Market Confidence Low: Carbon Credits now worth 25 cents, were at $7 in 2008

From Tom Nelson: Plunging prices at the Chicago Climate Exchange

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ABOVE: CCX CFI End of Day Summary: Offsets now selling for 25 cents each

Back on September 2nd, 2006/2007 instruments were selling as low as 20 cents and held that way until Sept 8th. So this is a boost. See the table below. Zimbabwe money notes are doing pretty well on Ebay. Right now they are actually more valuable than carbon credit notes.

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[2008: Offsets were selling for over $7 each]

ChicagoCCXgraph

[Spin from Sept 9, 2009]: “Carbon market evolving”

“The U.S. appetite for carbon trading is strong CCX is now trading 3,000 to 5,000 contracts per day, with 20 percent of the largest carbon dioxide-emitting utilities in the U.S. participating; 11 percent of the Fortune 500 companies; and 17 percent of the Dow Jones Industrials companies.”

A recent Congressional Budget Office study projected that carbon offsets could be a $60 billion market in 2012, on a par with U.S. corn and wheat markets, and “as it grows beyond that, it will make forestry mitigation opportunities more important,” says Jeffrey O’Hara, senior economist, Chicago Climate Exchange (CCX).

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116 thoughts on “Market Confidence Low: Carbon Credits now worth 25 cents, were at $7 in 2008

  1. How can you have forestry mitigation opportunities when all management/recovery activities are shut down cold with endless environmental lawsuits?

    Can I run outside and scream yet?

  2. As they say; there’s a sucker born every minute; so scams that prey on them are always popular. Then of course maybe people who are that stupid, shouldn’t be allowed to have money anyway.

    George

  3. Like I said in an earlier thread here, buy your carbon credits today before the price goes down!

    What I don’t understand is why any self respecting company would engage in the bizarre act of trading a virtual product? Perhaps they have money to burn (carbonize). More probable, they have $billions to bilk from the gullible.

  4. Makes me laugh that the environmental activists who have been pawns for the carbon trading masters are against this.

    • Actually I think there is money to be made here. Buy up $20 worth. In a few years the certificates will be a novelty and would probably have saleability on Ebay for $5 each, especially if they were nicely engraved.

      Take some to Al Gore’s next climate meeting and get them autographed. Then you could get $20.

      Zimbabwe money notes are doing pretty well on Ebay. Right now they are actually more valuable than carbon credit notes.

  5. There is no US/State mandate for Carbon Offsets.

    Renewable Energy Credits still carry reasonable value due to State mandates.

  6. IIRC, Eron came up with this idea, figured to make a killing by collecting rent on nearly every industry in the world.

    This has been a scam from day one.

  7. I do not see why this market exists at all. Who decides who had to pay credits and for what and who can earn credits and how? Will all those rules change if the Cap and Trade bill passes? If the .Gov wants to slow down the consumption of carbon based fuels just tax them! Why do we need this overly convoluted scheme?

  8. Thanks for the tip. I just went out and bought a couple of Zimbabwe notes.

    OT: I see that the not-quite-hewing-the-party-line Blog of Bloom at the BBC has gone on hiatus — nothing since July. Alas, it dared to suggest that things were not always as awful as portrayed.

    Craig

  9. When Carbon Credits were introduced in New Zealand, landowners cut down huge tracts of old growth forest, because carbon credits were only available for newly planted trees.

    Like biofuels, carbon credits have environmental disaster written all over them.

  10. It looks like Al Gore will need some patience before he will reach his goal of becoming the first “Carbon Billionaire”.

    I always wish people the best in business but in his case I sincerely hope he goes bust.

  11. Carbon credits are the new Housing Bubble….
    -and .com
    -and lending
    -and Saving and Loan scandal
    -combined…

  12. Philip_B (14:49:12) :

    The checky buggars actually nationalised the carbon credits, those areas havnt been replanted, theyve been clear felled, roots mulched, and put into dairy mostly.

  13. Can you short the credits. Looking at the stall in temp there maybe downside left.

    I bought my 8 year old a set of the Zimbabwe trillions 5, 10, 20, 50 and 100. Worth every penny of the $7.00 as he now knows where Zimbabwe is, the basics of inflation and what the cool rock piles on the back of the notes are.

  14. Wally welcome to the ranks of the bemused, baffled and bewildered. It’s a mad, mad world out there not fit for the likes of clear thinking and logical folk like thee and me.

    Kindest Regards

  15. Carbon Credits, Bah! Zimbabwe, Bah!

    I’m stickin’ with my Confederate Bonds.

    (and they’ve actually gone up quite nicely since I purchased them a few years back)

  16. Hank Hancock (14:21:36) : What I don’t understand is why any self respecting company would engage in the bizarre act of trading a virtual product?

    Um, perhaps because substantially every financial instrument is a “virtual product”? Very few of the markets are “delivery” markets where you get stuff if you don’t properly close out your position, and even in those, most positions are closed out prior to delivery. (Generally, “delivery” is the big PITA for traders. They don’t what to deal with real stuff, getting it or needing to supply it.) BTW, as of about 1960 (something… 4? 6?) even our money is a ‘virtual product’. It is “fiat money” and has no intrinsic worth. That pretty paper in your pocket is worth what someone else believes it is worth, nothing more. Every time you hand over currency, or accept currency, you are making a trade for a “virtual product”… Also, your home owners insurance contract is a “virtual product” (as are most insurance contracts) along with your retirement annuity (and your Medicare promise of payment “someday” worth “something”…)

    One of the truly bizarre and interesting aspects of Economics: Why people do this, all the time, everywhere…

    Wally (14:45:13) : I do not see why this market exists at all. Who decides who had to pay credits and for what and who can earn credits and how? Will all those rules change if the Cap and Trade bill passes? If the .Gov wants to slow down the consumption of carbon based fuels just tax them! Why do we need this overly convoluted scheme?

    Well, first off: Why?

    Because the government needed to get the Wall Street boys on board with their anti-carbon agenda. If all it’s going to do is slam your stock trades, you are against it. But if you get a piece of the action with a whole new market… Suddenly Goldman Sachs et. al. started talking about the merits of the scheme. There is also a minor economics argument that markets are a more efficient allocator of the (planned to be) scarce resource.

    Unfortunately, to get the scheme moved forward, the politicians had to basically give away “carbon indulgences” to all the impacted industries, and that excess supply drove the price down in the open market… So that sort of answers the “who” and the “Cap and Tirade” law impacts…

    Philip_B (14:49:12) : When Carbon Credits were introduced in New Zealand, landowners cut down huge tracts of old growth forest, because carbon credits were only available for newly planted trees.

    Like biofuels, carbon credits have environmental disaster written all over them.

    Yup. Economics is full of subtile inversions of behaviour. That is why the founders of the USA left it out of the purview of the government. Unfortunately, our present crop of congress critters (and California state critters) don’t seem to “get it” and want to go play with the Social Control Economic Shiny Thing… to the detriment of all of us.

    We really do need a “Hands Off Anything Economic” amendment…

  17. I feel very confdent that the US carbon market will become every bit as successful as the EU version. /Sarc Off

  18. wattsupwiththat (14:27:07) :

    “Actually I think there is money to be made here. Buy up $20 worth. In a few years the certificates will be a novelty and would probably have saleability on Ebay for $5 each, especially if they were nicely engraved.”

