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Emissions Credits

By Larry Brown

Co-founder VETO the VET

It seems that the EPA and environmentalist have created a form of SECRET money called emission credits.  I have asked several KY legislators to find out how the Dept. of Revenue taxes them, but to no avail. It seems Newport Steel last year testified, along with the N KY Chamber, that they did not want us to use their emission credits to end tail pipe testing. So obviously they are valued by Newport Steel and the N KY Chamber. In Louisville, numerous requests have been made regarding Phillip Morris's credits with Ford Motor Company, and again no information forthcoming.

When will the supportively watchdog media get on this issue? Do politicians really want to be on the wrong side with voters when it happens? It is time to introduce legislation to make this process transparent or eliminate it altogether. Below are some options people from around the state are discussing. Also included is a little research you may wish to do thanks to some of those friends.

Legislation should be introduced immediately at the state and federal level that will guarantee that no town or city’s ability to replace lost employment will  be restricted for even a single day as a result of pollution credits held by a corporation which has closed  or is leaving a community.  This legislation should specify that no local, state, or federal taxes will be levied to repurchase pollution credits presumed to have been owned or held by any corporation or individual nor will any financial instruments or artifice of any form be issued by any government for that purpose.

Oversight legislation should be introduced immediately at the state and federal level that will provide for a "yearly transparent public audit" of all pollution credits held by every corporation and individual. A transparent audit is needed to assure public confidence.  Are more credits being issued than are justified by E.P.A. guidelines? Equity:  is each business held to the same standard? Neighborhood air quality: is the ratio of pollution credits for compliance purposes versus the actual capacity of machinery to meet environmental standards creating toxic hotspots in some neighborhoods? Constitutional issues: does the concept of regional credits violate our Kentucky Constitution? Consent: under what Constitutional authority have these "financial instruments" been created? 

Inadequate pollution credits could act as an estoppel to future economic growth in any community and the sale or transfer of pollution credits to another county, state or nation by any corporation or individual could prevent a community from replacing lost employment. Legislation should be introduced immediately at the county, state and federal level that in plain language specifies under what conditions if any pollution credits may be traded across county, state or international borders.

Members of our Kentucky legislature should be concerned that the E.P.A. authorizes pollution permits/credits through a regional compliance model and not a state by state model. The concept of corporations owning pollution credits giving them the right to pollute has become a mechanism through which a community attempts to lay permanent claim to credits that were issued from a regional airbank.... but this concept has given corporations control over economic policy decisions previously made by our elected representatives. 

Kentucky could develop a better compliance model, a model that would make Kentucky the most environmental friendly state in our nation. That model would also assure maximum economic growth in Kentucky. 

Under existing pollution permit trading schemes, a business in Kentucky can comply with E.P.A. standards without purchasing equipment with the capacity to meet E.P.A. standards at each business location.  A compliance model that required every business to meet E.P.A. standards at every location would maximize Kentucky’s economic  opportunities while assuring the best air and water quality.

Pollution Credits Have Become Financial Instruments For A Form Of Corporate Governance

 Why is congress still awarding  corporations pollution credits for obeying environmental laws?

Thirty years ago there was a shortage of manufacturers selling industrial equipment to clean our environment. Pollution Credits were originally intended as incentives to encourage the development and sale of industrial equipment that would reduce pollution. Manufacturers received credits as financial incentives to purchase that equipment. These incentives have served their purpose. Its now 2005 and there are a significant number of vendors competing to sell the equipment manufacturers need to comply with federally mandated E.P.A. standards!

Pollution credits are no longer needed, but they have become more than a subsidy or incentive to encourage good corporate citizenship.

Pollution credits have morphed into financial instruments whereby corporations and some individual citizens make long term economic policy decisions formerly reserved to our elected representatives. Their decisions are not always in the best interest of the United States! 

Corporations certainly have a right to close, leave town, or even move overseas, but why does congress pretend that a corporation (a "person" by law) can own "financial instruments" whereby it can exercise control over the future economic development of an area after it has closed or moved? It may own the land, but does it own the air we breathe or the water we drink?

