It appears that the carbon offset market is dying in the USA. You may recall the WUWT story from 9/9/09 on the Chicago Climate Exchange trading price dropping to 25 cents per metric ton. See
Market Confidence Low: Carbon Credits now worth 25 cents, were at $7 in 2008
Since then, the price has dropped to 20 cents per metric ton for all Carbon Financial Instruments (CFI) except for the 2010 issues, losing 20% of their value. Trading volume has also dropped to a trickle with only 200 transactions Friday. Here’s the closing data from Friday, 9/18:
Last Friday, 9/11/09 appears to be the day when the current drop started.
It appears there was a big selloff on 9/11, when investors got wind of a major suspension by the UN before it hit the press. On Sept 11th, there were 292,500 transactions (largest in over a month) and the price fell from the previous day closing price of 25 cents:
click for larger imageThe Sunday Times has the story:
The legitimacy of the $100 billion (£60 billion) carbon-trading market has been called into question after the world’s largest auditor of clean-energy projects was suspended by United Nations inspectors.
No wonder carbon offsets are falling to 20 cents a ton. Coal is still much more valuable at 40-50 dollars a ton.
A look at the CCX external advisory board roster is telling. Here’s a partial list below.
=======================
CCX’s Advisory Board was formed to provide the Exchange and its Members with external strategic input from some of the world’s top experts from the environmental, business, academic and policy-making communities.
Honorary Chairman: The Honorable Richard M. Daley, Mayor, City of Chicago
Ed Begley Jr. has been considered an environmental leader in the Hollywood community for many years. He has served as chairman of the Environmental Media Association and the Santa Monica Mountains Conservancy. He still serves on those boards, as well as the Thoreau Institute, the Earth Communications Office, Tree People and Friends of the Earth. Mr. Begley’s work in the environmental community has earned him a number of awards from some of the most prestigious environmental groups in the nation, including the California League of Conservation Voters, the Natural Resources Defense Council, The Coalition for Clean Air, Heal the Bay and the Santa Monica Baykeeper. He currently lives near Los Angeles in a self-sufficient home powered by solar energy.
Ernst Brugger is Founding Partner and Chairman of Brugger Hanser & Partner Ltd. in Switzerland, a business consulting firm with international experience and range. He is also a professor at the University of Zurich, chairman and member of the board of various companies and a member of the International Committee of the Red Cross (ICRC). Dr. Brugger serves as Chairman of the Board of Directors of Sustainable Performance Group, an investment and risk management company which invests in pioneering and leading companies which have taken up the cause of sustainable business.
Lucien Bronicki is the chairman of Ormat International, an Israeli company in the field of innovative technology solutions to geothermal power plants, power generation from industrial waste heat, and solar energy projects. Chairman of Ormat since he founded the company in 1965, Bronicki chairs the World Energy Council’s Israeli National Committee, is a member of the Executive Committee of the Weizmann Institute of Science, and member of the board of Ben Gurion University.
Elizabeth Dowdeswell is internationally recognized for her global and highly diverse experience in building consensus and managing change. She advises both public and private sectors on environmental issues worldwide. Ms. Dowdeswell is a former Executive Director of the United Nations Environment Programme (UNEP). Before joining UNEP, Ms. Dowdeswell was the Assistant Deputy Minister of Environment Canada. In that capacity she played a leading role in global efforts to negotiate the treaty on climate change adopted at the 1992 United Nations Conference on Environment and Development. She was Canada’s permanent representative to the World Meteorological Organization, principal delegate to the Intergovernmental Panel on Climate Change, and Canadian Chair of the Great Lakes Water Quality Board. She is currently President & CEO of NWMO and a Visiting Professor at the University of Toronto. She also serves on the governing and advisory boards of several institutions. Ms. Dowdeswell is the author of numerous publications in both the popular press and professional journals.
Jeffrey E. Garten is former dean of the Yale School of Management. Formerly undersecretary of commerce for international trade in the first Clinton Administration, he also held senior economic posts in the Ford and Carter administrations. From 1979 – 1992, he was a managing director first at Lehman Brothers, where he oversaw the firm’s Asian investment banking activities from Tokyo, and then at the Blackstone Group. Currently a monthly columnist for Business Week, his latest book is “The Mind of the CEO”(2001).”
Donald P. Jacobs is a former Dean of the Kellogg Graduate School of Management at Northwestern University and its Gaylord Freeman Distinguished Professor of Banking. Under his leadership, the Kellogg School has become a leader in the field of business and finance and is consistently ranked as one of the top five business schools in the United States. Dean Jacobs is a former Chairman of the Board of Amtrak (1975-1979) and currently serves on several corporate boards. His work on banking, corporate governance and international finance has been published in many scholarly journals and he holds several honorary degrees and professional awards.