    Anthony,

    Why wait a few years when a correct belief in global cooling could make you good money in January 2010? Please have a look my post on the “Forecasting the Earth’s Temperature” thread below to speculate on whether the Earth is cooling according to Roy Spencer’s data. I’m willing to bet against anyone reading this.

  19. Voodoo economics. This a fake product. it will be impossible to hold and establish value on. A CPA will not allow these fakes to be valued on a company balance sheet. They aren’t audited and are worth less than penney stocks. Rolling Stone magazine wrote about Goldman Sachs getting this mess ramped up.

    Just for the record, there must be a few people that made a killing riding these up to 7 dollars.

  20. Don’t waste your money on carbon credits when there is a perfectly viable market for bridges spanning Sydney Harbour.

    Send bank account details for more information.

    You can trust me, I have a model of the bridge.

  21. It’s a new world and I can’t say when the change occurred. Possibly the rot set in as soon as the USSR collapsed.

    Energy producers are now aligned with energy rationers because the value of their product can be enhanced.

    Energy rationers are aligned with political opportunists who see a chance to seize control of every detail of life.

    Political opportunists are in control of the tax revenues of every wealthy nation.

    Ah, I see. The decadance of democracy from 60 years of relative peace, wealth and security gives time for power to be accumulated by those who would manipulate voter complacency and impotence for the ultimate global power grab.

    No one ever guaranteed that freedom and democracy could be maintained indefinitely. The British creation of a new world order based on parliamentary democracy 500 years ago was a guarantee of nothing.

    How can ordinary voters regain control without violence that would defeat their objectives when all the political options are moving in the direction of increasing centralisation and micro management of every aspect of society.

    It was never the end of history. It was the beginning of worldwide enslavement.

    The end of the Cold War could have been but the beginning of the end game leading to perpetual enslavement of the masses.

    Unless economic collapse concentrates minds and returns us to the righteous path by demonstrating that taxpayer funded wealth is a very delicate plant requiring careful nurturing.

    I hope my bottle of wine has left me reasonably intelligible.

  22. Quick! Buy 100 dollars of carbon credits before Cap & Trade becomes reality, with those things that cheap, if everyone bought that amount, they can spew as much CO2 as one wants, heck the power companies can buy a bunch without making a dent in their finances and continue running coal plants and build new ones. :-P

  23. wattsupwiththat (14:27:07) :

    Actually I think there is money to be made here. Buy up $20 worth. In a few years the certificates will be a novelty and would probably have saleability on Ebay for $5 each, especially if they were nicely engraved.

    We think alike, alas, I fear there are no tangible paper certificates to request. I certainly would buy a few shares of each provider. One might be able to draft shares of “Watts Carbon Certificates” and sell them on your weathershop.com.

    A commercial source, http://www.scripophily.net/, trading in old certificates had a “bonus” calendar printed ala a proper stock certificate, so there might be a way to create them by Christmas. A couple years ago I bought a certificate to the Edison Portland Cement Co, issued to Thomas Edison (but not signed).

    Ah – they’re offering a Ten Trillion Dollar Zimbabwe bank note for $14.95 or free with orders of over $200. “This colorful historic document has a vignette of three boulders piled on top of one another (front), and buildings (back). This item has the printed signature of the Governor, Dr. G Gono (appropriate name).”

    On the front it says “I promise to pay the bearer on demand TEN TRILLION DOLLARS for the Reserve Bank of Zimbabwe.” (Their shouting, not mine.)

  24. I hope people won’t mind indulging me for a moment. My guess is that the ramp up to $7 happened as a result of the Taxman malarkey being passed by the House, and the subsequent drop by the Chinese and Indian announcements that they’re not going to play ball.
    There is another interesting thing here. In Obama’s budget, he predicts that he will raise $79bln in 2012 from these.
    American emissions are estimated to be 6bln tons which would infer that they will be over $13 by then. Can anybody see that happening in light of the China India stance and Africa’s demands that they be compensated for the damage done by Western emissions?
    I believe at $79 bln, that would put the carbon market bigger than both corn or wheat futures in it’s first year!
    My guess is that even if the bill is passed in it’s present form (unlikely), with no further concessions (impossible), the price will end up a small fraction of what they’re expecting. In other words, a giant white elephant that won’t achieve what it sets out to do, and complicates everybodies’ lives in the process.

  25. E.M.Smith (15:38:38) :

    With kind thanks for your explanation, I feel it safe to conclude I won’t be making any career moves to Wall Street (or Carbon Street as it emerges) any time soon. For the moment, I will focus on collecting as many of those pretty pictures in my pocket in hopes they one day become valuable.

  26. Wally (14:45:13) :

    I do not see why this market exists at all. Who decides who had to pay credits and for what and who can earn credits and how? Will all those rules change if the Cap and Trade bill passes? If the .Gov wants to slow down the consumption of carbon based fuels just tax them! Why do we need this overly convoluted scheme?
    —————————————————————-
    Yup, taxing the hell out gasoline has worked wonders in the UK. Fewer more efficient cars on the road; gasoline consumption is way down…

    Taxing anything does not reduce consumption. It also allows those who can afford ‘it’ to consume as much of ‘it’ as they want with a clear conscience. “Why do I need to reduce my carbon footprint (sic)? I’m offsetting that at the pump!”

    And even so, even within carbon credits, what does it ultimately buy? There are dozens of “green eco-companies” which take these ‘carbon credits’ or ‘offsets’ (Al Gore is a life long customer as he keeps reminding us) but what do they actually *do*?

  27. Asset Backed Paper has more value than Carbon Credits. At least with Asset Backed Paper you might get 10 cents on the dollar. Not that the US dollar(or any other dollar) is worth that much any more. When you think of Carbon Credits think Bre-ex or tulip bulbs.

  28. Maybe Van Jones, reportedly a Chigago-revolutionary friend of Obama’s super-advisor, Jill Jarrett, and now a famous ex-White House Advisor for “Green Energy” Tsarism was planning on making a killing with these pump-and-dump credits. Good thing he dumped himself before he could revolutionize our energy-dependent capitalist economy.

  29. We’ve had the same thing happen here in aussieland. Great Southern Plantations were a managed investment scheme dealing in tree plantations. In 2005 they were worth $5.70 a share, by may 2009 they had fallen to 10c. The company has now been wound up.

    so much for carbon credits.

  30. I’m confused. Just what do I get for my ‘carbon credit’? The right to emit CO2? What if I use it up? Does it suddenly evaporate? It looks like I don’t even get a nice certificate to hang on the wall that future generations can laugh at. What is the exchange rate for U.S. credits and Euro or Aussie credits? (I assume they would be metric credits)

    How many quatloos can I exchange a credit for? How many Zimbabwe dollars?

    I should at least get a T-shirt.

  31. “Philip_B (14:49:12) :

    When Carbon Credits were introduced in New Zealand, landowners cut down huge tracts of old growth forest, because carbon credits were only available for newly planted trees.”

    And the biggest landowner in NZ is the Govn’t. They cut down more 80 year old growth forrest than everyone else combined.

  32. “That pretty paper in your pocket is worth what someone else believes it is worth, nothing more.”

    I’ve not seen many people realize this, but it applies to everything, even the all powerful gold and silver. You can’t eat them, or wear them, or practically build a house out of them. Everything, fiat money, carbon credits, and gold is only worth what someone else believes it is. Very strange.

