From Tom Nelson: Plunging prices at the Chicago Climate Exchange
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.
[2008: Offsets were selling for over $7 each]
[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).
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. 😛
wattsupwiththat (14:27:07) :
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.)
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.
Sorry, I got it wrong with my first assertion. The WM bill was just a twinkle in their eye in 2008.
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.
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?
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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*?
Stephen Wilde (16:08:43)
Here is one fellow WUWT reader that agrees with you, wine or not.
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.
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.
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.
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.
“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.
“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.
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!
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.
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.
“Save your Carbon Credits – Global temperatures shall rise again!” (Or not :^)
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
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”.
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.
Buy dead dogs! Sell fish!
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.
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?
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.
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…