European Politicians mislead the public on the real benefits of Carbon Credits to reduce global C02 Emissions

Although Europe is committed to reduce carbon emissions to 12.5 pct below the 1990 level within the next four years motivated by legitimate public concern about climate change. Outside of the European Emissions Trading System, which caps large emitters, the policy responses in each country differ. The influential Green movement in Germany has ensured large investment in wind power to reduce carbon emissions and similar to the English public they are uncomfortable with nuclear power although it supplies circa 80 pct of French energy. The UK Government increases public taxes on the pretext to reduce global carbon emissions while the Irish continue to explore the flawed concept of rationing through personal carbon levies. The pragmatic Italians have chosen to purchase cheap carbon credits from the Russians to meet their commitment.

The weakness in much of these responses is that politicians cloud the distinction between Europe’s long term energy security including the availability of oil and gas and public and public concern about global C02 emissions.

The world is not going to reduce its dependence on carbon fuels even if oil and gas runs out. By 2030 global GDP will be twice the 2005 level and energy demand will be 50-60 pct higher than today. We will still be dependent upon carbon fuels and global C02 emissions will be significantly higher unless we address where they are growing now. In Europe a commitment to energy efficiency and alternatives to match increases in GDP should enable our carbon emissions to remain stable or decline. The European political and economic challenge is energy security at prices which continues to allow GDP growth.

The European public challenge is to lower global C02 emissions and this should be addressed where the growth occurs through reduce credits services. One euro spent on purchasing a carbon credit which reduces carbon emissions in the developing world can be 100-200 times more effective than spending the same money in Europe. A simple policy option Europe could adopt to reduce global C02 emissions is to increase developing country aid where there is an additional opportunity to obtain carbon credits.

However politicians invariably prefer to spend and waste money locally than make cost effective policy decisions. So don’t hold your breath that European politicians will do much to halt the global increase in carbon emissions.