There’s been a lot of talk lately about the gaping holes in the international carbon market, and in the European scheme that has spurred it, the EU ETS. Financial writers are, rightly, pointing out that it’s difficult to verify that, say, an airline selling carbon permits isn’t selling the same tonne of carbon to multiple buyers.
Faith in this exploding new system diminishes further when you consider that it’s the United Nations that’s running it. Anybody who trusts UN verification should read up on the famous oil-for-food program.
And faith disappears altogether when you consider that nuclear energy projects are not eligible for credits under the Clean Development Mechanism (CDM), the principal arrangement through which Kyoto signatory countries can finance carbon-reduction projects in developing countries. The atom might have been eligible under the CDM, but anti-nuke activists mounted a successful campaign to remove it during the 2001 Bonn conference. The no-nuke edict puts most current CDM projects squarely into the rinky-dink column, especially when it comes to power generation. Power-starved India realizes this, which is why the Indian prime minister and U.S. president discussed the CDM soon after the G-8 summit in early June.
The sad thing is, we could have an international carbon market that does result in massive, economy-friendly emission reductions, and that is totally verifiable. That is by participating in the Global Nuclear Energy Partnership (GNEP). Strict verifiability is what underpins the GNEP. The inspectors who oversee the transfer of plutonium and/or spent uranium fuel from a moderated reactor could be the same people who verify that that reactor’s output has displaced coal-fired power.
Unlike the current free-for-all, investors could safely bank on these reductions. And the reductions would be massive. As I have pointed out (see article), Ontario’s shift from coal to nuclear reduced annual power sector carbon emissions by 15 million tonnes since 2003. If carbon were $15 per tonne, Ontario Power Generation and Bruce Power (the two nuclear operators in the province) would have earned $225 million between them.
This could spur peaceful nuclear development in countries like India and China, the latter of which added 100,000 megawatts of coal-fired generating capacity in 2006.
The atom should go back into the CDM.