Chicago Climate Exchange = FAIL, Now California opens "Pacific Carbon Exchange"

UPDATE: related story shows what can happen when emissions trading doesn’t have proper checks and balances – Carbon trading tempts firms to make greenhouse gas

California hasn’t learned from the failure of the Chicago Climate Exchange this year, when a ton of Carbon traded for a mere 5 cents. Nobody wanted to buy it even at that ridiculously low price. But, like a zombie, carbon trading rises again in brain dead broken California.

final day on CCX - click to enlarge

Now the the AB32 madness begins, and PCarbX (which sounds like some over the counter antacid remedy) is the new trading scheme. I give it two years, max. Here’s the story from the San Francisco Chronicle.

California poised to enter carbon-trading market

Andrew S. Ross

Today could be seen as the biggest day yet for California’s climate change law, assuming, as expected, the state Air Resources Board signs off on the rules to implement it.

It will also be a big day for Aaron Singer, CEO of San Francisco startup Pacific Carbon Exchange, (at left) which is engaging in an enterprise thought dead in the water not so long ago: carbon trading.

“It’s the official starting gun for California and for Western regional carbon markets,” Singer said. “It means we get to make this business a growing reality.”

Central to the law, which goes into effect in 2012, is a “cap and trade” system designed to limit the amount of carbon from the state’s 500 largest emitters – mostly power plants, energy companies and heavy industry.

Companies emitting less than their state-mandated limit can trade their unused allowance – also known as carbon credits, or offsets – with companies that may be seeking to emit more than their mandated share.

“This is a significant milestone,” said Josh Margolis, CEO of Cantor CO2e, a San Francisco offshoot of New York’s Cantor Fitzgerald, referring to the board’s expected action. “In the trading world, it’s been a decadelong anticipation.”

With the Bay Area Council serving as the firm’s incubator, Singer has been working on its trading infrastructure for the past two years and is in the process of obtaining the certifications and accreditations from the U.S. Commodity and Futures Exchange Commission.

In the meantime, PCarbX, as it is known, plans to begin some futures and options trading next year, pending a full rollout when the bell officially rings in January 2012.

In September, it also signed a memorandum of understanding with the Shanghai Environment and Energy Exchange to explore the establishment of more carbon markets in the United States and China.

Other entrants: PCarbX is not alone. In addition to Cantor CO2e, others in the “environmental commodity” business who are reported to be coming to California include the global Intercontinental Exchange and the Green Exchange, both with U.S. headquarters in New York. “We expect healthy competition,” Singer said.

“As a San Francisco-based entity with ties to policymakers, they’re in a unique position,” said Adam Raphaely, director of environmental markets at Karbone, an environmental commodity brokerage and project finance company in New York. “We see a potential relationship there.”

Neither is California alone, even though Congress and the Obama administration gave up on a national cap-and-trade policy this year.

The Western Climate Initiative, a cap-and-trade program, which includes several Western states and Canadian provinces, is due to go into effect – also in 2012.

Still, for all the anticipation, carbon trading here is likely to start small, especially as the Air Resources Board is initially giving emission allowances away for free, rather than the $10 minimum per ton the agency had proposed in its rules. And companies don’t necessarily have to trade through exchanges.

“You won’t see a big bang, but, rather, a buildup in intensity,” said Margolis, who has estimated the market could be worth anywhere from $3 billion to $58 billion by 2020 – the target year for California’s emissions to be lowered.

“This is much more than simply a business opportunity,” Singer said. “We’re here to serve the aims of AB32 and help the next generation of clean tech investment for our state.”

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/15/BUO21GQG0D.DTL#ixzz18L4gAqtW

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Dave Turner

Dont them Bastards (sorry) ever learn. I could have cried today listening to chris huhne.

MB

Top 500 companies… It’s gonna be a race to #501. Bye-bye jobs.

Leave it to California……

Richard Sharpe

I wonder if Governor Moonbeam will figure out that his budget problem will only get worse if he allows CARB to continue on its silly path.

Baa Humbug

Some of the top 500 may shut down operations that emit, grab the cash from permits and re-open in neighbouring states who may also offer incentives for bringing jobs etc.
This has been done already, just google redcar.
A smart Governor in neighbouring states can take real advantage of this madness and thus ensure decades of re-election.

Harry Bergeron

I had to invent the term “Lametardic” to fully describe this travesty.
REPLY: LOL, but apparently, great minds think alike, four times previously – Anthony

“We expect healthy competition,” Singer said.
OK, so how about .00000005 cents per ton.
Total madness from a BK state.

I would short the market if I could….
But they will probably force companies to pay up. There is no reason for a business to still be in California. Time to leave the sinking ship.
John Kehr
The Inconvenient Skeptic

I wonder how much money Al Gore has in this venture?
Thanks
JK

Chuck

Reminds me of Blazing Saddles where the Cowboys stink up the camp from baked beans.
Everyone takes their turn.
Greenfrye Tomatos

I California wants to tax carbon and they apparently need the money, then I say let them. If they think trading pretend carbon credits for real money will some how do anything useful for anyone I think they have all been smoking way to much. The thing sounds like it has been written by Cheech and Chong. (I hope I spelled this correctly)

And, again I ask myself… Why, oh why, do I still live here??????

CodeTech

I was never a big fan of the movie Forrest Gump, but as I read this article the phrase “stupid is as stupid does” just kept echoing in my mind…

higley7

Not only will the cost of energy go up, but I imagine they will aim to issue lower and lower permits every year, raising it even higher. To paraphrase our fearless leader, “Of course, I expect energy prices to skyrocket.”

