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From Dark Ages To Green Ages? Carbon Markets & Environmental Sins (1/6)

Updated: Oct 18, 2022

After centuries of environmental dark ages, are we entering a period of green ages?

Will we repeat the past mistakes as we purge ourselves of environmental sins?

In this article, we’re remembering what happened centuries ago as a result of “sin markets;” from that platform, we’re glancing at today’s carbon markets.

Note: this topic has also been covered in this video.

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600 years ago, “sinners” wanting to pass through purgatory and avoid hell paid a fee to catholic priests who “cleansed” them. Putting a price on “sin” contributed to revolts that led to the Protestant Reformation.

Today, releasing greenhouse gases is a universal “environmental sin” and putting a price on it is key to limiting global warming, achieving net zero, and avoiding HELL (pardon the pun).

Both types of sin – the faith-based of the middle ages and the environmental of today – are very different. The biggest difference is objectivity; millions of tonnes of carbon emissions are being released right now; they can be measured using technology and carbon accounting frameworks. It’s miles away from the subjective superstition of the dark ages.

But both “sins” share the same root – the idea that you must pay for bad behaviour, for harmful activity

Now, let’s look at what happened centuries ago as a result of “sin markets”.

Religious indulgences

They were a type of token that was sold to the 14th-15th century “sinners” with the promise to purge their souls in purgatory so they would go to heaven in the afterlife. Issued by the catholic clergy, indulgences for sin had credibility, because the Church was the central point of moral authority back then.

The Vatican was the centre of virtue

The Catholic hierarchy, with the pope at the top, and the apparatus of clergy as the bottleneck through which the divine wisdom gets passed down onto laypeople began trading virtue for money.

Initially, the indulgences were used for charitable purposes, such as building hospitals and feeding the poor…

But in the superstitious middle ages, this booming trade metastasized into a “market for the remittance of sin,” as R. Fidler termed it. Soon, it became a gilded vacuum cleaner - sucking money from the poor into the coffers of the opulent Church.

A Papal Dyson

The Church began accepting, then demanding payments for expanding a variety of sins, including of those already dead (payable by relatives)!

With greater complexity came greater corruption and to keep the biz going, the greedy clerical apparatus needed more streams of income. Soon, indulgences themselves weren’t enough and the clergy expanded their portfolio and began taking things away from people.

Wine and bread

During medieval congregations, it was a common practice to give the wine and bread to lay churchgoers. But to save money, the clergy replaced wine and bread with water. The official reason was that the wine the blood of Christ was too precious to be spilled by a simple lay churchgoer; to prevent this sacrilege, laypeople only got water. Of course, the clergy kept the bread and wine to themselves.

That’s where the chalice of patience began to overflow

Until the late 14th century, most people couldn’t read; they relied on the priests for interpretation of the scriptures. Thus, the clergy possessed and disseminated the “truth”. But educational reforms of King Charles IV (of the Holy Roman Empire) meant that soon, people could read the scriptures firsthand. What did they read about? Humility, leanness, poverty, modesty, and charity. Did they see these principles lived by the clergy? No, they saw the opposite - greed, opulence, fat, and gluttony.

People also started reading “heretic” texts of early Christian reformers:

The first was Oxford philosopher John Wycliffe. He wanted clergy to “go back to basics” and renounce gold, robes, opulence, palaces, feasts, the concept of purgatory with the indulgences and even celibacy. He reasoned that none of these things had any basis in the scriptures.

The second was Czech philosopher and theologian Jan Hus, the predecessor of Protestantism. Building on Wycliffe’s ideas, he called the indulgence dealers ‘crass charlatans’. Hus moved from the majestic St Vitus Cathedral to the simple Bethlehem chapel (both in Prague) and preached Christian “basics” of modesty, poverty, simplicity, truth, and against opulence and greed. This angered the Catholic church and the King, who was getting his cut from the sales of indulgences.

But people loved Hus and formed a movement - the Hussites. This movement culminated in the Hussite wars, a period of ten years of fighting the Catholic church (the soldiers of the Holy Roman Empire).

Hus was burned at the stake in 1415 for heresy.

