“Cap-and-Trade” Permits:
States in the Service of Capitalist Polluters

Dec 21, 2009

The Obama Administration has called for cap-and-trade legislation in the U.S., and it is currently under debate in Congress. Cap-and-trade is promoted as the means to cut back on the emission of greenhouse gases.

But for some time this system has been established in Europe and hasn’t done what it promised. In Europe, there are about 12,000 businesses involved in this program, accounting for 45% of European CO2 emissions.

Under “cap-and-trade,” each nation and business is given a certain quota of CO2 emissions each year, in tons, measuring the quantity of CO2 they are allowed to emit. If a business emits more than this quantity, it has to buy permission for the excess amount on the “carbon market.” On the other hand, if they emit less CO2, they can sell the surplus. The price of a ton of CO2 is supposedly fixed by supply and demand in the market place.

Allowing industrial companies to pollute according to the “laws” of the market–including speculation–is the perfect image of the capitalist world, in which everything is bought and sold. This pollution market is supposed to be a way to get businesses to invest in controlling their pollution. But this works only if the price of a ton of CO2 emission is high enough that the capitalists judge it more profitable to invest in modernizing their facilities than in buying pollution permits.

From 2005, when this market was established in Europe, until today, the price of a ton of emissions has never gone high enough to force companies to add pollution controls. Of course! The different countries have given a multitude of exemptions to their respective industrial companies, allowing them to go on polluting without buying more permits.

The emission quotas given to each polluting enterprise were much higher than their actual emissions–so much so that in the first years, the majority of industrial companies emitted less CO2 than they were allowed. The greatest polluters, like the petrochemical industry even pocketed millions in profits by selling pollution permits!

The industrial companies have also profited from the so-called “Mechanism of Proper Development.” When a capitalist invests in an “ecological” industrial project in an underdeveloped country, he gets an additional emission quota for the plants in his own country, corresponding to the tons of greenhouse gases that will be saved by this new project elsewhere!

So the price of CO2 emission on the “carbon market” hasn’t soared. Nor has the pollution market pushed the European industrial companies to limit their pollution. This should come as no surprise–since the priority of every government in capitalist countries is first and foremost to serve the interests of their respective capitalists.