  33. I have a Confederate $20 bill. If the government keeps on printing money to finance the huge deficits, the day will come when the Confederate bill will be worth more as a historic document than the equivalent US dollar. Maybe the southern states can secede once again and clean up!

  34. It may remain worthless especially if the US ratifies the Kyoto Protocol at this stage and the sucessor to the Kyoto Protocol. The carbon credits registered with the CDM board is still trading at euro 12 down from euro 15. Most of the carbon credits if any are registered or complied with the verification and validation procedures of the Kyoto Protocol. One of the controversial issue that the US was unhappy with the Kyoto Protocol is the limit to the carbon credits from sequestration to one per cent and practically no credits for good stewardships of existing sinks. The Kyoto Protocol is basicaally European in orientation. Europe has practically little of old growth forests left while US has a lot of forest under federal land. European forest is very limited so the one per cent cap will not bother them. One of the biggest defect of the Kyoto Protocol which environmentalist is does not bother is its potential to encourage logging of old growth forests in developing countries. Old growth forests is very inefficient in carbon sequestration compared to young forests.

  35. It is not just intangible property (carbon credits, company shares and the like) that have value only if someone is prepared to give them value. The same goes for every item we own. For example, how much is my car worth? Answer: whatever someone will give me for it. It might be thousands of pounds, it might be nothing; I am at the mercy of the judgment of the potential purchaser(s).

    Carbon credits have a value because someone is prepared to pay for them. Under cap & trade schemes that value is real because it represents the actual or estimated value that companies will pay in order to avoid penalties for exceeding their carbon dioxide ration. If the fine is, say, $1million for spewing too much they will pay what they need to for carbon credits in order to mitigate that potential loss, despite the credits themselves not being backed by anything tangible. Even a saving of $10,000 will be worthwhile, so they might fork-out $990,000 on credits and fees in order to avoid the otherwise unavoidable loss of $1million.

    If such a scheme is anticipated, people are prepared to pay with a view to cashing in later, as and when the scheme comes into effect. They might win, they might lose, but it’s their free choice whether to play the game.

    Value is not just a matter of stuff. Take a painting, for example. Skilled artists have produced stunningly accurate copies of well known paintings for centuries. Put the original against the perfect copy. What is the difference? Do they not both use the same materials and both depict the same image? Yet one is a forgery worth a few hundred and the other is the original worth millions. Why is the original worth so much more when, in substance, the items are identical? Answer: because potential purchasers consider the original to be worth more. Maybe it is just snob value, maybe it is a substantive reflection of historical rarity, maybe it is because a purchaser collects works by that artist and is prepared to pay more than anyone else for an original; frankly it doesn’t matter what it is – value is what people are prepared to pay. And they are prepared to pay what they are prepared to pay for a host of reasons that we would not all consider sound. They do not pitch their price for a painting according to a formula of cost of materials & so-many hours’ labour by the artist.

    Carbon credits are, in substance, air. But that air might have a substantial value to a company facing a penalty or to a trader hoping to find a company that will pay more for them than he has to pay. A painting is, in substance, canvass and paint. But that canvass and paint can have a value far in excess of cost price because the benefit received by the purchaser can only be valued by him.

  36. I’m as big a climate warming skeptic as the next person. But, these carbon credits are real, and they are likely here to stay.

    California (and a few other places) have long experience in creating and trading various pollution credits, one example is called RECLAIM in Southern California. One can purchase the right to emit SOx and NOx. They, too were fairly cheap at first because the cap-and-trade scheme had a high cap in the early days. The cap was reduced over time, and the prices soared. But, these financial instruments are not like corporate common stock, these have an expiration date that makes their lives very short.

    http://www.aqmd.gov/RECLAIM/reclaim.html

  37. It is strange that this market tanked just when Congress is (almost) ready to put a real value behind them.

    I guess the market thinks the climate bill has no chance to pass now and there is already an oversupply of credits in the virtual market which existed without the climate bill.

    They really have no value without a “price” put on CO2 emissions.

    The market thought there would eventually be a “price” on emissions (ie that global warming was a real problem that would have to be addressed eventually). Now the market thinks there is no problem that needs to be addressed at all virtually.

    Some of us would put a small price on emissions while others would put no price on them. The average would still be higher than 20 cents per tonne. The market is going with the “no pricers”.

  38. Another Credit Default Swap thing, only in this case, it’s a Carbon Default Swap. Visions of granduer, only where’s the money supposed to come from to buy all those hot shares? The West is cash strapped and in debt up past their eyeballs.

  39. Philip_B (14:49:12) “When Carbon Credits were introduced in New Zealand, landowners cut down huge tracts of old growth forest, because carbon credits were only available for newly planted trees. Like biofuels, carbon credits have environmental disaster written all over them.”

    Many years ago I did research on forest population genetics on fragmented landscapes during climate change (so your post is of particular interest). Thank you for sharing this information.

    Can you confirm that the credits are also not available if the cut-blocks are allowed to regenerate naturally?

    The reason I ask:
    You say “planted” trees. If credits are not allowed for natural regeneration, we are screwing with the forest’s ability to naturally adapt to climate change (by reducing the variability in the gene pool — diversity is a population’s defense against an array of future survival-bottlenecks).

    I’m an ecologist – and this would be just one more thing making me angry at & bitterly opposed to the ‘phony greens’ who are promoting policies that can have counterintuitive (& seriously detrimental) impacts on the environment. They aren’t thinking through the consequences of their actions. They are convincing people to do things that cause risk of very serious harm. I question their judgement with all due severity; I consider this a serious responsibility.

  40. Stephen Wilde (16:08:43) : Ah, I see. The decadance of democracy from 60 years of relative peace, wealth and security gives time for power to be accumulated by those who would manipulate voter complacency and impotence for the ultimate global power grab.

    That pretty much sums it up.

    How can ordinary voters regain control without violence that would defeat their objectives when all the political options are moving in the direction of increasing centralisation and micro management of every aspect of society.

    Well… if you are willing to loosen your constraints a bit… The usual model is that the population enters a passive aggressive phase (“we pretend to work, they pretend to pay us.”) and about 40 years later the system collapses. Unfortunately, this is often accompanied by some amount of violence, sometimes from near by states…

    The end of the Cold War could have been but the beginning of the end game leading to perpetual enslavement of the masses.

    Nothing is forever.

    Eventually even a global perfect empire would be faced with a natural calamity beyond their ability to cope. (Rock fall from space. Supervolcano. Global pandemic plague. Weather / climate driven crop failure of excessive size.) At that point it breaks up and collapses as the “bribes” offered by the central power to maintain control are not sufficient to overcome the personal desire to save ones posterior from destruction.

    But even before that, internal political infighting often brings collapse.

    Even the Roman Empire fell. In two stages no less. One from internal political stresses. Later the surviving half in Byzantium fell from religious shifts it could not accommodate. (Shift to Christianity inside, Islam at the gates.)

    The only bad news is that it can take 1000 years to happen :-{

    Welcome to history’s “wheel of fate”…

    Unless economic collapse concentrates minds and returns us to the righteous path by demonstrating that taxpayer funded wealth is a very delicate plant requiring careful nurturing.

    I hope my bottle of wine has left me reasonably intelligible.

