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Collapsing Carbon Market Backfires February 23, 2009

Posted by honestclimate in Carbon Trading.
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Collapsing Carbon Market Backfires

Posted on ICECAP

By Julian Glover, UK Guardian

‘Roll up for the great pollution fire sale, the ultimate chance to wreck the climate on the cheap. You sir, over there, from the power company – look at this lovely tonne of freshly made, sulphur-rich carbon dioxide. Last summer it cost an eyewatering 31 vpounds to throw up your smokestack, but in our give-away global recession sale, that’s been slashed to a crazy 8.20 pounds. Dump plans for the wind turbine! Compare our offer with costly solar energy! At this low, low price you can’t afford not to burn coal!”

Set up to price pollution out of existence, carbon trading is pricing it back in. Europe’s carbon markets are in collapse. Yet the hiss of escaping gas is almost inaudible. There’s no big news headline, nothing sensational for TV viewers to watch; no queues outside banks or missing Texan showmen. You can’t see or hear a market for a pollutant tumble. But at stake is what was supposed to be a central lever in the world’s effort to turn back climate change. Intended to price fossil fuels out of the market, the system is instead turning them into the rational economic choice.

That there exists something called carbon trading is about all that most people know. A few know, too, that Europe has created carbon exchanges, and traders who buy and sell. Few but the professionals, however, know that this market is now failing in its purpose: to edge up the cost of emitting CO2. The theory sounded fine in the boom years, back when Nicholas Stern described climate change as “the biggest market failure in history” – a market failure to which carbon trading was meant to be a market solution. Instead, it’s bolstering the business case for fossil fuels.

Understanding why is easy. A year ago European governments allocated a limited number of carbon emission permits to their big polluters. Businesses that reduce pollution are allowed to sell spare permits to ones that need more. As demand outstrips this capped supply, and the price of permits rises, an incentive grows to invest in green energy. Why buy costly permits to keep a coal plant running when you can put the cash into clean power instead?

All this only works as the carbon price lifts. A lot of the blame lies with governments that signed up to carbon trading as a neat idea, but then indulged polluters with luxurious quantities of permits. The excuse was that growth would soon see them bumping against the ceiling.

Instead, exchanges are in meltdown: a tonne of carbon has dropped to about 8 pounds, down from last year’s summer peak of 31 pounds and far below the 30-45 pounds range at which renewables can compete with fossil fuels.

The lesson of the carbon slump, like the credit crunch, is that markets can be a conduit, but not a substitute, for political will. They only work when properly primed and regulated. Europe hoped that the mere creation of a carbon market would drive everyone away from fossil fuels. It forgot that demand had to outstrip supply, and that if growth stops, demand drops too.

There is not much time to rescue the system. Carbon trading remains at the heart of the international response to climate change. Obama backs what Americans call cap and trade. Australia wants to try the same thing. It should be at the heart of a deal at the Copenhagen summit this winter. But both are hesitating, given Europe’s mess.

The market must be unashamedly rigged to force supply below demand. The obvious way would be to cut the number of permits in circulation, but in a recession no government will be brave enough to do that. And private initiatives such as Sandbag, which encourages individuals to buy and lock away permits, can exert little pressure on price in a market awash with them.

Europe can choke off tomorrow’s supply, however, without hitting business today. First the EU must stop importing permits from countries such as Russia – a bonus for a paper transaction. No one really believes that 15m tonnes of imported permits will not still be emitted by a steelworks somewhere east of Novosibirsk. Second, it must publish plans to crack down on the surplus of permits when the recession is over. Warnings of famine ahead, when the scheme enters its third stage in 2012, would raise prices now, if believed. Like medieval pardoners handing out unlimited indulgences, governments have created a glut. Reformation must follow. Wanted – a modern Martin Luther to nail a shaming truth to industry’s door: Europe’s whizz-bang carbon market is turning sub-prime. Read story here.

