Thursday, December 17, 2009

Cap and Trade: NGO Access to COP15

The last week of COP15 famously left NGOs delegates out in the cold. Long lines, overcapacity, and a disorganized UN response pushed out NGOs participation. This impacted all NGO delegates and even some of the parties involved.

Within the long lines to COP15, it was not uncommon to hear delegates say:
"If the UN can not coordinate an international conference, how do they plan on implementing an international agreement to manage greenhouse gases?"
Some sarcastic remarks were:
"Climate Change no problem, a conference, now that's hard to manage."

The solution to the overcapacity brought about by the UN echos plans of cap and trade or carbon trading. This post will draw analogies between how the UN handled the overcapacity of the Bella Center and Cap and Trade.

The Bella Center is design to handle 15,000 people comfortably and 20,000 at capacity. As seen from the above provisional document (Dec. 8 2009) listing all participants. Before the addition of more world leaders and press the expected amount of participants was already double the amount the Bella Center is designed for. On Monday the Bella Center reached dangerous levels with about 40,000 people in it. This lead to changes in quotas of people allowed in.

The amount of people the Bella Center can handle can be analogizes as the amount of green house gas pollution that world can handle. During the first week, the conference center (world) could handle the amount of accredited participants (green house gas emitters), much like how our planet could handle the amount of anthropogenic green house gases added throughout the industrial revolution. As the conference went on, the amount of people trying to attend increased exponentially much like how throughout recent history the amount of green house gases increased.

When reaching dangerous level of participants, 40,000 and growing, plans went into effect to limit the number of people. The plans did not include a way to mitigate demand, but just to ration out supply cut off access to the center.

The participants of the conference can be seen as local governments who are organized into delegations. Each delegation can be seen as a country. Each delegation had different number of members representing the diverse range of demand which can be seen as carbon pollution. Some delegations were small made up of 1 or 2 people, while others were made up of hundreds of participants.

To limit the number of people attending the conference the UN took a cap and trade approach. They limited the number of people by issuing out secondary passes. Each NGO delegation received a finite number of secondary passes (see picture below of a secondary pass). For the AAG delegation of 13 people, received 6 secondary passes. Secondary passes can be seen as carbon credits. The demand for 13 was capped at 6. Then we as a delegation had to trade the cards so we could attend (or in this analogy pollute). This decentralized approach left the management of attendance to each delegation, and reduced the demand by causing people to limit their attendance and work out with each other who was attending and how much they would attend. Secondary passes were used for Tuesday and Wednesday to reduce the amount of people in the Bella Center.

For Thursday and Friday the numbers of attendants was reduced further to a total of 300 delegates. 1 in 100 people attending the conference in a NGO role were allowed to go in. This reduction brought about a third wave of passes (credits), given to focal groups that composed of multiple groups of NGOs. For Example, RINGO represented all research institutions, and BINGO represented all Business institutions. Then the credits were distrubted in a higher level with more politcs involved in getting a ticket.

While in theory the cap and trade system seems like an ideal way to control demand for the amount of supply available, with out the right conditions it can fail. It can allow for people to find ways to manage themselves and respect to the cap. However in practice, this system failed terribly at COP15 for numerous reasons.

First failure was that there were too many secondary passes issued. This lead to the Bella Center reaching overall quotas. NGOs attendants with secondary passes still had to wait in long lines and many were dined access. If a smaller number of secondary passes were issued, this would not have became a problem. For carbon capping, if too many carbon credits are issued they will do nothing to stop the run away pollution and will end up having little effect. This can be seen in many of the EU cap and trade systems where the credits are priced too low and are too widely available. This end up just being a tax for governments to collect money.

Second failure came about the unequal distribution of secondary passes. NGOs with more power received many more secondary passes, equivalent to all the delegation going. For example a NGO comprised of EU parliament members numbering about 120 delegates received 20 passes at first. Through talking with UN staffers they were able to get 80 more passes. Making it possible for most of the delegation to attend at the same time. This example exhibits a practice of lobbying the credit issuers to give free carbon credit or to increase carbon credit for powerful interests groups. Groups like coal power plants will be able to lobby the congress to give them more carbon credits. Having unequal distribution of carbon credits to big polluting industries is a major pitfall in the cap and trading system.

Third failure in this system was no viable alternatives were given to the conference attendance. If they are not able to attend there is nothing else for them to do. The limits were imposed without an alternative. For example if a cap was issued for carbon, an alternative energy sources should be available, or people will just have no option besides the dirty sources. They will just end up paying more for energy and no result will be obtained.

Cap and Trade system is suppose to price carbon or environmental pollution in order to be able to factor it into economic driven decisions in business. Because environmental damage is not factored into economic decisions there is no disincentive to not pollute. The secondary pass system for COP15 was suppose to give disincentive to NGOs not to show up unless them had their passes. This did not work because people still showed up to try. They had no incentive not to show up.

For Cap and Trade to work there needs to be limits on permits, to hold their value. There needs to be alternative options for demand to go to. There also needs to be incentives to use green technologies, like subsides or tax credits. While Cap and Trade does not sound like a tax, it truly is a tax. If not implemented with care, it will not obtain any results besides collecting money for environmental projects.

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