From Climategate to ETS-Gate?

Par Edgar L. Gärtner

Carbon Fraud is paving the way for a dictatorial world government

cliffs4008.JPG (1471777 bytes)While EU representatives are praising the European Emissions Trading Scheme (ETS) in Copenhagen as panacea, European law enforcement agency Europol is revealing that carbon credit fraud has caused in the past 18 months more than 5 bn euros damage for European taxpayers. In some countries up to 90 percent of the whole trading volume was caused by fraudulent activities. It is easy and perfectly legal for small dealers who have experience in computer and cell phone trading to buy European Unit Allowances (EUA) in one EU member state without VAT and to sell them in another country while taking the usual VAT rate from the buyer. The operation becomes illegal when the trader does not transfer the kept back VAT to the local tax authority. All and above the buyer can resell the certificates abroad and get the VAT reimbursed by the local tax authority. German tax authorities at present are investigating some 40 companies that traded CO2 certificates for allegedly taking advantage of loopholes in sales tax laws to bilk the tax office out of hundreds of millions of euros. British Financial Services Authority (FSA) even estimates that the loss of tax revenue could soon reach two or three million euros . In the meantime Britain like France, the Netherlands and Spain have shifted the tax burden from the sellers to the buyers in order to prevent fraudulent emissions trading.

But there are even more subtle fraud opportunities in Kyoto’s Clean Development Mechanism (CDM). With the help of this scheme companies can earn carbon credits if they support poorer countries by investing in new CO2 saving power plants and other clean technologies that would not have a chance without CDM. For getting carbon credits funders of CDM projects need to demonstrate that they will cut greenhouse gas emissions below “business as usual” level. This is not difficult as cost and benefits calculations can easily be manipulated. Recently an UN committee has refused the approval of a wind farm project near Harbin in north-eastern China for it was obvious that the Chinese government had artificially lowered the windmills feed-in tariff in order to qualify the project for CDM funding. David G. Victor from the University of California at San Diego estimates that up to two thirds of all CDM credits that amount to some $ 7 bn worldwide have rewarded investors whose projects would have been realized without CDM.

That’s just the beginning. Emissions traders are expecting from the Copenhagen Summit a signal for a general takeoff of their business. The global emissions trading volume is estimated to reach some two trillion dollars. No wonder that criminals from everywhere are attracted by the new market. On 7 December the London Times remembered UN’s “Oil-for-Food” scandal and warned that a global emission trading system “almost begs decision-makers to make politicised, if not outright corrupt, rulings.” Already IPCC chief Rajendra Pachauri is accused to profit from nearly $ 2 bn carbon credits created by the closing of the Corus Redcar steelmaking plant in Britain.

There is one lesson to draw from these examples: If it is already very difficult to control the international oil trade it is nearly impossible to supervise the traffic of virtual products like CO2 certificates. Thus globalisation of emissions trading is likely to lead to a global police state. Lord Christopher Monckton has drawn the attention to the fact that the following paragraph of draft Copenhagen Treaty is clearly envisaging a world government: “The government will be ruled by the COP with the support of a new subsidiary body on adaptation, and of an Executive Board responsible for the management of the new funds and the related facilitative processes and bodies. The current Convention secretariat will operate as such, as appropriate.”

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About the Author: Edgar Gaertner