If former presidential candidate Ralph Nader, the greenest of all the greens, the man who played an integral role in starting the Environmental Protection Agency and passing the Clean Air and Clean Water Acts, opposes cap and trade, it’s probably not a good idea. Here’s what Nader told the New York Times concerning cap and trade:

I mean, it’s not going to work. It’s too complex. It’s too easily manipulated politically. Right now, they’re having a battle over whether they can even auction the credits off for money. The industry doesn’t want auctions for money. So, they’re already having a battle right from the takeoff. I have to call Markey and see why did he ever buy into that.”

The best case study is Europe. In essence, companies are able to meet emission targets by investing in clean energy development in other countries. The large problem is a number of these clean energy projects have been in the works for years or are completed already. The result is no cut in emissions.

Under the United Nation’s Kyoto Protocol, a multilateral attempt to reduce greenhouse gas emissions established in 1997 (of which the U.S. was not a participant), a mechanism known as the clean development mechanism (CDM) was established as a credit system for reducing carbon dioxide. The problem is it was largely corrupt:

Credits from the project are being bought by European companies and governments who are unable to meet their carbon reduction targets.The market for CDM credits is growing fast. At present it is worth nearly $20bn a year, but this is expected to grow to over $100bn within four years. More than 1,000 projects have so far been approved, and 2,000 more are making their way through the process.

A working paper from two senior Stanford University academics examined more than 3,000 projects applying for or already granted up to $10bn of credits from the UN’s CDM funds over the next four years, and concluded that the majority should not be considered for assistance. “They would be built anyway,” says David Victor, law professor at the Californian university. “It looks like between one and two thirds of all the total CDM offsets do not represent actual emission cuts.”

A separate study published by International Rivers last year found similar results showing that these projects would have been built with or without the extra clean energy funding. “It would seem clear that a project that is already built cannot need extra income in order to be built,” said Patrick McCully, director of the thinktank in California. “Judging additionality has turned out to be unknowable and unworkable. It can never be proved definitively that if a developer or factory owner did not get offset income they would not build their project.”

Bryan Leyland, chairman of the economic panel of the New Zealand Climate Science Coalition, said, “I first heard about carbon trading at a conference more than 10 years ago. I got up and said ‘If I was the financial adviser to the Mafia, I would advise them to get into carbon trading.’ Nothing that has happened since then changes my opinion – rather the reverse.”

In fact, now the Italian mafia is getting involved in green energy.

And let’s not forget Enron’s Ken Lay was a strong supporter of carbon cap and trade. He believed a cap and trade program “do more to promote Enron’s business than almost any other regulatory initiative.” These carbon allowances that will be bought and sold have a value estimated at $50 billion to $300 billion annually, and the trade in them would be a huge new business. Enron may be gone, but others ready to take advantage of cap and trade, at the public’s expense, are not.

Leyland went on to say:

So, to my knowledge, carbon trading is the only commodity trading where it is impossible to establish with reasonable accuracy how much is being bought and sold, where the commodity that is traded is invisible and can perform no useful purpose for the purchaser, and where both parties benefit if the quantities traded have been exaggerated. It is, therefore, an open invitation to fraud and that is exactly what is happening all over the world.”

Are we next?