It’s like we were lepers or something. More fallout from the fake press release and, it now appears, the fake reaction from the Ugandan delegation that we referenced below. It seems our Environment Minister Jim Prentice can barely manage a photo op with the United States’ Energy Secretary. I understand that every government has a PR machine, but this is ridiculous — proof positive that Canada is seriously lacking in the gravitas department.

One does get a sense that the Feds are panicking and running around with their heads cut off. In a feeble attempt to deliver a substantive comment, Prentice picked up Former PM Paul Martin’s frankly silly suggestion yesterday that the United States should share some of the burden for the environmental damage caused by Alberta’s oilsands. Right, and shall we pick up the burden of all the cars we’re importing from the U.S.?

“This is the day that will define our century. Canada is fully acknowledging its historical climate debt and the legal responsibilities that follow. Today, we no longer have to wait for a COP20 or COP100 before the voices of our children are heard. Now that we are friends, I can say it is high time Canada changed.”

- Margaret Matembe, MP and member of the Climate Committee of Uganda

Too bad “the staged response” was in response to the fake news release claiming that Canada had done an about turnaround on its carbon emissions targets.

The hoax has created such a stir that PMO spokesman Dimitri Soudas apparently accused eco-warrior Steven Guilbeault of being its author. François Cardinal reports that Guilbault caught up to Soudas and the two exchanged some unkind words for one another. Suffice to say that the Feds in Copenhagen are getting some pretty bad press.

So far, it seems the Yes Men are getting credit for the prank.

As previously mentioned on this blog (here, here, and here), we have many issues with a cap-and-trade system. They are very difficult to account for. The video below, clearly explains the risks of carbon markets. With Copenhagen on everyone’s mind, it is important to realize the inherent problems with carbon markets.

The logic is that large emitters will finance renewable energy through the purchase of carbon credits. If carbon credits are to be a form of financing for projects, we have big problems ahead of us. Heavy industry, with powerful lobbies, receive too many credits – which they then sell or dump on the markets. The flooded market, manipulated by traders, becomes extremely volatile. If a project developer, who needs to plan for a return of at least 15 years, cannot rely on carbon credit revenues – what use are the credits?

The Alberta energy market is a spot market, which means the price of electricity is determined by a market. In other provinces, the price of energy is set by the government. In Alberta, the price has gone from about 0,14$/kWh to 0,03$kWh – causing many renewable energy projects to be put on hold. In fact, at that price, coal based power does not even make sense. This volatility is very bad for project development. Voluntary carbon credits on the Chicago Board of Exchange have gone from 8$ to 35 cents! How can you plan a project based on revenues from carbon credits when they risk to completely collapse.

In my view, the first item to tackle carbon emissions is to remove the subsidies from the oil & gas industry. Not only will that lower carbon emissions, it will save our government valuable dollars. Secondly, let’s make large emitters pay a simple tax for the damages they cause – soil contamination, health of their workers, water pollution, …. If we keep the system simple, people might actually respect it.

The Copenhagen climate change summit opens today and will run until December 18. Depending on who you read, either the Canadian government won’t buy into “the hype” and won’t be rushed, or will “push for a binding deal.”

Though Climategate still looms in the forefront, members of the UN’s Intergovernmental Panel of Climate Change (IPCC) have released the Copenhagen Diagnosis — a review of hundreds of peer-reviewed research papers published since the IPCC’s last assessment in 2007 — which concludes that the climate situation is much worse than the IPCC has so far reported.

The lesson in all this is that it is important we continue to question the orthodoxy of scientists and deniers alike.

Martin Wolf of the Financial Times offers three criteria for post-Copenhagen climate change policies to be truly effective.

First, we need prices for carbon that apply over relevant planning horizons. That price cannot be fixed forever, but must change with events. But it needs to be far more stable than in the European Union’s market for permits (see chart). A tax seems more attractive to me than “cap and trade”, for this reason.

Second, where the abatement occurs must be separated from who pays for it. Abatement needs to happen where it is most efficient. That is why emissions of developing countries must be included. But the cost should fall on the wealthy. This is as much because they can afford it as because they produced the bulk of past emissions.

Finally, we need to develop and apply innovations in all relevant technologies. A paper from the Bruegel think-tank argues, persuasively, that merely raising prices on carbon emissions would reinforce the position of established technologies. We need large-scale subsidies for innovation as well.