Joseph P. Kennedy II is Chairman and President of Boston-based Citizens Energy Group. Before returning to Citizens Energy, Mr. Kennedy represented the 8th Congressional District of Massachusetts in the U.S. House of Representatives for 12 years. Mr. Kennedy founded the non-profit company in 1979 to provide low-cost heating oil to the poor and elderly. Under his leadership, Citizens grew to encompass seven separate companies, including the largest energy conservation firm in the U.S. Mr. Kennedy also advises and serves on the boards of several companies in the energy, telecommunications, and health care industries. Mr. Kennedy is the son of the late U.S. Sen. Robert F. Kennedy.
Israel Klabin is the president of the Brazilian Foundation for Sustainable Development, a major Brazilian non-governmental organization devoted to issues of environmental and sustainable development policy. Mr. Klabin is the former chairman of Klabin SA, one of the largest forestry companies in Latin America. He is a former mayor of Rio de Janeiro and was one of the main Brazilian organizers of the United Nations Conference on the Environment (Rio 92). He is also actively involved in several philanthropical activities.
Bill Kurtis has had a distinguished career in broadcasting for over 30 years, as a news anchor in Chicago and later of the national CBS Morning News. He started his own company, Kurtis Productions, when he returned to Chicago in the mid 1980’s and currently hosts shows on the Arts and Entertainment network. Mr. Kurtis is involved in The National Science Explorers Program, Electronic Field Trips and the Electronic Long Distance Learning Network, all aimed at teaching children about science. Mr. Kurtis and his shows have been the recipients of several awards. He serves on the board of directors of organizations devoted to natural history and the environment, including the National Park Foundation, the Nature Conservancy and the Kansas State Historical Society.
Thomas E. Lovejoy is a world-renowned tropical and conservation biologist. Dr. Lovejoy is generally credited with having brought the tropical forest problem to the fore as a public issue, and is one of the main protagonists in the science and conservation of biological diversity. In 1987, he was appointed Assistant Secretary for Environmental and External Affairs for the Smithsonian Institution and is Counselor to the Smithsonian’s Secretary for Biodiversity and Environmental Affairs. Dr. Lovejoy is also Chief Biodiversity Advisor to the President of the World Bank and the Bank’s Lead Specialist for the Environment in Latin America. From 1989 to 1992, he served on the President’s Council of Advisors in Science and Technology (PCAST), and acted as scientific adviser to the Executive Director of the United Nations Environment Programme (1994-97). He was the World Wildlife Fund’s Executive Vice President from 1985 to 1987. Dr. Lovejoy is the author of numerous articles and books.
Dr. Rajendra K. Pachauri is the Director-General of The Energy Research Institute (TERI) which does original work and provides support in energy, environment, forestry, biotechnology, and resource conservation to governments, institutions, and corporates worldwide. Dr Pachauri is currently Chairman of the Intergovernmental Panel on Climate Change (IPCCC), one of the recipients of the 2007 Nobel Peace Prize; a Director of the Indian Oil Corporation Limited (a Fortune 500 company); and a Member of the Board of Directors of the Institute for Global Environmental Strategies, Japan. He has been President (1988) and Chairman (1989*90) of the International Association for Energy Economics and is President of the Asian Energy Institute since 1992. He has been a member of numerous committees and boards, including those of the International Solar Energy Society, World Resources Institute, World Energy Council, and has acted as an Advisor to the Government of India, reporting directly to the Prime Minister. Dr Pachauri has also served as a member of the faculty of several prominent academic and research institutions and has published 22 books and several papers and articles. He was recently awarded the Padma Bhushan, one of India’s highest civilian awards.In July 2001 Dr Pachauri was appointed a member of the Economic Advisory Council to the Prime Minister of India, which is chaired by the Prime Minister.
@ur momisugly K (15:56:00)
Thanks the response. I guess I didn’t fully clear, but I’m wondering who it is that’s buying them, before any US cap and trade system is in place.
Surely if a farmer saves all the unsellable biomass from his crop that is sequestered carbon, as long as it doesn’t rot or burn?
I don’t like to say ‘I told you so’, but here is an extract from my Carbon Credit article, written in November 2008 – before the UK had even gone into recession.
http://wattsupwiththat.com/2009/04/10/a-farmers-view-on-carbon-credits/
Quote:
Meanwhile, back at the financial dealing desks for Carbon Credits, another commodity is about to crash. But perhaps I should not use the term ‘commodity’, for Carbon Credits (CCs) are an abstract construct that have even less contact with the real world than our over-inflated monetary systems. If there was ever an emperor with no clothes, it is a carbon trader declaring that a CC is worth £30 or £20 or £10, or any other figure that he or she may invent. CCs are a new pyramid selling scheme, that only survives as long as someone is promoting it and as long as there are more gullible customers pilling into this new market. But there are not. A small element of science is beginning to doubt the Global Warming trends, fraud has destabilised the Carbon Trading market, and a global recession will flood this already unsteady market with millions of unwanted CCs. The price of a CC is about to fall through the floor, and I expect that the whole concept of a Carbon Trading market will fall over the cliff with it.
