Saturday, December 12, 2009

The Polluter Gets Paid Principle

Some decades ago OECD coined the Polluter Pays Principle. That is an appealing principle which states than the one that causes pollution should also pay for it - that is for the cleaning up etc. Unfortunately the principle is not always applied. In farming polluters have for decades been paid to produce more and pollute more, even if it is changing a bit the global picture is largely the same. Many countries are subsidising chemical fertilizers just to mention an example.

In the green house gas schemes there is a risk that we are endorsing the complete opposite principle, the one where the Polluter Gets Paid. I am here mainly thinking about the Carbon Capture and Storage technologies (CCS). They are costly, still not tested, technologies that are promoted by the large energy corporations. The cost for reduction of CO2 with that technology is very high, in the range of 40-50 Euro per ton, according to Mc Kinsey. Meanwhile there are plenty of methods to reduce carbon dioxide emmissions that are either for free or that saves a lot of money, such as driving less cars and use less AC or reduce temperatures a bit. In agriculture and forestry there are also methods that are a lot cheaper and which also have other benefits (such as improving the productivity of the soil or improve bio-diversity). So why is then CCS promoted?

There are two reasons: Firstly the energy corporations see them as a possibility to avoid the otherwise inevitable downward pressure on their production. It is only the CCS technologies that can cope with a constant increase of energy production and consumption. While the rest of the world discuss reduction of energy use, the energy companies are preparing for the opposite. Secondly, and what this posting is aboutis that by developing this "service" the energy companies themselves can ascertain that they will capture most of the carbon sequestration or emission reduction market which are under development. In other words, they will keep the profit in their pocket.

Hey wait a second, it gets worse: Not only will they keep the profit, they will actually increase their revenue and profit substantially. First they will earn the same money as today from selling energy. And then, in addition, society will impost a number of fees, taxes or other measures to generate money to pay for carbon sequestration and emmission reduction. Depending on the construction of these fees they will be paid over the taxes or over the energy bill, in most countries a mix of it. But the good thing, for the energy companies that is, is that they will through CCS capture most of this money. So the government de facto will reward them for their pollution, expand their business and their profit. The Polluter Gets Paid Principle. And I forgot to mention, they obviously think the tax payers should foot the bill for development of this technology. For those that hesitate that my analysis is correct can read the following article in the Guardian. Shell: market alone cannot deliver green energy

The thing reminds me a bit of the firm in Stockholm that was cleaning walls from graffiti. To boost their business they provided youngsters with spray cans.....

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