The third, hundred years after Hus, was Martin Luther, who said “Ich bin ein Hussite.” The father of Protestantism benefitted from the new invention the printing press which allowed him to share his ideas at scale (before, texts had to be copied by hand). He also translated Bible to German, making it accessible to millions of lay Germans.

Now, how is this^ related to carbon markets?

That’s a good question!

We are living in times of environmental sins. Ignored for most of human history, these sins are now biting

There are many of them, e.g. deforestation, loss of freshwater, coral bleaching, ocean pollution, or loss of biodiversity.

But these sins converge on one universally accepted, harmonized sin – the release of greenhouse gas emissions (GHGs), such as carbon dioxide and methane.

This sin was behind the Kyoto Protocol, and the Paris Agreement, signed by 193 countries that pledged to limit global warming to 1.5C by slashing their GHG emissions.

Limit warming, reaching net zero is the goal - the what

Reaching that goal the means, the how must include carbon pricing. Why? Because we live in a global market-based economy. Carbon markets do the “invisible green hand” work of incentivising low-carbon “good” behaviour and business practices, while simultaneously disincentivising “bad” high-carbon behaviour and business practices.

Ross Garnaut in his 2019 book ‘Superpower’ writes that “comprehensive carbon pricing is the centrepiece of any environmentally and economically efficient program to reduce emissions” … and “reliance on regulatory approaches and direct action for reducing carbon emissions is likely to be immensely more expensive than a market approach.”

For carbon pricing to foster carbon-reducing activities, the price on carbon must be sufficiently high to drive low-carbon behaviour and business practices. So that, for example, farmers will grow trees on their farms instead of grazing sheep. They won’t do it unless there are market incentives, unless it makes economic sense.

To illustrate, let’s look at an example from New Zealand.

Trees instead of sheep

There are about five sheep per person in New Zealand. When you drive through this stunning country, you’ll see many sheep-dotted hills.

But the sheep-dominance may not last forever.

Why? Because farmers can now earn five times more by planting trees than by breeding sheep.

They plant carbon-sucking and carbon-storing trees and earn carbon credits under the NZ’s Emissions Trading Scheme.

The scheme is the market-based mechanism through which NZ plans to reach carbon neutrality by 2050:

“Those that remove greenhouse gases from the atmosphere, or from New Zealand, may earn NZUs from the Government. For example, owners of forests that absorb greenhouse gases.”

NZUs are New Zealand Units – emission units, the equivalent of ACCUs - Australian Carbon Credit Units.

These units carbon credits are traded on the carbon market to offset emissions. In the past three years, their value has tripled, as governments, investors, and lenders push for incentivise decarbonization while simultaneously disincentivising (tax, penalizing, refusing to fund or invest in) high-carbon activities.

A Kiwi farmer can now earn five times more from planting trees on his property than from breeding sheep. By planting trees, he creates carbon sinks (growing trees) as well as long-term carbon storage (carbon stored in trees). That’s a low-carbon, carbon-abating activity, as opposed to the high-carbon (and high methane) activity of breeding sheep.

Ross Garnaut prefers a market-based system. It’s efficient and less expensive than regulation and direct action.

Makes sense.

But I wouldn’t put all eggs in one basket (the market). Regulation and direct action are equally important. The NZ ETS, a market-based system, was created through the Climate Change Response Act 2002. So regulation plays a key role and so does direct action. How big a role? That’s context-dependent.

Overreliance on markets – even green – isn’t enough. It can lead to farms being converted to “green deserts”, where trees are growing for 30 years, which is great for absorbing CO2 but bad for local people who’ll lose jobs they previously had on sheep farms. That problem won’t be solved by markets.

So it’s rather a ‘Green Holy Trinity’ of carbon markets + regulation + direct action.

Following the period of medieval dark ages, where tokens for sin were traded and where opponents of such practices burned at the stake …

Following the period of environmental dark ages …

Are we entering the Green Ages?

In our century, not one individual is going to burn at the stake for protesting against carbon markets.

But if we don’t get it right, this carbon market biz, we’ll keep overheating to the point of … some kind of HELL.

And what’s going to purge us then?


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