Investigative reporter Humberto Rocha discusses dodgy dealings in Big Carbon, exploring how companies strategically benefit from carbon trading in the EU, discrepancies in free carbon permits allocation, validation of emissions data through satellite imagery, and potential decarbonization policies including carbon border tariffs.
Pricing carbon incentivizes emission reduction in companies for cleaner production methods.
Loopholes in the carbon allowance system allow highly polluting companies to profit from excess permits.
Deep dives
Carbon Market Incentives and Penalties
The podcast discusses the essence of the carbon market, where companies need to buy carbon allowances based on their emissions. By pricing carbon, companies are encouraged to reduce pollution and find cleaner production methods. The price of carbon fluctuates depending on supply and demand, providing incentives for companies to lower their carbon emissions annually. Companies that emit more carbon must purchase more allowances, creating a system that promotes emission reductions.
Abuse of Carbon Allowance System
The episode highlights potential issues in the carbon allowance system where highly polluting companies could exploit loopholes. Some companies, like steel plants, receive a significant number of free carbon permits despite emitting minimal carbon due to operational changes or shutdowns. This loophole allows companies to profit by selling excess permits obtained for free in a market with rising carbon prices, raising concerns about the misuse of the system.
Regulatory Responses to Address Abuses
Regulatory bodies in both the EU and the UK have acknowledged the potential abuse in the carbon allowance system and are taking steps to address it. Measures include shortening the time frame for receiving permits after operations cease, aiming to prevent companies from benefiting from unused allowances. Proposed changes aim to ensure that the carbon allowance system effectively encourages firms to decarbonize, rather than providing opportunities for financial gain through permit trading.
Humberto Rocha of the Oil Price Information Service on some dodgy dealing in Big Carbon... in part three of our new investigative mini-series interviewing the investigative reporters behind six remarkable pieces of journalism shortlisted for this year’s Paul Foot Award.
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