In anticipation of a federal, and perhaps a Washington State, "cap and trade" system to reduce greenhouse gases, Chelan Public Utilities District (PUD) registered its "carbon offsets" with the Chicago Climate Exchange, according to a story by Les Blumenthal in The News Tribune, Tacoma. The PUD figures that recent improvements to Rocky Reach Dam just north of Wenatchee on the Columbia River means that 700,000 tons of carbon dioxide won't be pumped into the atmosphere and therefore, are up for sale. Of the 700,000 tons for sale on the exchange, 160,000 are already sold.
The "cap and trade" system, which is expected to migrate from Europe, would set greenhouse gases limits on manufacturers, power plants, state and local governments, and others. Those exceeding their greenhouse gas ceiling would have to buy carbon offsets or credits from sources which are under their limits or otherwise available.
Other offsets listed on the Chicago Exchange include dairy methane reduction, reforestation, and,wind and biomass projects. Rocky Reach Dam is the first hydroelectric project listed. But with Washington's vast hydro system, others could be next. Perhaps, someday even the carbon offsets from the four lower Snake River dams would be up for sale.
In a related story in the Wall Street Journal (subscription required to download story entitled: EU Greenhouse-Gas Emissions Rose 1.1% Last Year) on April 3, the European Union, which has a "cap and trade" system for oil refineries, steel mills and power plants but has not included retail stores, cars, airplanes or commercial buildings, saw the price of carbon credits soar. However, in the last three years since it was introduced greenhouse gas emissions increased and last year, the Oslo-based Point Carbon, a carbon market-research firm, said CO2 went up by 1.1%.
According to the Journal,
"Although the scheme (cap and trade) has so far failed to reduce emissions, it has spawned a fast-growing market for trading carbon permits. Last year, the value of all carbon credits traded in Europe topped $40 billion, up 55% from the previous year. Hedge funds, investment banks and brokers trade carbon credits as they would other commodities like gold or oil.
And while the data released Wednesday might fuel pessimistic predictions of the scheme in holding back emissions, financial players were bullish about what it meant for the carbon market."
So, while carbon credits are fetching more green backs for investors, are they working to reduce carbon emissions? In the three years since the cap and trade system was introduced in Europe, the evidence shows they are not so lawmakers in Washington and the U.S. need to clearly identify their goal for the "cap and trade" system they seem destined to implement.
Finally, while the Sierra Club waxes on about the need to reduce greenhouse gases, the Club's Executive Director Cal Pope called for the removal of the four lower Snake River Dams in the name of salmon restoration. Pope said wind and solar power will sufficiently replace the lost hydropower. We're already short of electricity so how can that be? Check the numbers because we don't feel the replacement power is there and if it is, it is unlikely to come from greenhouse gas free hydro, nuclear, wind or solar.
Don C. Brunell, AWB President (DonB@awb.org)