    Rather eloquent, actually…

    The point about “concentrates minds” is particularly relevant to me, since here in California we are being “concentrated” right now. Folks voted with their feet and the state is on the edge of bankruptcy. FINALY there is a tiny little bit of talk about fixing some of the excess spending…

    Basically, they are just barely starting to realize that they are “running out of other peoples money to spend.” One can only hope they finish the transformation prior to the complete collapse of the state… As of now, it’s $40 Billion in the hole, some tiny cuts, a lot of smoke and mirrors with accounting games moving costs to the future, and a tremendous degree of wailing and gnashing of teeth by the folks who expect a never ending gravy train. Oh, and the implicit expectation that “next year it will be better when the recession is over and we can forget about all this talk of deficits.”

    What they don’t realize is that folks (and more importantly jobs and businesses) will NOT come flooding back to California next year.

    So this “crash” will take about a decade to play out, IMHO. Maybe 5 years if we are very very lucky. (For California). Until the Gubmint learns that there is no infinite cash cow to tax to death and that it’s a failed parasite that kills its host.

    So watch California. That’s the way the model will run for the USA later.

    The rest of the world? Well, they have their own cycles and patterns…

    Europe, especially, seems to play out The Socialism Shiny Thing for decades and props things up until the whole shebang collapses in a heap after 30 to 60 years. (Often with regional or world wars involved…) Not looking forward to that one, but we probably have 20 to 30 more years before it hits.

    Hispanic South American countries seem to have the Dictator Du Jour oscillating with the Socialism Shiny Thing on about a 20 year cycle. Occasionally with a decade or so of “Western Democracy” while they recover and borrow money from the North; then start all over.

    Brazil did the Military Dictator thing. Didn’t like it. Tasted Socialism, put it back. Then embraced the western democratic republic. Jury still out, but it looks long term stable from here. They seem more clue-full about the lessons of their history than most other S.Am countries. I’d bet on them to do OK. At least for 50 years or so.

    Asia? Strange, exotic, volatile. Sporadically stable for centuries (often under central dictatorial power structures of various kinds) and sporadically spectacularly unstable. Not much evidence for survival of democratic Republics there.

    Africa? Never stable for long, no matter what they try. Muslim World and Middle East? Not exactly stable, but lots of long lived dictatorial power structures based on family dynasties (though things tend to go “BANG” in the night a lot. And always have…) It will continue plodding along as it has for centuries. Will play in global power structures, but never submit to them. Will pretend to go along to get along, but will only play for position. Unfortunately, the religious dictatorial nature of the place will not yield to a democratic republic, so not very useful as a place to preserve western values.

    So that leaves 3 interesting bits.

    “Ex British Empire” English culture dominated. India. Pacific Islands.

    You can pretty much lump together Australia, New Zealand, Canada, etc. They like to dabble in The Socialism Shiny Thing, but have the sense to pull back when too much economic blood has been sucked out of the host. They play with it, but stop short of destruction. Will probably continue in the same mould. Also sporadically try “British style” police state bits (like gun confiscation or cameras everywhere) but sometimes back away if they fail too spectacularly as well. There is some, limited, hope here.

    India seems to just keep on being India. Muslims dominate for a while, then leave power. Britain makes it part of The Empire for 400 years, then leave. Dabbled in some Soviet Sympathy behaviours, then said Never Mind. Now they are trying a fling with US Style Capitalism, but hang onto 4000 year old traditions. I think in 500 years India will be doing more or less what it does now; being India. Old and new. Spectacularly rich along with incredibly poor. Trappings of “central control” on something too unwieldy to every really control. Whatever the new social fad is in government layered on top as a veneer so the rest of the world won’t notice that it’s still just being India…

    Then there are all those Pacific Islands. Sporadically over run by external powers (Polynesians, British, French, Spanish, Japan, USA, …) who end up largely either being tossed out by someone else or just sort of losing interest. It’s a long way from anywhere for most islands, and not much of value that can be removed. So folks end up parked under a palm tree with a cool one; or leaving. Works for me… Only real problem I see is the sporadic external power that wants to claim control (but never really has it, being too remote) and the sporadic external war that rolls through for a couple of years. OK, roll the dice and keep a boat handy…

    As I look back over that world description, I don’t see it ending up in the grips of a One World Power.

    Just too many loose ends and too many orthogonal groups. India, Islam, and China are in a three way stalemate. Russia is too weak to dominate, but too strong to be dominated. Europe is so internally fractured that if someone sneezes wrong it will disassemble. (If they even think about letting Turkey in for another decade it’s likely to fall apart. And Greece will leave if Turkey enters the EU.) S. America can’t even keep the individual countries stable for several decades, how can it be integrated into anything? Ditto Africa. And the Asian puzzle box is just waiting for a reason to do something totally unexpected and very unstable.

    So don’t worry, any global empire of domination will last about 10 days, IMHO. Just long enough for folks all around the world to say “Nah..”

    Now put that in the context of the Carbon Trading Shiny Thing. India, China, and Russia will not be “on board”. You can buy them in, but not when you have run out of money (which is happening now.) The Muslim world will pretend to play, but not if it does anything to their own plans. Africa is out of the pool. SASOL is NOT going to suddenly stop powering all of South Africa just because it uses coal… South America will be looking for handouts and “Don’t cut the trees? Give me money!” schemes. If that doesn’t happen, they will pay no attention to the idea.

    Basically, everyone is willing to TALK a good game as long as they think they will “win” in the game. Once they realize they do not win, they are “out of the pool”.

    Think of it as a “Prisoner’s Dilemma” problem. (Most of the world does.) You win most if you pretend to cooperate, but cheat. Now if there is anything that the power structures in China, lots of the rest of Asia, Russia, South America and Africa are good at, it’s cheating on agreements… So all you can reasonably expect is that the rest of the world is going to make noises like they are bought it, will accept money, and will do nothing.

    That means the system will collapse.
    No perpetual enslavement.
    No One World Order.
    No empire.

    Feel better now?

  41. Ryan P (18:56:57) :
    I’ve not seen many people realize this, but it applies to everything, even the all powerful gold and silver. You can’t eat them, or wear them, or practically build a house out of them. Everything, fiat money, carbon credits, and gold is only worth what someone else believes it is. Very strange.

    In fact gold and silver are very useful elements, restricted in that use by their rarity value. Silver is the best thing to make electrical power lines due to its excellent conductivity, gold is excellent as soldering iron bits, electrical contacts, etc. Without a scarcity market, they would easily hold a fine price against poorer substitutes like copper. Also silver is edible and has, I believe, antibiotic properties.

  42. Philip_B (14:49:12) : When Carbon Credits were introduced in New Zealand, landowners cut down huge tracts of old growth forest,

    Douglas Adams had a good handle on this syndrome at the end of ‘The restaurant at the end of the Universe’.

    Having adopted the leaf as legal tender on prehistoric Earth, the useless third of the Golgafrinchan population, having been tricked into leaving their own planet by a false story of impending planetary doom, “run into a small inflation problem” which they decide to solve by burning down all the trees…

  43. I have a very nice time share Opera House opportunity on Sydney harbor over the bay from Trigge’s Bridge (15.56), . Personally I would not buy the bridge, I happen to know that it is covered with back rates and needs serious renovation to come up to code.

    The Sydney Opera time share opportunity is all upside and no responsibility. The only time not available is New Years eve.

    Please email me care of Walker@Nigeria.Gov.

  44. Stephen Wilde (16:08:43) :

    Energy rationers are aligned with political opportunists who see a chance to seize control of every detail of life.

