employee. He has three students working for the company and a three-member advisory board. The company says it is a for-profit enterprise, but caps its profits at a maximum of 10 percent of revenues.

Presumably the money received by the company will be used to purchase pollution allowances on the Chicago Climate Exchange. The Climate Exchange allows polluting companies that produce less than a certain amount of airborne pollutants to sell credits to other companies that then allow them to go over the limit. TerraPass says it also invests buyers’ money (remember it only has one employee, the “owner”) in power-generating wind farms and other projects that reduce air pollution.


“A Carbon credit works like this:

Companies are limited to 80,000 tons of emissions, but “Company A” outputs 120,000. To offset this, Company A purchases 40,000 tons worth of carbon credits, therefore bringing them within the so called ‘legal limit’. This opens the door for multibillion dollar corporations to output even more, just by paying a “small fine” of purchasing carbon credits, which may or may not be used recently after their purchase, and even still, may not be used towards a truly worthwhile cause. All the while, Company A is increasing their emissions, while still complying with the Kyoto Protocol.”


Another problem as The Financial Times noted in an article on cap and trade systems “Carbon markets create a muddle” and “…leave much room for unverifiable manipulation”. The paper actually conducted an in-depth study of the carbon credit business and made some very revealing findings”. Their investigation found:

? “Widespread instances of people and organisations buying worthless credits that do not yield any reductions in carbon emissions.
? Brokers providing services of questionable or no value.


For one example, The United Nations runs a scheme under the Kyoto Protocol that allows rich nations to invest in clean energy projects in developing countries and in return receive certified emissions reduction credits (CERs) to offset their own emissions. However the credits are being used on projects that would have gone ahead anyway. A UN commissioned report prepared by Germany’s Oeko Institute for Applied Ecology, said “projects lacking this so-called ‘additionality’ help increase gases blamed for global warming by giving firms a spurious justification for continuing to pollute”. “One out of five emissions reductions credits sold under the Kyoto Protocol’s Clean Development Mechanism (CDM) lack environmental integrity”.

How about the use of carbon credit money to “fix” wetlands; does this reduce carbon dioxide emissions? The American Littoral Society received some help from the New Jersey legislature. New Jersey coastal wetlands were included as part of the legislature’s climate-change package passed in 2007. That law provides that future sales of carbon credits by energy companies and other big carbon dioxide emitters can be used to restore salt marshes. How does that alleviate the “problem” of greenhouse emissions?


Or how about California’s governor, Arnold Schwarzenegger use of carbon credits to justify his anti-environmental activities; is this what global warming fanatic supporters of the carbon credit system had in mind? Schwarzenegger will buy “carbon credits” in the Fred M. van Eck Forest, in the form of trees “allowed” to live and grow bigger and older so they can absorb more carbon dioxide. The purchase will offset some of the global-warming gas released during the governor’s frequent trips by private jet. (How do you allow trees to grow bigger; by not cutting them down?)

Anyone can buy credits like this when they purchase an airline ticket; generally for $10 to $15 per ton of carbon dioxide emissions. That’s roughly one person’s share of a commercial jet’s emissions in a round-trip flight across the country. But it is difficult to know exactly what the money buys because there is no accounting. Furthermore there is no agreement in the industry yet on what projects should count toward carbon credits.



What did the city do to earn those credits? They responded to citizen complaints about a smelly landfill. Fargo Solid Waste Manager Terry Ludlum can point to a map on the wall at the city landfill; it shows an aerial view of the landfill and it’s covered by red circles. Each of those circles represents a methane well and there are 40 of them on the 160-acre landfill.


Methane collected from the garbage now saves Fargo more than $300,000 a year. But that’s not all. Preventing all that methane from escaping in to the atmosphere earns the city carbon credits. Terry Ludlum explains, “If we say it’s worth $4.00 a metric ton, all of a sudden you’re dealing with $600,000 of income”. If the carbon market keeps trending up, Fargo’s annual carbon earnings could easily top a million dollars in a couple of years. Is this a great country or what?



Republican Representatives Joe Barton (R-Texas) and John Shimkus (R-Ill.) asked the GAO to look into “questionable purchases of carbon offsets” after recent media criticism of the venture revealed that while several farmers who had received money from the House purchase were actively sequestering carbon credits, they might not actually be using the money to further their carbon reduction efforts”.

This is what the carbon credit scam is all about; it’s a way to get paid for doing something you’d do anyway or not do at all. In this case, the beneficiaries may be small farmers but also include massive companies like Archer Daniels and Cargill. Generally it is major corporations that are pushing hardest for “Cap n’ Trade” legislation. General Electric is a major windmill producer and has the largest congressional lobbying budget of any company in the world. General Electric would receive a huge windfall if this so-called “market” is ever made mandatory or legalized even more than it already is.

As one columnist said, “There’s an elephant in global warming’s living room that few in the mainstream media want to talk about: the creators of the carbon credit scheme are the ones cashing in on it”.

The global carbon credit market is expected to be around $70 billion this year and this figure will grow exponentially as governments come on board with similar programs. Such an amount of money will attract scam artists worldwide. How can carbon credits be a good idea when you’re giving money to a project that doesn’t really need it or it isn’t used at all except to line someone’s pockets? Buying carbon credits might make you feel better about all the pollution you’re generating, but that doesn’t make it any less harmful, if it is, — especially since your carbon credit is more or less pointless.