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Cap and Trade or Tax and Charade October 10, 2008

Posted by honestclimate in Carbon Trading.
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Tax and Charade

by Roger Pielke, Jr

From the Science Policy blog, September 18, 2008

The New York Times had an article on the upcoming carbon dioxide auction of the Regional Greenhouse Gas Initiative (RGGI) of 10 northeastern U.S. states participating in this new cap and trade program (h/t Adam Zemel at the BT blog). The evolving performance of RGGI should add weight to the argument that cap and trade is simply not up to the challenge of reducing greenhouse gas emissions. Here is an excerpt from the NYT article:

The program is due to get off the ground in nine days, but already there are worries that it may fail to reduce pollution substantially in the Northeast, undermining a concept that is being watched carefully by the rest of the country, by Congress and by European regulators. . .

The concept has been praised by environmentalists and state officials. But the emissions cap was based on overestimates of carbon dioxide output, which has dropped sharply from 2005 to 2006 and is on a lower trajectory than anticipated.

This means that there are more emissions permits available than emissions (can you say ETS Phase 1?).

Read the rest of the article, click below link

http://sciencepolicy.colorado.edu/prometheus/tax-and-charade-4576

Al Gore’s Carbon Empire, Cashing in on Climate Change September 27, 2008

Posted by honestclimate in Carbon Trading, Temperature.
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Al Gore’s Carbon Empire, Cashing in on Climate Change

I want your money!

I want your money!

By Capital Research Center, Fred Lucas

From SPPI, September 11, 2008

Al Gore says everyone will benefit when new government rules require companies to pay to reduce global warming. But some people will benefit more than others, as will some companies. Benefiting most are those like the ex-vice president who can set up and invest in companies that will profit from the federal regulations imposing heavy costs on others.

Read the rest of the article, click below link

http://scienceandpublicpolicy.org/other/gores_carbon_empire.html

Financial crisis: Lehman misses out on carbon credit scam September 21, 2008

Posted by honestclimate in Carbon Trading, Discussions.
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Financial crisis: Lehman misses out on carbon credit scam

By Christopher Booker

From the Telegraph, September 21, 2008

What is the connection between the bankrupt Lehman Brothers and the likelihood that in four years’ time our electricity bills will jump another 25 per cent (on top of the rises likely from soaring coal and gas prices)?

The answer is that, before its collapse, Lehman was pitching to become the leader in the vast trade created by the new worldwide regulatory system to “fight climate change” by curbing emissions of carbon dioxide.
The biggest money-spinners will be the schemes whereby industry will pay for permits to emit CO2 at so much a ton, either directly to governments or by buying them on an international market.

This market, soon to be worth trillions of pounds, was where Lehman hoped to be “the prime brokerage for emissions permits”, as it set out in two hefty reports on “The Business of Climate Change”.

Advised by some of the world’s leading global warming activists, such as Dr James Hansen and Al Gore (a close friend of the firm’s erstwhile managing director Theodore Roosevelt IV), Lehman bought their message wholesale. GIM, the company set up by Gore to sell “carbon offsets” in return for planting trees, was a prized Lehman client. (more…)

Political Climate September 17, 2008

Posted by honestclimate in Carbon Trading.
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Lehman Brothers Close Ties to Gore, Hansen and Carbon Trading

From ICECAP, September 16, 2008

Al Gore’s carbon trading business GIM was banked with Lehman Bros. It will be interesting to see how this will play in the future but I suspect that this increases the risk of participating in Carbon trading. Merrill Lynch was also deeply involved in this business.

Last year Lehman Brothers released a long and highly publicized report about climate change in which they preached about decarbonization, trying to make their investors keep getting high profits from the Kyoto carbon trade scheme and the support of huge public subventions. All that, of course, with the applause of the usual choir of politicians, the entire media and the Greens.

Last year Lehman Brothers released a long and highly publicized report about climate change in which they preached about decarbonization, trying to make their investors keep getting high profits from the Kyoto carbon trade scheme and the support of huge public subventions. All that, of course, with the applause of the usual choir of politicians, the entire media and the Greens.

A year ago they couldn’t predict their bankruptcy but were predicting the climate 100 years ahead. Thousands of green militants have been using the Lehman report as a proof of global warming and impending chaos. Lehman Bros said it! sacred words! Its scientific advisor is James Hansen! The report is the basis for policies on climate change in Spain, Argentina and several other countries playing the progress game; it is used by economy professors playing the climatologists; by newspapers editorials, and even by a State Secretary: Lehman Bros, said it!

(more…)