    The end of the Cold War could have been but the beginning of the end game leading to perpetual enslavement of the masses.

    I hope my bottle of wine has left me reasonably intelligible.

    Loud and clear Stephen.

  45. Beware of forestry schemes where you pay for credits to emit CO2, to a company planting trees. Growing trees do sequester CO2, but once they are cut down or burned, their sequestration value goes back to zero. Someone has got rich from your gullibility. The credit value should be refunded as it worked for a mere blip in time.

    Tree planting sequestration works ONLY if if the biomass on the given land is increased and maintained enlarged forever. A Viagra type of concept.

  46. I live in a third world country. Our house overlooks hundreds of acres of sugar cane. Traditionally, in cutting season, the cane is burned before the cutters go in. This operation gets rid of the snakes that feed on the mice that abound in the cane, and makes the cutters’ lives more palatable.
    They started a harvest two weeks back, but with no prior burning! I guess some guy in a plush office, and who has never encountered a snake in the wild, is cashing in on carbon credits. Tough on the poor cutters! The good side is that it helps keep my wife’s laundry smut-free.

    Geoff Alder

  47. This guy has the right idea:

    The main worry with all this is that governments are in a rush to create all this policy to stop climate change, and we know how effective government policy is at the best of times, let alone when the whole foundation for the policy-making is a false premise…

    Hmmmm perhaps we should just wind back the clock to the John Lennon days… hang around in bed all day and sell them carbon creds on eBay. Without the Yoko Ono wailing bit, of course…

  48. Paul Vaughan (22:52:23) :

    the whole story here(NZ), is that when carbon credits were introduced, the government nationalized the carbon credits, so private forestry owners didnt recieve them(most farmers had blocks of pines also). Native forests however are protected.

    Basically the bottom has fallen out of the price of wood, where as commodity prices have soared(ironically partly due too land diversions to bio fuels across the globe, obviously effecting supply) So as the pine forests are being felled, they are not being replanted where its topographically possible to get a far greater return through dairy farming.

    I recall green peace doing a protest about it… but they protested against the opposition party, instead o the political party that nationalized the carbon credits…. i found that amusing at the time.;-)

  49. E.M.Smith (22:56:54) :

    Very Interesting Perspective.

    I figure that a one world govt would see massive insurgencies. Too many people would hate it for all sorts of reasons.

    Besides which, there are no external entities that a one world govt could offer as scapegoats for people to transfer their issues on too. It would all go internal – hence no unity and conflict.

    BTW: George Orwell had a solution for that, hide the one world govt behind three factions – oceania is always at war with eastasia (or was it eurasia… – anyway the ministry of truth will sort out the recorded history) to allow for perpetual conflict and blame.

  50. MikeE (23:49:52) “I recall green peace doing a protest about it… but they protested against the opposition party, instead o the political party that nationalized the carbon credits…. i found that amusing at the time.;-)”

    I think we need to start thinking about what the systems will morph into over time. I imagine, years from now, speeches like, “Well, the reason that was introduced … You see, at the time … BUT …& so … (changes) … & thus… No one could have foreseen….”

    I imagine people are thinking, “Get the system in place using this momentum. Later we’ll change it into something useful. We can’t waste this momentum. We can morph the system into something useful later after we use this momentum to get it into place.”

    Thanks for the notes.

  51. Today I received a very interesting lesson in how financial markets may or may not work from you guys. It’s nice to rub shoulders with intelligent posters. However, I can sum up the carbon credits situation in one short word and with no financial strategy lesson required:

    FRAUD!

    Last time I looked, committing fraud was a crime.

  52. “Unfortunately, to get the scheme moved forward, the politicians had to basically give away “carbon indulgences” to all the impacted industries, and that excess supply drove the price down in the open market… So that sort of answers the “who” and the “Cap and Tirade” law impacts…”

    …The UK power companies were GIVEN these credits by the Government, and the power companies SOLD the credits to consumers by adding whatever they judged they could get away with to our bills. So we all ended up paying hundreds of millions of pounds for nothing. Thanks Al.

  53. “Ron House (23:03:56) :
    In fact gold and silver are very useful elements, restricted in that use by their rarity value. Silver is the best thing to make electrical power lines due to its excellent conductivity.”

    But silver is 4 times as heavy as aluminium, so you will have mechanical problems. That is why a power line is made from a combination of aluminium and steel. But wires can be copper.

  54. To whoever censored my comments about the FREE carbon credits given to the power companies in the UK, I suggest you read this page:

    http://www.power-to-the-people.co.uk/tag/carbon-credits/

    Notice near the last paragraph on this item it clearly states “The government should investigate the generous £9bn windfall the energy companies received in carbon credits and if it was incorrectly assessed, then the difference should be clawed back. The Competitions Commission must launch an enquiry into competition in the UK market and publish their findings, based on which, the government must legislate if necessary.”

    Further enquiries can be made to verify everything I said in my original post to any reputable organisation including the Consumers Association, also known as Which?

  55. Kate (02:17:33) :

    Curiously he asks, “Did GHG emission levels drop as a result of all of these hundreds of millions of pounds being spent, as well as the higher charges for consumers?”

  56. wattsupwiththat (14:27:07) :

    “…Actually I think there is money to be made here. Buy up $20 worth. In a few years the certificates will be a novelty and would probably have saleability on Ebay for $5 each, especially if they were nicely engraved..…”

    well, you’ll probably like this one:

    http://www.rahmstorf.eu/co2pins/background.htm

  57. ” Geoff Sherington (03:10:36) :

    Kate (02:17:33) :

    Curiously he asks, “Did GHG emission levels drop as a result of all of these hundreds of millions of pounds being spent, as well as the higher charges for consumers?”

    …No, they actually went up due to enduring the coldest winter in 19 years.

  58. Ryan P (18:56:57) :
    I’ve not seen many people realize this, but it applies to everything, even the all powerful gold and silver. You can’t eat them, or wear them, or practically build a house out of them. Everything, fiat money, carbon credits, and gold is only worth what someone else believes it is. Very strange.

    In fact you can throw a pure gold coin in the ocean, leave it for a 1000 years or so, then pick it out, clean it up and it will look the same as it did 1000 years previously.
    You could take this same 1000 year old coin and go and buy food with it.
    Everything else would have disintegrated.

    Lesson I learned long ago: In the seventies I worked for a very large multinational engineering company that produced electronic equipment. Their international contracts for equipment supply were in the billions of dollars back in the early seventies. The financial chief once told me not to be naive and think that the company made that much profit from the actual sale of the equipment.
    Commissions for arranging loans from banks, interest rates, inter currency transaction rates and money market. This was the cream. The company was owned by a consortium of private banks.

  59. Gov wants to slow down the consumption of carbon based fuels just tax them! Why do we need this overly convoluted scheme?

    Because the United Nations says so.

    The United Nations wants carbon credits because they get to be in charge of international trade in carbon credits, certification, etc, and the consequent huge money flows.

    Whether it was their intent or not, the result will be fraud on a scale never before seen on planet Earth.

  60. Henry chance (15:52:40) :

    “Voodoo economics. This a fake product. it will be impossible to hold and establish value on. A CPA will not allow these fakes to be valued on a company balance sheet. They aren’t audited and are worth less than penney stocks. Rolling Stone magazine wrote about Goldman Sachs getting this mess ramped up.

