Carbon Trading Open Invitation To Fraud
Carbon trading is an open invitation to fraud, in the opinion of Auckland energy consultant Bryan Leyland, who is
chairman of the economic panel of the New Zealand Climate Science Coalition.
"I first heard about carbon trading at a conference more than 10 years ago. I got up and said 'If I was the financial
adviser to the Mafia, I would advise them to get into carbon trading.' Nothing that has happened since then changes my
opinion - rather the reverse," said Mr Leyland.
"It is interesting to compare it with electricity trading. In an electricity market, the amount of electricity bought
and sold is measured to an accuracy of +/- 0.2% every 30 minutes. On top of that, when you buy electricity, you get an
amount of energy of high value that you can use directly for your benefit.
"With carbon trading, it is all different. The amount of greenhouse gas emissions from an industrial plant can be
measured to an accuracy of, at best, +/-10%. If you are purchasing carbon credits from, for instance, a forest, the
accuracy of measurement is probably something between +/-100%. If it is a tropical forest, it could be minus 150%
because there is reasonable evidence that some tropical forests are net emitters of greenhouse gases," Mr Leyland
continued.
"But it gets worse. In between the buyer and seller is an 'auditor' who, in theory, can make an accurate judgement as to
the quantity of greenhouse gases being traded. He is the direct equivalent of the old inspector of weights and measures
or electricity meter reader. If the reading of an electricity meter is fiddled, one party wins and the other party
loses. But if an auditor fraudulently states that a forest is absorbing say, 200 tons of carbon dioxide per annum when a
more realistic figure might be 100 tons, both parties win. The forest owner wins because he sells more credits. The
purchaser of the credits wins because he is out to buy a piece of paper certifying that he purchased carbon credits. If
the volume is fiddled upwards, the chances are that the price per tonne will be reduced and, anyway, he probably needs
to buy more credits than are available.
"So, to my knowledge, carbon trading is the only commodity trading where it is impossible to establish with reasonable
accuracy how much is being bought and sold, where the commodity that is traded is invisible and can perform no useful
purpose for the purchaser, and where both parties benefit if the quantities traded have been exaggerated.
"It is, therefore, an open invitation to fraud and that is exactly what is happening all over the world," said Mr
Leyland.
ENDS