The carbon credits boom is already costing British jobs
What is the connection between Dr Rajendra Pachauri, the Indian railway engineer who has been much in evidence at the Copenhagen climate conference, as chairman of the UN's Intergovernmental Panel on Climate Change, and an Indian-owned steel company's decision to mothball its giant Teesside steel works next month, ripping the heart out of the town of Redcar by putting 1,700 people out of work?
Nothing of this complex story is likely to be heard in the dreary concrete shed outside Copenhagen where, as temperatures drop towards freezing, 17,000 prime ministers, officials and climate activists are earnestly discussing how the planet is warming up towards extinction. But it certainly sheds a little light on a colossal worldwide racket these delegates are helping to promote, because the end of the story is that we shall all be paying to export thousands of British jobs to new steel plants in India, for no gain in the reduction of worldwide CO2 emissions.
Thirty years ago Britain's state-owned steel industry, over-manned and highly subsidised, was the most inefficient in Europe. By 1988, after Mrs Thatcher's privatisation and having lost two thirds of its workforce, it was as efficient as any in the world. In 1999, for reasons never fully explained, much of it was sold off to the Dutch firm Corus, which in 2007 was bought by the Indian giant, Tata Steel.
One of Corus's prizes was the Redcar steel works, once Europe's largest blast furnace. It is this which is now to be mothballed, according to Corus because of worldwide "over-production". But this is transparently not the case, since its new owner, Tata, is planning to more than double its steel production in India over the next three years. Furthermore, only last month Corus announced plans to build a 20 million euro plant in the Netherlands, with the help of 15 million euros from the EU and 5 million euros from the Dutch government. Our Government says it is unable to help over the closure of Redcar because this would not be allowed under EU state-aid rules, although Gordon Brown says he may be able to offer a little "re-training".
The real gain to Corus from stopping production at Redcar, however, is the saving it will make on its carbon allowances, allocated by the EU under its Emissions Trading Scheme (ETS). By ceasing to emit a potential six million tonnes of CO2 a year, Corus will benefit from carbon allowances which could soon, according to European Commission projections, be worth up to £600 million over the three years before current allocations expire.
But this is only half the story. In India, Corus's owner, Tata, plans to increase steel production from 53 million tonnes to 124 million over the same period. By replacing inefficient old plants with new ones which emit only "European levels" of CO2, Tata could claim a further £600 million under the UN's Clean Development Mechanism, which is operated by the UN Framework Convention on Climate Change – the organisers of the Copenhagen conference. Under this scheme, organisations in developed countries such as Britain – ranging from electricity supply companies to the NHS – can buy the right to exceed their CO2 allocations from those in developing countries, such as India. The huge but hidden cost of these "carbon permits" will be passed on to all of us, notably through our electricity bills.
Thus, at the end of the day, Redcar will lose its biggest employer and one of the largest manufacturing plants left in Britain. Tata, having gained up to £1.2 billion from "carbon credits", will get its new steel plants – while the net amount of CO2 emitted worldwide will not have been reduced a jot.
And the connection with Dr Pachauri? Directly there is no connection at all. But it just happens that Dr Pachauri's other main job, apart from being chairman of the IPCC, is as director-general of the Tata Energy Research Institute, funded by Tata, which he has run since 1981.
He may not benefit in any way personally from Tata's exploitation of the various carbon trading schemes set up to implement the 1997 Kyoto Protocol, but it is the IPCC which provides the recommendations which drive those schemes, Last year, on official figures, buying and selling the right to emit CO2 was worth $126 billion across the world. This market, now enriching many of our leading financial institutions (not to mention Al Gore), is growing so fast that within a few years it is predicted to be worth trillions, making carbon the most valuable traded commodity in the world.
Forget Big Oil: the new world power is Big Carbon.Truly it has been a miracle of our time that they have managed to transform carbon dioxide, a gas upon which all life on earth depends, into a "pollutant", worth more than diamonds, let alone oil. And many of those now gathered in Copenhagen are making a great deal of money out of it. (For more detail, see my colleague Richard North's blog
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