Does congress actually believe they have the informed consent of "We The People" to create these financial instruments and make these revolutionary changes in our government and our economic future? Money is power, and control of pollution credits turbo-charges the power of money! 

When a corporation moves out of your town or city, it retains ownership of the pollution credits (credits which another industry may need to open a new plant and replace lost jobs), so it has effectively hi-jacked the economic decision making authority! Some pollution credits are already being traded across international borders. Those trades represent more than a transfer of money or pollution credits. They represent an agreement whereby the corporation or individual selling those credits controls or possibly restricts the future economic growth of the town, city, state and/or country. Please note these decisions are not made by your elected representatives and are not necessarily in America’s best interest!

All legitimate lawful government is based on the informed consent of its people. The people of the United States have not given congress their informed consent to create these powerful financial instruments whereby economic decision making is transferred from elected leaders to global corporations acting in their own interest.

How can citizens evaluate the effectiveness or integrity of pollution credits without an audit or any means of public oversight?

Ordinary citizens have no data, no information, on which to evaluate, grant, or deny their consent for the existing or proposed global use of pollution credits. While every local and state government and even our federal government is required to provide a yearly public audit of income and expenditures of monies, and the FED provides citizens information about total dollars in circulation, there is no available public audit or accounting of pollution credits which nationally are valued in the billions of dollars and internationally in the trillions!

Should a bureaucrat be allowed to authorize or approve the creation of these valuable tradable pollution credits without public audit or oversight? [1] [2]  Have more credits been issued than are justified by EPA standards? Have "corporations" paid kickbacks to bureaucrats or politicians from dollars generated by this scheme? Are the "books" cooked on "pollution credits"? How could anyone know?

Legislation should be introduced immediately that will provide a yearly transparent audit of all pollution credits held by Kentucky businesses.

Does congress control the EPA?

Since the pollution credits that are issued can be converted to cash or some other cash equivalent, under what authority does the EPA issue what is equivalent to cash?

Credit for Early Implementation: Kyoto through the Front Door http://www.cei.org/gencon/004,01555.cfm

How many Millions or Billions have "corporate citizens" received for obeying environmental standards under this pollution credit scheme? [3]

Please click on the preceding link "[3]" and note Ford motor company would not say what it paid Phillip Morris for pollution credits it needed to expand truck production in Louisville, Kentucky. What would happen if Phillip Morris had refused to sell its credits when its plant left Louisville? If Phillip Morris had dragged its feet, would Ford Motor company have expanded production in another state, thereby creating an economic disaster in Louisville? The story link makes it clear that our Governor recognized those credits were the property of Phillip Morris and that he would not take an active part in influencing their decision regarding pollution credits! Would Kentucky be blackballed if it became the first state to strong-arm a corporation to sell or return its credits? Would injury be added to insult if Kentucky taxpayers were forced to ante up to purchase pollution credits needed to replace lost employment opportunity?  Would the "Robber Barons" of the 19th century be envious of this newly created unaudited power?

"According to the Electric Power Research Institute, the total value of carbon dioxide permits could be worth $13,000bn by 2050. The opportunities for trading permits and their derivatives could be immense." [ Excerpt from November 4, 1999 FINANCIAL TIMES.... CLIMATE CHANGE: A bull market in hot air ] http://www.envifi.com/News/ft110499.htm

"If there is good news in the closing of the Phillip Morris cigarette plant in Louisville, it is that in the short term, it will mean cleaner air. That's because Phillip Morris is one of Jefferson County's largest sources of smog-forming pollution. In the longer term, the plant closing could help efforts to attract new industry, expand existing plants or even give owners of new cars a break from vehicle emissions testing." Excerpt from Courier Journal article "Closing will free up emission 'credits' " by ANDREW MELNYKOVYCH, Monday March 1st 1999

Do "corporate citizens" pay taxes on their pollution credit assets or financial gain from them?