.
But I am going to anyway – ‘told you so’.
>>>Surely if a farmer saves all the unsellable biomass
>>>from his crop that is sequestered carbon, as long
>>>as it doesn’t rot or burn?
Thats the trouble with Carbon Credits. They are giving credits for forests (conservation or planting) but most trees will either burn, rot, or be used as timber – and then eventually burn or rot. In all cases, the carbon is not permanently taken out of the cycle at all.
For forests to be truly carbon storage, either the felled trees need to be buried, or the planting of forests needs to be permanently exponential.
.
>>>At least in theory government regulates the number of
>>>public credits available and makes sure the process is
>>>meaningful.
Not quite. There are Clean Development Schemes, where you can pledge to save carbon, and are issued with brand new carbon credits (CCs) for doing so. The problem is that this inflates the CC (carbon money) supply, and most of these schemes are of dubious value. Corrupt nations can claim for fabricated, illegal carbon reductions and get CCs by the million (hence the recent collapse of the largest CC auditor). This used to be a great scam worth $billions, until the price of CCs collapsed.
As has been said before. You cannot trade an imaginary product.
You might say the same therefore applies to normal money, which is also ‘fiat’ or ‘imaginary’. Well yes, the same applies there too. If you have a fiat money system that is open to corruption, you get an economy like Zimbabwe (a loaf of bread at 3 billion Zim dollars) or, indeed, the recent financial crash.
That, however, is the problem with any cross-border money system – do you trust the members to behave?? I thought the Euro might have problems here, but most members are sticking by the rules. But with the new proposed World Currency, do you think that all nations will play fair, and not quietly print extra currency on the side?
http://www.futureworldcurrency.com/
The World Currency pipe-dream was raised by Russia and China at the last G8 conference. If it ever becomes a reality, it will have to be completely independent from national politics, and the recent partisan performance of the UN suggests that this is just not possible.
.
Check the azolla event in wiki.
To sequester biomass dump in an anoxic lake/ocean ie. Black Sea. Then you’ll have replaced fossil fuels for someone in 80 Million years time, assuming there is intelligent life on earth then 😉 .
kmye: I hope I get closer to answering your question this time.
Buyers want to say they have them. I don’t know why. Maybe for prestige, or they have green views, or it helps in picking up babes.
But most buyers are probably speculating that the market price will go up. After all those pieces of paper are a commodity, maybe the commodity price will rise.
For private credits, some purchases are “conscious” purchases. Someone feels guilty about spewing CO2 from their car so they buy a credit that says someone will offset that.
The purchaser feels good about himself, the credit seller feels good about getting the money. And some sellers may actually plant trees or take another action that reduces CO2 by the agreed amount.
Corporations like to be seen as model citizens. So they may buy some. Ben and Jerry’s Ice Cream probably does, I believe they like environmental and green ideas.
Public credits are different. They are a business cost. The government creates them and businesses must buy enough to offset their emissions. The idea is that government will limit the total credits they sell. Businesses will strive to reduce emissions in order to avoid the costs of buying credits.
Presto, CO2 emissions fall, the government gets revenue. All is well.
The Devil is always in the details. If the private credits do nothing to actually reduce CO2 then there is no purpose to them.
If the public credits can be manipulated by insiders or industry then it may be worse than not having any at all. Another way, such as a carbon tax, might be do better.
Al Gore has one or more companies that sell credits. I think he personally buys some to cover his homes and jet, etc. If he buys them from himself he probably gets a good price.
I saw an article the other day which said that “old” GM stock was “trading” for 70 cents per share. Short sellers having to buy the stock they sold short, something like that, although the shares are completely worthless. Commodity trading is anything but investing. Gambling is what it is.
Pachauri – whose qualification for election as head of the UN’s Intergovernmental Panel on Climate Change is that he’s a railway engineer, who advocates that we should all stop eating meat. It is noticeable that he does not advocate proscribing pets, for 99% of owners a purely lifestyle choice – expensive too, money in one end, excrement the other with the middle perpetually and irritatingly under the feet. Almost all consume animal derived nutrition which, according to the railway engineer, avoidably increases CO2 which pollutes the atmosphere and perilously raises global mean temperatures. So, from the climate change fakir of the IPCC why no proscription? Does he fear being waylaid by a screaming lynch mob of pooch lovers?
As Henry Chance has noted – “a Platinum panel of Cluelessness.” Perhaps, I could also add “and snake oil salesmen.”
RW