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January 23, 1999


Power has seduced an influential green group into backing a pollution trade scheme. Frankly it stinks Up in the hills of Tennessee, they just LOVE air pollution. Can't get enough of it. In fact, they'll spend hard cash for more of it.

Gregory Palast

In May 1992, the Tennessee Valley Authority paid a Wisconsin power company for the "rights" to belch several tons of sulphur dioxide into the atmosphere, allowing the TVA to bust above contamination limits set by law. Wisconsin cut its own polluting to offset Tennessee's. This was the first ever trade in emissions credits, an experiment in using market mechanisms to cut nationwide pollution overall.

Why should you care if Billy Hill is paying good money to suck soot? Because trading rights to pollute, first tried on Tennessee, is the cornerstone for implementing the Global Warming Treaty which will set the rules for industrial production worldwide for the next three decades.

The treaty, known as the Kyoto Protocol, aims to slash emissions of "green house gases" which would otherwise fry the planet, melt the polar caps and put Blackpool under several feet of water. (It will also have negative effects.)

As you can imagine, industry's big lobbying guns have lined up against the Protocol. From the US, leading the charge against the treaty is Citizens for a Sound Economy, an ultra-right pressure group chaired by corporate super-lobbyist Boyden Gray.

Squaring off against CSE is the influential Environmental Defense Fund of Washington DC. So committed are EDF's greens to the treaty that they set up a special affiliate to help implement the protocol's trading system. EDF's new Environmental Resource Trust is chaired by Boyden Gray.


How did Gray, top gun of the anti-treaty forces and industry defender become chief of a respected environmental group? Did he have a deathbed conversion? No, Mr Gray's in fine health, thank you. Someone far more cynical than me might suggest that Mr Gray and his polluting clients, having failed to halt the clean-air treaty, have perfected a new way to derail the environmental movement: If you can't beat 'em, buy 'em. Covered in the sheep's clothing of a respected green organization, polluters can influence the terms of treaty implementation to make darn certain that they do not actually have to change their dirt-making ways.

That's where the Tennessee model comes in. By insinuating into the protocols a company's right to meet pollution targets by buying unused emissions allotments, US industry can blow up the treaty from the inside. Corporate lobbyists try to keep their fingerprints off the filth-trading proposals. Fronting the scheme is left to the Environmental Defense Fund. But the real muscle behind limitless use of the contamination credits actually originated with the corporate lobby Business Roundtable which, embarrassingly, left a memo to that effect in a photocopy machine in November at the Buenos Aires round of talks Activists made it public with much glee.

Other than the plain creepiness of selling rights to pollute, what is wrong with such trades if they painlessly cut emissions overall? Well, keep your eye on that "if." I haven't yet found a single trade that took an ounce of pollution out of the atmosphere. The free-market fix for dirty air was rotten from the first deal. In the 1992 Tennessee case, the Wisconsin company that sold its right to spew SOx could never have received state authority to build another polluting power plant. The seller's reduction in pollution was a sham, but the additional spume of poison into Tennessee mountains was real and deadly.

Despite this sorry record, US negotiators pushed emissions trading as a take- it-or-leave-it condition of America's participation in the treaty. Tony Blair, hearing the words "voluntary and incentive-based," could barely contain his enthusiasm. Emissions trading, as a so-called "market mechanism" for saving the biosphere, is the pride and joy of the Third Way, the means by which New Democrats and New Labour hope to replace those nasty old rule-by- command laws - 'THOU SHALT NOT POLLUTE' - with efficient, retail transactions, possibly at your local TOXINS R US. (The US already has a "stock exchange" where 15 million tons of sulphur dioxide trade each year.)

Under US treaty proposals, any US or European manufacturer who wants to crank up their Earth-baking discharges will have to buy up rights from a green- minded company which has cut emissions. But where in the world will they find earth-friendly industries willing to sell their rights to pollute? You'll never guess: Russia and Ukraine. In case you were on holiday when Russia became an eco-paradise, I'll fill you in. The treaty's rights to pollute are allocated based on air trash pumped out in 1990. Up to that date, Russians under Communist rule were forced to work in grimy, choking factories. Now they are free not to work at all. Russia's industrial depression has cut their emissions by 30%. Thus, the bright side of the impending starvation on the Steppes is that it could generate enough credits to eliminate 90% of US industries' assigned reduction in pollution.

Is anyone fooled? Did America's tree-hugging Vice-President Al Gore jump up and holler, Fraud! Not a chance. To corporate applause, the VP has blessed the bogus trading in filth credits. To protect his green credentials, Gore has held had plenty of photo ops surrounded by recognized environmentalists, i.e. from the Environmental Defense Fund.

It gets worse. The Clinton Administration has just announced a scheme to give "early credits" to US companies which cut emission before the treaty takes effect. If a chemical company shuts a plant to bust its trade union, for example, they get credits. A dozen top environmental groups are up in arms about this windfall for phantom reductions in pollution - but not EDF, which takes pride in crafting the proposal's details.

How did EDF come up with this bizarre idea? A reliable birdie has faxed to the Observer copies of internal documents from the EDF unit chaired by Boyden Gray. These state that, "most of the major utilities have been regularly meeting with EDF staff to discuss this concept" - and they would pay EDF fees for creating the early-credits market. An EDF staffer admitted that the plan was drafted with Southern Company and American Electric Power, notorious polluters, "looking over our shoulders."

The sale of crud credits has chopped the legs off anti-pollution laws in the States; and now it will be used to sabotage the Global Warming Treaty. We know the attractions of the filth trade to government: it is the ugly stepchild of the new mania to replace regulation with schemes that pose as "market" solutions. It provides a pretense of action to the public while giving winking assurance to industry that the status quo is not disturbed. Marketing-not-governing schemes spread like Tennessee kudzu. Don't be surprised when General Pinochet claims to have purchased unused bone-cracking rights from Pol Pot.

But what attracts environmentalists to these schemes? Why do some enviros appear to act like Rent-A-Greens for Boyden Gray and corporations they once blasted? It is not venality. Rather, genteel alliance with industry is the ticket that lets them hang out with Gore and the Big Boys in the deal-making loop. Unfortunately, the collaborationists have confused proximity with influence. As one old-style activist put it, gimmickry will never replace guts in the battle against ascendent commercial authority.

[email protected]
Guardian Media Group
Reproduced with author's permission
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