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).
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.
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.
“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.
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.
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.
very bad for Carbon Credits:
Joe Bastardi get’t the message out, the World is cooling:
http://www.mofopolitics.com/2009/09/09/video-accuweather-coms-joe-bastardi-the-globe-is-actually-cooling/
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
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.
Its all been done before:
http://en.wikipedia.org/wiki/Indulgence
Enron-all over again-BTW Paul Krugman has a hand in this too….
@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.
France’s Sarkozy urges carbon tax
http://news.yahoo.com/s/ap/20090910/ap_on_bi_ge/eu_france_carbon_tax_2
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!!!!
[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]
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.
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.
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?
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
in vino veritas
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.
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. 🙂
E M Smith (22:56:54)
Feeling lots better thanks. Your analysis is sound.
The trouble is that the authoritarians never give up.
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
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.
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.