Preventing deforestation is in the R.E.D.D.

There is no price tag on air, yet. While companies continue to pollute indiscriminately in the developing world to make a profit, bankers and lawyers are looking to make gains on what should be protected by law: the tropical rainforests of the world.

Right now the U.S. Senate is working on a bill called the Waxman-Markey comprehensive energy bill, or the American Clean Energy and Security Act. It has provisions that set standards for lowering emissions, federal grants for expanding renewable energy sources and establishing standards of energy allocation for utility companies. The most dynamic and dubious part of this bill, however, is the much-touted “cap and trade” system for carbon emission regulation.

Cap and trade’s basic operating principle is that general pollution levels can be derived easily through measured carbon emission levels. In order to reduce carbon emission and thus pollution, a limited number of “carbon credits” will be issued to various companies, industries, etc.

Essentially, each credit will be worth a certain tonnage of carbon. When a company exhausts all of its credits, it has reached a pollution quota. In order to legally continue its business while polluting, the aforementioned company has to pay through the nose to get more from the government, pay interest on “future credits” or buy them from a group that has “extra” credits. The logic goes that this will make polluting expensive and cause companies to invest in renewable energy or cleaner energy.

While it paints a pretty picture, there is a sneaky loophole in the cap and trade phenomenon-its called speculation. Speculation of home equity in the housing market caused the mortgage crisis. Speculation causes oil prices to rise rapidly when people speculate there will be an oil shortage. It is also what gives bankers and brokers their immense business because when people “speculate” about something, when they want to trade stocks or get a loan, the banker or broker makes money on fees.

If carbon (the most abundant element on Earth) is capped and traded, whoever can stockpile the most credits will make an immense profit when people begin to run short. Many businesses will not be able to shift away from a carbon-producing economy quickly enough to hold off a credit shortage. These businesses will be burdened by the cost of speculation in the carbon credit market, raising their operating expenses for the benefit of bankers and larger companies.

Currently the Waxman-Markey bill has provisions that allow for companies to gather additional credits by buying up “stored” carbon credits in the form of tropical rainforest preservation. Basically one would give x number of dollars to a nature conservancy that would then distribute the money to people in developing countries with rainforests, in exchange for carbon credits.

When so many acres of these vital forests are cut down every year, it sounds like a great way to save rainforests and give companies some slack as they switch to alternative energy. It is a wolf in sheep’s clothing.

Not only is this carbon credit hard to regulate (loggers would just shift to other places or illegally cut down forests), these forests should be protected regardless because they can’t be replaced. Besides that, a portion of the money would actually be given to logging companies because they constitute part of the local economy.

Even if such a plan did work, it doesn’t actually reduce carbon levels!!! Instead, it allows companies in developed countries to pollute by keeping these vital areas from being destroyed at a slower pace.

If cap and trade is to be successful, it has to be regulated heavily to reduce speculation. Additionally, carbon credits should only be given to companies that partake in re-forestation projects, not ones that simply prevent trees from being cut down. Initiatives that use forests as a bartering chip in the carbon market are known as Reducing Emissions from Deforestation and Forest Degradation (R.E.D.D) projects.

R.E.D.D projects are expected to be a large part of the debate in the upcoming December U.N summit at Copenhagen on climate change. This summit will be a major part of the creation of the next binding U.N. resolution to replace the 1997 Kyoto Protocol, which expires in 2012.

Every developed country has a responsibility to repair the damage they have caused. The U.S. did not participate in the Kyoto Protocol despite being the largest contributor to greenhouse gases at the time (surpassed only recently by China, which has six times the population and even less efficient technology). At Copenhagen, the U.S. will have to play ball and it has to come honestly, not through the exploitation of developing countries’ rainforests. The economy comes second.