Pollution Credits also represent a form of bribery that would make third world dictators envious. Corporations have accepted unrealistic and ever increasing E.P.A. restrictions because the financial burden for meeting those standards is transferred from those corporations to the taxpayers, who subsidize the purchase of the pollution equipment. Of course, as illustrated above, those credits are part of a larger political agenda.

Can pollution credits be sold or traded across county, state or even national borders? [7] 

"In the last month, Canadian energy companies have struck two large deals in which they paid others to fulfill their commitment to cut greenhouse gas emissions. In one transaction, they paid Iowa farmers to refrain from tilling their farmland, so retaining carbon dioxide in the soil." [ Excerpt from November 4, 1999 FINANCIAL TIMES.... CLIMATE CHANGE: A bull market in hot air ] http://www.envifi.com/News/ft110499.htm

"Jay Pruett last year spent US$5.4 million of his company’s money to plant a forest in Brazil. He’s not planning to cut timber or build a resort. But he means to put those trees to work." "Pruett, environmental services director for Central & South West Corporation, a large Dallas-based utility company, is counting on the trees to do what comes naturally: absorb carbon dioxide produced by animals, factories and cars, and emit oxygen into the atmosphere. He’s tapping into an emerging market spanning from San Jose, Costa Rica to Sydney, Australia that seeks to assign a price per ton of carbon dioxide processed by trees." [ Excerpt From September 2000 LATIN TRADE MAGAZINE A Virgin Forest Market? ] http://www.envifi.com/News/latintrade0900.htm

TORONTO (CP) _ Ontario Hydro earned nearly $500,000 by selling pollution reduction credits to a Connecticut company that needed them to satisfy state regulatory orders to improve air quality. http://free_pres.tripod.com/pollutio.htm#Ontario

Greenhouse Gas Revision To Deliver Massive Financial Bonus For Australia, says Institute http://www.tai.org.au/MediaReleases_Files/MediaReleases/MRGreenhouseGas300899.htm

Does the international pollution credit scheme, give "corporate citizens" unprecedented control over the economic future of counties, states and even countries? How many pollution credits do the foreign owned plants operating in these United States control?

Legislation should be introduced immediately at the state and federal level, that will guarantee that no town or cities ability to replace lost employment will  be restricted for even a single day as a result of pollution credits held by a corporation which closes or leaves a community. This legislation should specify that no local, state, or federal taxes will be levied to repurchase pollution credits presumed to have been owned or held by any corporation or individual nor will any financial instruments of any form be issued by any government for that purpose.

THERE IS A BETTER WAY TO SECURE KENTUCKY'S  ENVIRONMENT AND ITS FUTURE ECONOMIC GROWTH: 

Under existing pollution permit trading schemes, a business in Kentucky can comply with E.P.A. standards without purchasing equipment that has the capacity to meet E.P.A. standards at each business location.  A compliance model that required every business to meet E.P.A. standards at every location would maximize Kentucky’s economic  opportunities while assuring the best air and water quality.

[1] Who's making the laws? http://worldnetdaily.com/news/article.asp?ARTICLE_ID=27334

[2] EPA hires million-dollar lobbyist http://worldnetdaily.com/news/article.asp?ARTICLE_ID=27501

[3] Ford buys Philip Morris air pollution credits (June 30, 2000 print edition of Business First ) ..... Copy this address into your web browser http://www.bizjournals.com/louisville/stories/2000/07/03/story2.html

[6] Blueprint for Cleaner Skies Under Fire (The Christian Science Monitor Monday July 28, 1997 Edition) http://www.csmonitor.com/durable/1997/07/28/us/us.1.html

[7] GOLDEN RULES FOR TRANSBOUNDARY POLLUTION Cited: 46 Duke L. J. 931
[*pg 931] http://www.law.duke.edu/shell/cite.pl?46+Duke+L.+J.+931

[9] http://www.eenews.net/subscriber/search/data/greenwire/1997/02/g970219.6.html

[10] Selected Greenhouse Gas (GHG) Emissions Reductions Trading Resources http://ourworld.compuserve.com/homepages/JWeinstein/greenhou.htm

[11] Cantor Fitzgerald Environmental Brokerage Services http://www.emissionstrading.com/

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