    Just for the record, there must be a few people that made a killing riding these up to 7 dollars.”

    Yes, credits have been bought by electricity producers.
    They will simply bill their customers to compensate for their loss.

  61. MikeE (23:49:52) :

    Paul Vaughan (22:52:23) :

    “the whole story here(NZ), is that when carbon credits were introduced, the government nationalized the carbon credits, so private forestry owners didnt recieve them(most farmers had blocks of pines also). Native forests however are protected.

    Basically the bottom has fallen out of the price of wood, where as commodity prices have soared(ironically partly due too land diversions to bio fuels across the globe, obviously effecting supply) So as the pine forests are being felled, they are not being replanted where its topographically possible to get a far greater return through dairy farming.

    I recall green peace doing a protest about it… but they protested against the opposition party, instead o the political party that nationalized the carbon credits…. i found that amusing at the time.;-)”

    This is yet another example how bad Green schemes effect out environment.
    Carbon capture technologies will double the amount of coal to produce the equivalent amount of electric power, Palm Oil (for bio kerosine) kills tropical forests and biodiversity, bio fuels increase the price of food and increase water consumption
    etc, etc.

    Green is mad and bad.

  62. Looks like the price of carbon credits correlate to sunspot activity, not CO2 emissions, just like the price of wheat. I so enjoy the irony of it.

  63. Paul Vaughan (22:52:23) :

    Can you confirm that the credits are also not available if the cut-blocks are allowed to regenerate naturally?

    What happened in NZ was that landowners cut down trees for 2 reasons.

    1. Was to get ‘vacant’ land that trees could be planted on for carbon credits (money).

    2. Was to avoid the penalties (a necessary adjunct to carbon credits) that would come into force for cutting down trees.

    I very much doubt credits would be available for natural regeneration, because then anyone doing nothing would be entitled to credits resulting in a massive expansion in the supply of credits.

    BTW, I’ve seen the ecological devastation across SE Asia from the biofuels boom – huge areas of forest clear cut and bulldozed for palmoil plantations. Now carbon credits will make things much worse with their incentives to plant trees and disincentives to retain existing rainforests or allow them to regenerate naturally.

    We have already seen this in Australia. Natural bushland replaced by monocultured bluegums.

  64. These ‘carbon credits’ being fake and traded will create another economic stranglehold, increasing the volatility of the trade game. When everyone and their dog (dead or otherwise) can buy and sell, everyone is an expert.

    When you start trading virtual commodities, you start spending real-world assets on nothing. As a previous poster stated, regarding energy producers: being a ‘middle man’ in this game, they can afford to speculate with carbon credits, generating both good will and a potential profit, while doing absolutely nothing ‘real’ to achieve the theoretical objectives of carbon credits. When the market for credits tanks as it inevitably will, they, as noted, pass the losses onto the consumer under the good-will guise.

    No-one loses except the end user – ironically, the very people pushing the government to ‘punish’ these evil corporations.

  65. “Ron de Haan (05:06:42) :

    Henry chance (15:52:40) :

    “Voodoo economics. This a fake product. it will be impossible to hold and establish value on. A CPA will not allow these fakes to be valued on a company balance sheet. They aren’t audited and are worth less than penney stocks. Rolling Stone magazine wrote about Goldman Sachs getting this mess ramped up.

    Just for the record, there must be a few people that made a killing riding these up to 7 dollars.”

    Yes, credits have been bought by electricity producers.
    They will simply bill their customers to compensate for their loss.”

    It’s already happening, well, just the “price increases” before the “increase in price” as a result of CO2 “permits” given to “emitters” by Gummint.

  66. Bill Illis (21:26:39) :

    “It is strange that this market tanked just when Congress is (almost) ready to put a real value behind them.

    I guess the market thinks the climate bill has no chance to pass now and there is already an oversupply of credits in the virtual market which existed without the climate bill.

    They really have no value without a “price” put on CO2 emissions.

    The market thought there would eventually be a “price” on emissions (ie that global warming was a real problem that would have to be addressed eventually). Now the market thinks there is no problem that needs to be addressed at all virtually.

    Some of us would put a small price on emissions while others would put no price on them. The average would still be higher than 20 cents per tonne. The market is going with the “no pricers”.”

    Bill,
    There is not enough money available to finance the upturn of the economy.
    We have been trying to solve a crises that was caused by over lending by…more lending.
    Don’t believe the reports of a restoring economy, the so called “good news” from China, Germany, Japan and the US. This crises is not over.

    Things will get much worse as the effects of mass unemployment start to further effect local banks, construction and consumer spending, thus triggering more businesses to close down and more unemployment.
    We are not out of the woods by a long shot.

    As a result energy consumption will go down further as well.

    With not enough money around to finance the upturn, we certainly can’t afford cap&trade.
    Besides that, the entire AGW hoax is about to collapse.

    The only way for the economy to kick in again and make money is trough international trade and exports.
    Exports are down and go further down.

    I simply take a look at the number of ships passing through the Panama Channel,
    6% down from July (Just under 15% compared to the beginning of the crises). Machine production and exports in Japan and Germany, further down last month, container trade Rotterdam harbor, also further down last month.
    I don’t know where the Chinese Production is exported to but it’s not going to Europe
    and it’s certainly not going to the USA.

    State deficit USA, out of control and rising.
    Europe, entire countries on the brink of failure (Southern countries and former east block countries).

    You can simply forget it.

  67. I don’t think I’ve seen this mentioned so I’ll briefly go over it: ignoring the various financial instruments, the reason things have value is because of two factors: scarcity and demand. Gold is expensive because it’s in high demand and, compared to coppoer or iron, there isn’t much of it about. It’s hard to extract (though easy to refine given its properties). Part of the demand is precisely because of its rarity, but it has excellent properties as well – highly ductile, non-reactive, malleable, and a very good conductor. It’s also pretty. In the days of the roman empire Tin had a similarly high value and demand.

    Even financial instruments have some basis in the physical world. They’re based on existing markets and valued by whatever commodity portfolio they’re based on.

    Markets exist because of scarcity and demand. The crucial problem with carbon credits was that this scarcity and demand had to be mandated by the government. That mandate is temporal – it will eventually disappear along with the government that made it. A government mandated artificial scarcity sets up a classic bubble in very short order. It happened with housing, it happened earlier with the american railways and it has happened with other things as well. Soon the bbble collapses as the artificial scarcity is removed. We’re seeing that already. If copenhagen fails to produce anything substantial the bubble will collapse even faster, but even if it does produce an agreement with tangible goals the bubble will still collapse because it’s based on a scarcity that doesn’t exist, and a product that is only demanded because the government says it must be so. That simply cannot last.

  68. Re: E.M.Smith (15:38:38) :

    Very few of the markets are “delivery” markets where you get stuff if you don’t properly close out your position, and even in those, most positions are closed out prior to delivery.

    There’s another nice example of commodity scheme when traders created a pseudo-market for Uranium on the NYSE to allow speculation, with non-delivery for obvious reasons.

    Looks like the envirodarlings Lehman got burned on that one as well-

    http://www.bloomberg.com/apps/news?sid=aNJJYNBs1rQA&pid=20601109

  69. Meanwhile in Europe some countries, France for example as in this bbc article are talking about introducing tax directly on CO2 or as the BBC likes to call it carbon. http://news.bbc.co.uk/2/hi/europe/8248392.stm
    When you call it a tax you are telling it as it is, when you tax the consumer directly and not hide it behind smoke and mirrors, the public can see directly what they are paying. Its fine to say you are concerned about AGW on a survey but when it comes time to pay up we will find out what the public really think.

