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There's gold in green: profiting from climate change

The double standards of our eco accountants

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Imagine an unpopular, impotent, and fragile UK Government, trying to make political capital out of a looming crisis. To avoid being embarrassed by criticism of its shallow policies, it appoints an independent panel of experts, to which it defers controversial decisions. Now imagine that the panel proposes measures from which its members and their associates will directly benefit.

It couldn't happen here, you may think. Scandal and resignations would surely follow. Who could possibly allow vested interests to profit from the legislation they are instrumental in creating?

This week, an independent panel of experts called the Climate Change Committee (CCC) published the details of its recent advice to Parliament that the UK should reduce its CO2 emissions by 80 per cent by 2050.

There's no doubt there's money to be made from this new legislation, which was passed last week. A recent conference, given the title 'Cashing in on Carbon' was, in its own words, "aimed squarely at investment banks, investors and major compliance buyers and is focused on how they can profit today from an increasingly diverse range of carbon-related investment opportunities".

Amongst these bean-counters-turned-Gaia-botherers were representatives from IDEAcarbon, which offers carbon market intelligence, ratings and advice to governments, organisations and companies. Climate Change Committee member, Samuel Fankhauser, a former climate change economist for the World Bank, is the company’s managing director, strategic advice. IDEAcarbon’s parent company, IDEAglobal, appointed Nicholas Stern, author of the highly influential Stern Review on the Economics of Climate Change and former chief economist at the World Bank, as vice chairman, last year.

The group has its eyes on the carbon market, which it says "grew from $10bn to $34bn between 2005 and 2006", and projects to be worth well over $100bn in the future.

A "carbon market" is built on the idea that, if greenhouse gas emissions are capped by law, then the legal right to emit these gasses becomes a commodity that can be traded. But without legislation, there can be no market, as IDEAcarbon (pdf) acknowledges:

The global carbon market is moving into a critical new phase of development. If it is to succeed over the long term, both in its role in reducing carbon emissions and as a financial market in its own right, legislators need to provide certainty of a regulatory framework that will be robust, flexible, and valid over the long term.

The company’s website is surprisingly candid about the influence it exerts over the UK Government:

Working with the key decision makers who are shaping the future of the market enables us to accurately predict market trends and provide tailored strategic advice to clients.

In other words, the interests of investors and national policy makers must be aligned. And it would be most fortunate if they were one and the same.

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