At the forefront of the European Union's efforts to meet its international and other self-imposed carbon emission reduction targets is quite possibly the most flawed system in the world. It is a system that has gifted billions upon billions of Euros to the continent's largest emitters in subsidies, lined the pockets of international criminals with vast sums, and not only increased carbon emissions on Europe's borders to the tune of hundreds of million tonnes of CO2 it also created the an environmental disaster dubbed the worst in history. And when it all went catastrophically wrong, the EU has given itself privileges of market manipulation that would have sent a banker to jail many times over if they had tried the same thing in any ordinary market.
And here is the punchline: and you paid for it all.
Someone once said that a camel is a horse designed by a Committee. Well, in this case the horse is an effort to reduce carbon emissions by using market mechanisms. And the committee is the European Union.
Allow me to introduce you to the camel.
In question is the self-styled 'flagship' programme of the European Union, the EU Emission Trading System (ETS). The ETS is a bewildering mishmash of carbon credits, verification agencies, multiple Government departments, and international agreements, all covering 12,000 installations in the EU, Iceland, Norway, and Liechtenstein.
The reach of this system is enormous and covers the power, iron, steel, aluminium, oil, gas, cement, ceramic, glass, chemical, pulp, and aviation sectors. If you have ever switched on a light, driven a car, used anything made of steel or aluminium, got on a plane, bought a replacement window, or picked up anything from the shops made with chemicals you will have been in contact with a product that has been included in this €100 billion a year system.
Each of these products will have had a charge attached to it that is used to buy a carbon credit. It is unavoidable. And yet, you probably did not know that it existed.
Its history is a Wall of Shame.
It began in 2005 when billions of Euros worth of free credits were handed to the EU's largest emitters; the EU called this a 'trail period,' and the giant corporations pocketed billions in riskless profit.
The 2008 recession caused a massive contraction in industrial output, leaving the emitters with billions worth in freely allocated carbon credits, sold into the market for vast sums. In doing so, the European Union contradicted its own Polluter Pays Principle. One could reasonably argue that the Polluter Was Paid. I wonder if the lobbying firms had anything to do with this.
But the biggest crimes were still to be committed. Through loopholes in the ETS 600 million tonnes of excess CO2 in the Ukraine and Russia (worth around €4 billion) were generated to create bogus carbon credits for sale to the EU power and industrial conglomerates. The Stockholm Environment Institute noted that the chief beneficiaries of these credits were organised crime gangs.
Astonishingly, in apparent contravention of an existing international treaty, around 2 billion tonnes of ozone depleting gases (HCFCs) were generated (mostly in China and India) according to the Environmental Investigation Agency in order to catch a by-product and create carbon credits worth around €20 billion, in what was dubbed "the greatest environmental scandal in history." These credits were again sold to the power companies and industrial giants in the EU.
All of this was perfectly above board.
As if that was not enough, failure by the EU to account for differing tax regimes created the largest VAT fraud the world has ever seen. Estimates of up to €15 billion were defrauded by this poorly constructed and poorly managed system.
When the price of carbon credits got too low the EU sprang into action and began withdrawing credits from circulation to manipulate and boost prices and your power bill, and make European industry less competitive.
At every international climate conference the global community looks at the EU and laughs.
In the post-Brexit world, the United Kingdom can withdraw from this laughing stock of a system, and manage its own climate and emission obligations in its own way. It can be flexible, and cope with difficulties when they arise, and most importantly it can adapt. The single largest reason for the catastrophic failure of the ETS was the EU's inability to adapt. Unshackled from the EU and its foolish dogma, the UK will be able to formulate and manage its own climate and environmental policies.