  70. @Paul Vaughn:

    “I think we need to start thinking about what the systems will morph into over time…”

    It will look like every other tax scheme looks after it becomes more “useful” – a more oppressive tax scheme. It’s a question of the definition of “utility” to those who shape the scheme.

    Specifically who will be oppressed?

    - Some (most?) producers, including:

    * Those that rely on carbon emissions and can’t substitute “greener” sources of energy (e.g. operators of coal-burning plants, concrete manufacturers). Expect subsidies to impacted industries.

    * Those that can substitute, but compete with producers in other countries that lack such restrictions. Expect subsidies to these industries, and tariffs on competing goods. In fact, expect lots of “your lax environmental regulations justify our protectionist policies” in all sorts of circumstances, because everyone uses energy.

    - Consumers/taxpayers, who will bear the increased cost of goods and services produced, either in subsidies (i.e. through taxes) or in increased prices (in the case of tariffs).

    Of course, some politically connected producers will benefit, too. Green energy like wind and solar, of course, but also some in industries where tariffs are “mistakenly” set too high, or where subsidies prove somewhat more generous than necessary.

  71. I made a ton of money trading carbon credits!! So much so that I was able to buy myself a new Hummer and 38′ yacht!!!!

  72. [b]*********************************************

    The problem with the CO2-Certificates is a little bit more complicated than most people think. And it is so complicated that a normal polititcian can’t under stand it

    *****

    For example the European Union is not only selling CO2 certificates to the emitters of CO2! They are also subsidise different ways of generating electric power. E.G. they garantuee a certain (very high) purchase price for solar and windpower. So they LOWER the DEMAND for CO2 certificates by pumping billions into the solar and windmill industry!
    They use two CO2-reducing policies, but one way of CO2-reducing is obstructing the other!

    ******************************************************************************[/b]

  73. How do you, intelligent people, think this mounstrous swindle will be stop?
    How, in the past, things like these, have been stopped?
    Think the same?, then it is for a good cause to keep on debunking all these climate lies as WUWT does. If noboby does it, then it will end as usual.

  74. With these bovine burps bargains, it is less attractive to cull the heard.
    I suspect we are dealing with many city folks that have no concept of biology.
    Next thing they will want to reduce nitrogen in the atmosphere. Then O2. Remember if we had zero O2, there would be no forrest fires.

  75. My family and I have a very small carbon footprint. We are not what you would call wealthy. This economic downturn has hurt us pretty badly. Cap and Trade will easily sink our little boat. Makes me think of James J. Braddock ( the boxer during the great depression) when asked what he was fighting for. His response was “milk”. That is now my response as well. Wonder how Al Gore would react to seeing average families suffer. Oh yeah, …. that is what they want. To reduce the population greatly by eliminating those who disagree with their misguided Utopian view. Fail. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Do you think Al would cut me a check if I asked really nicely?

  76. Just a few months ago farmers were told Carbon credits would be $20.00 a ton. Based on that information farmers were told Cap and Trade would be neutral for farm income. It sure is nice to know that the cost of producing food will go up but all the carbon I sequester will be worthless. A side issue but if the price of corn goes up because cap and trade passes Will we hear about food riots in some foreigh country like we did when ethaniol supposedly caused a spike in food prices. I’m guessing that is a Politically incorrect question

  77. OT, but a very interesting piece of news, published in The Guardian, nonetheless.
    Scientists discover new coral species in Galapagos waters

    Scientists have discovered three new coral species – and one that was thought to be extinct – in an extensive survey of reefs around the Galapagos Islands, raising hopes that reefs may be more resilient to rising sea temperatures than previously thought.

  78. David Ball (08:58:51) :This “movement” has been created by the most illuminated ( I Illuminatti: The illuminate) minds of the universe, initiates who only want our welfare, that is why they have planned the convenient disapperance of the less gifted like us.
    They are the inheritors of the esoteric tradition which made possible the french revolution and the wars of independence in north and south america, they gave us liberty as now they will free us of the burden of living our daily life and our children of being born in this nasty world contaminated with the CO2 we commoners exhale.
    People like the hideous prophet you named are the most egregious human beings on earth, so high their intellect rises, that they will ignore when their feet will be at the stake and you throw the torch on it. :-)

  79. E M Smith (22:56:54)

    Feeling lots better thanks. Your analysis is sound.

    The trouble is that the authoritarians never give up.

  80. David Ball (08:58:51)

    I don’t think Al Gore could give two figs about how much c02 there is in the atmophere, just as much as policy makers don’t care about the temperature. What they care for is how exploitable these phenomena are. If they did, they wouldn’t be taxing and engaging in trade, and the like. They’d be tackling the problem directly if it really existed

  81. When you call it a tax you are telling it as it is, when you tax the consumer directly and not hide it behind smoke and mirrors

    Cap and Trade and Carbon Credits are a form of rationing. Like food was rationed in WWII.

    The reason emissions permits (carbon credits) are being given to electricity generators for example is twofold.

    One is that, if the credits were sold by auction (the best way to establish a price) it would make the cause of the rise in people’s electricity bills etc, transparent and they would correctly blame cap and trade.

    The other is the idea that at the start everyone gets an allocation equal to their current emissions and as their allocation (credits) declines over time, those that are more efficient at reducing CO2 emissions would make money by selling their surplus credits to those who aren’t more efficient. Thus providing a financial incentive to become more ‘carbon’ efficient.

    To a degree this is sound economics. The problem is that the major CO2 emitters, such as coal powered electricity generators, have a limited ability to reduce CO2 emissions. What will happen as the allocations are reduced over time, is the price of carbon credits rises rapidly and reduces end user demand through higher retail prices for products requiring ‘carbon’ inputs, ie everything.

    So the required reduction in emissions is achieved through increased efficiencies and decreased demand due to higher prices.

    Cap and Trade has the same result as a tax, higher prices (and increased efficiencies), without the benefits of a tax, transparency and efficiency of collection. The worst aspect of Cap and trade is the croneyism and corruption it will result in.

  82. This is all very interesting.

    I thought carbon credits were supposed to end up being the new worldwide currency.

    I figure the clearinghouses and money changers will benefit the most, and you’ll end up with a worldwide government, just because someone managed to tank all the world’s regular currencies and economies.

  83. E.M.Smith (15:38:38) :
    BTW, as of about 1960 (something… 4? 6?) even our money is a ‘virtual product’. It is “fiat money” and has no intrinsic worth. That pretty paper in your pocket is worth what someone else believes it is worth, nothing more.

    Not often given the opportunity to correct you, I must jump at the chance ;~P :

    The Bretton Woods System, enacted in 1946 created a system of fixed exchange rates that allowed governments to sell their gold to the United States treasury at the price of $35/ounce. “The Bretton Woods system ended on August 15, 1971, when President Richard Nixon ended trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed”. The gold standard has not been used in any major economy since that time.

  84. Philip_B (10:03:58) :

    When you call it a tax you are telling it as it is, when you tax the consumer directly and not hide it behind smoke and mirrors

    Cap and Trade and Carbon Credits are a form of rationing. Like food was rationed in WWII.

    The reason emissions permits (carbon credits) are being given to electricity generators for example is twofold.

