Investment bankers, in particular, like the idea that the amount of carbon that can be emitted will be continually lowered by governments.
This means that carbon credits should become scarcer over time, and that their value should therefore rise.
The cap-and-trade system has been up and running in Europe for years, but US president Barack Obama has hesitated to introduce it in the US amid fears that it could damage industry, though investment banks such as Goldman Sachs favour the legislation.
American journalist Matt Taibbi of Rolling Stone, who is a stern critic of Goldman Sachs, reckons the carbon credit market is attractive to investment banks because it is, in effect, a brand new commodities market where the main commodity to be traded is guaranteed to rise in price over time because of its scarcity value.
‘‘Well, you might say, who cares?” Taibbi wrote recently. ‘‘If cap-and-trade succeeds, won’t we all be saved from the catastrophe of global warming? Maybe. But cap-and-trade as envisioned by Goldman is really just a carbon tax structured so that private interests collect the revenues.”
Peter Goode, a director of Goode Concrete and a vocal critic of CRH who is embroiled in a High Court dispute with the building materials firm, described the carbon credit trade in Ireland as a ‘‘scam’’, which the Irish government had bequeathed to the cement industry ‘‘as a gift from the heavily burdened taxpayers’’.
Worse still, said Goode, the measure, which was designed to encourage industry to close down inefficient plants, instead had the effect of keeping them open. ‘‘If they close the factory, the credits disappear,” he said.
Paddy Healy, a former director of concrete provider Healy Brothers, agrees. ‘‘The carbon credit system is operating the exact opposite of how it should,” he said.
The financial services industry has already successfully lobbied for changes in Irish tax legislation to allow carbon credits to be bundled up and traded as shares, in the process known as securitisation.
One effect of the amended legislation is that foreign investors will be able to take their profits from investments in carbon credits in a tax-efficient manner.
The foreign investors will, therefore, avoid paying certain taxes on profits made from investing in assets known as carbon credits - assets that were effectively a gift from European taxpayers.
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