    One is that, if the credits were sold by auction (the best way to establish a price) it would make the cause of the rise in people’s electricity bills etc, transparent and they would correctly blame cap and trade.

    The other is the idea that at the start everyone gets an allocation equal to their current emissions and as their allocation (credits) declines over time, those that are more efficient at reducing CO2 emissions would make money by selling their surplus credits to those who aren’t more efficient. Thus providing a financial incentive to become more ‘carbon’ efficient.

    To a degree this is sound economics. The problem is that the major CO2 emitters, such as coal powered electricity generators, have a limited ability to reduce CO2 emissions. What will happen as the allocations are reduced over time, is the price of carbon credits rises rapidly and reduces end user demand through higher retail prices for products requiring ‘carbon’ inputs, ie everything.

    So the required reduction in emissions is achieved through increased efficiencies and decreased demand due to higher prices.

    Cap and Trade has the same result as a tax, higher prices (and increased efficiencies), without the benefits of a tax, transparency and efficiency of collection. The worst aspect of Cap and trade is the croneyism and corruption it will result in.

    ——————————————————
    Yeah, that sounds like a plan. Let’s do that. Or not.

    Economically, while it may seem sound, just doesn’t work in the real world. or starters, allocation: no one has the right to ‘allocate’ to me what *I* need to live.

    Secondly, driving efficiency: almost all energy consuming devices are pretty efficient today. There is no room for any significant increase in efficiency, especially since any increase has an exponential cost associated with it.

    Thirdly, such allocation ‘schemes’ (with a negative growth, designed to push the users in a specific direction) punish those who actually live their lives responsibly, and those who are unable to meet an ever increasing ‘tax’, while those who can afford it, can continue to afford it. Any ‘credit’ given to those who cannot afford it simply degrades the system to a transfer of wealth.

    Fourthly: demand for energy will never decrease for a given standard of living. In fact, paradoxically, as energy efficiency *does* increase (e.g. buying a more fuel efficient car, an ‘energy star’ refrigerator or obnoxious compact fluorescent bulbs) this gives people an opportunity to expand their consumption in other areas, increasing their standard of living – a prime motivator of mankind.

    Fifthly: any efficiency gains can be made today, without any kind of ‘scheme’. If the ‘majority’ of people want the government to do something about global worming, the net result being that they have to (for example) replace their water heater, light bulbs, AC unit and turn the thermostat up to 78, why is this ‘majority’ not doing this now?

    Having said that, I can think of over at least half a dozen ways to motivate people into becoming more efficient with their energy consumption, without any additional government involvement.

  85. OceanTwo (10:56:50) : All what you say is economics’ logic. That’s nice but it is not how things work in the real world.
    Many years ago several countries in south america established a tax on fuels. It makes us pay, right now, more than US$4.50 per US gallon of 97/98 octane gasoline, but consumption never decreased but increased.
    In the SA case the reason backing this tax was to get money for financing all things currently needed (education, health, etc.) and we all are used to it.
    However it seems that your Cap &Trade schemes and those of Europe have another purpose. We can see what were the effects of these measures in Europe since green policies began: Manufacture and jobs have migrated to Asia and southeast Asia. Perhaps some of the motivations behind those illuminated minds is to achieve a levelling of the economic conditions between the once developed world and the now emerging economies.
    However I think that as former revolutions or changes were the consequence of climate changes -see Timo Niroma’s ( and Sun’s)

    http://personal.inet.fi/tiede/tilmari/sunspot5.html#some200

    so the changes we are and will be witnessing will turn the screw perhaps on the contrary sense nowadays’ conspirers have thought. That would be very interesting to witness!

  86. wattsupwiththat (14:27:07) :
    Actually I think there is money to be made here. Buy up $20 worth. In a few years the certificates will be a novelty and would probably have saleability on Ebay for $5 each, especially if they were nicely engraved.

    Actually you most definitely should not purchase these unless you know what you are doing! These are FUTURES contracts, and they are not at all like stocks and bonds. In any case, there typically is no certificate. Normally you get the product delivered to you (i.e. 5,000 bushels of corn) or you offset the purchase later on by selling the same number of contracts. If you are going short, you are expected to supply and deliver the product, or else offset the sale by buying the same number of contracts. I have no idea how they handle “delivery” of 100 metric tons of CO2!

    Besides, the fees will eat up any hope of profits. It is $250 to set up an account, and $5 per contract for each side of the trade. Trading a hundred contracts will be $1250 in fees for $2500 of the commodity. It’s a wonder that they have any volume at all. The price has to practically double to make any money, and it is almost impossible to make money by selling short when the price is so low. IMHO, the exchange is the only one making money here. Does anyone feel like investigating who owns the exchange?

  87. “Does anyone feel like investigating who owns the exchange?”

    According to their web site “Who we are”, the only names I recognize are:

    Director: Maurice Strong (1 of 9)

    External Advisory Board: Dr. Pachauri (1 of many)

  88. Tom in Texas (13:30:16) :

    “Does anyone feel like investigating who owns the exchange?”

    According to their web site “Who we are”, the only names I recognize are:

    Director: Maurice Strong (1 of 9)

    External Advisory Board: Dr. Pachauri (1 of many)

    Thanks Tom,
    I hope they go bankrupt ASAP and land in jail for “fraud” and “betrayal of humanity”.

    In the mean time the French President, also a con artist, is threatening to introduce carbon taxes on imports.
    Obama has made similar threats in past.

    Such taxes (paid by the consumer) could have a devastating effect on the economy and the International Trade.

    There is also a serious threat that such solo actions from individual countries could derail a Global Climate Agreement (which I don’t mind at all).

    This news comes at the moment the European Union is in a row about a 15 trillion Euro budget to prevent and mitigate the effects of carbon pollution, droughts and other extreme weather events in Third World Countries (Spread the Wealth until the economy crashes and Medieval Times return).

    Yes people, it’s hard to wake up to the reality that our respected establishment is nothing more but a bunch of crooks in a suite.

    http://www.ft.com/cms/s/0/a5fb6084-9e32-11de-b0aa-00144feabdc0.html

  89. Nogw (07:49:59) :

    “How do you, intelligent people, think this monstruous swindle will be stop?
    How, in the past, things like these, have been stopped?
    Think the same?, then it is for a good cause to keep on debunking all these climate lies as WUWT does. If noboby does it, then it will end as usual”.

    WWIII

  90. I find this really bad news, myself and a group of like minded caring individuals were preparing a submission listing all of the countries in which we would promise not to built a new brown coal fired power station, at the same time, we are preparing a list of all of the forest areas we are prepared to swear we will not cut down or burn.

    Sales from the enormous carbon credits earned from this lack of enterprise would have seen us retire to a high living jet setting future. The collapse of this market has set our prospects back considerably.

    People who celebrate this collapse do not understand the protection side of the environment protection people. (Give me some money or I will cut your tress down)

  91. Does anyone know what caused the big spike in the price beginning in early 2008? Could it have been the publication of the last major IPCC reports. Also, opinion polls indicate that most people in the US and UK believe the climate change was natural, and that scepticism is actually increasing. Could this explain the subsequent steep fall?
    Chris

  92. Philip_B (10:03:58) :

    “The worst aspect of Cap and trade is the croneyism and corruption it will result in”.

    Philip_B,
    It’s cronyism and corruption that started it.

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