That pic is not Aaron Singer, that would be Mr Ross. Go to the CCE site for his ugly mug.

I mean the PCE site.

Douglas DC

Of Oregon waits with bated breath-to cut down on our CO2…
Oregon is Califonia’s mini-me..

ew-3

The 2nd revolution is about to begin.

Bill Jamison

Or to put it another way…$3 billion to $58 billion by 2020 in additional cost passed on to California consumers.
Just another nail in the coffin for many California businesses.
:sigh:

pat
TomRude

And in Canada British Columbia, the internal race for the leadership of the BC Liberals, one contender offered to scrap the carbon tax…

TomRude

If anything this shows that some politicians are hell bent to force feed us this green garbage regardless of the science. If tomorrow scientists all agreed that the IPCC was wrong, these guys would still do it. Recall anyone?

Joshua J

I wonder how long before California puts carbon on its Prop 65 list, which is monstrously useless (other than as a basis for regulatory extortion).

Hoser

Brown started the destruction of California with the Energy Commission. Now he can see his work finally pay off. The good news is the rest of the country can learn from the collapse of a once great state. I wonder how long it will take the smug residents on the coast to figure out what went wrong. Green sounded so good.

UK Sceptic

This is what happens when you give granola the vote…

Baa Humbug

Dennis Nikols, P. Geol. says:
December 16, 2010 at 9:07 pm

The thing sounds like it has been written by Cheech and Chong. (I hope I spelled this correctly)

Yeah you did, and here is a youtube clip demonstrating the SIZE of the californian stupidity.

Richard deSousa

@ Sonicfrog…. me too!

Gibo

Arizona, Nevada and Oregon should see this as a great opportunity to attract any remaining Californian industry from across the border.

Geoff Sherrington

“In the trading world, it’s been a decadelong anticipation.”
Translate: Those hungry vultures had to circle for 10 years before someone appeared with some money to fight over.
The question is, as always, whether this is the best allocation of scarce funds and in the national interest. It’s not. It’s a new version of an old way for the smarties to get rich quick at the expense of Joe Citizen who just keeps pluggin’ along delivering the goods and services of commerce.
Have these people no shame?

G.L. Alston

Timing with AGU event underscores the notion that coincidences don’t exist. Seriously, what are the chances?

You’d think that an LA smog trading scheme would make more sense. Where are Ken Lay and Paul Krugman, when they’re needed?

ant

I have a wonderful opera house for sale in Sydney Australia with water views and a terrific central location.

LevelGaze

@ant
Hang on, I have sole agent rights to that one!

Steeptown

$58 billion by 2020 for trading an invisible and freely available plant food. We live in a strange world where the lunatics are in charge of the asylum.

John F. Hultquist

Being honest, I don’t think anyone knows what will happen with PCarbX, industry in the State, or the well being of the State’s budget, and so on.
However, there will be no effect on climate.
And, even funnier, is that there is no way to know.

AusieDan

The formation of this new exchange is a really great idea.
It will take economic activity from one state and transfer it to other states or even to other nations.
It is essentially a perfect example of either:
(1) The circular flow of money in the economy, OR
(2) circulare thinking
Your choice.

Ben D

Perhaps its like other forms of ponzi schemes that keep on popping up, it’s a given that the creators generally make a ‘killing’ off their initial investment whereas the late comers lose everything,… Chicago Climate Exchange = FAIL, Now California opens “Pacific Carbon Exchange”

I have decided to open an Nitrogen trading company in my garage. I figure it makes just as much sense, and hey, if these guys can trade air, why can’t I?

old construction worker

“Central to the law, which goes into effect in 2012, is a “cap and trade” system designed to limit the amount of carbon from the state’s 500 largest emitters – mostly power plants, energy companies and heavy industry.”
In a few years 500 largest emitters will not produce enough revenue, then the next 500 emitters will have to be “taxed”. Then another 5000 emitters and so on. As the wealth is drained out of California, there will be a Carbon tax levied on California consumers for buying goods and services from out of State. The richest class won’t care because they will be on receiving side of carbon trading money. The “poor” won’t care because they will demand more tax money. The tax paying middle class will move out unless they work for the government.
This is California’s Road to prosperity.

David L

“As a San Francisco-based entity with ties to policymakers, they’re in a unique position”
A unique position? Usually when politicians are “in bed” with business it’s considered a bad thing. So a phony baloney company will be created and supported by phony baloney policy enacted by phoney baloney politicians. I dont even want to visit CA anymore. Is that place even still a part of the US?

Grumpy old Man

Pissing other peoples’ money up against the wall- it’s what socialists (liberals) do best.

Darell C. Phillips

Perhaps we’ll finally see a proper border patrol there but the irony of it will be to keep Californians from escaping to other states. I also wonder how much Han Solo would be worth on the new PCarbX after he was carbon frozen? Skywalker ranch is after all in California. Hmm, this begs the question was Han a Climate Skeptic and thus why he was “sequestered” possibly? Anyway, I’ve got the perfect desk for Mr. Singer.
http://www.wired.com/gadgetlab/2009/11/han-solo-frozen-in-carbonite-desk/

old44

There is a simple way of defeating this carbon trading tax, if the power companies shut down as soon as they reach the state-mandated limit I would bet the Government would fold in two minutes. Movie stars mansions without air-conditioning, unthinkable.

Nigel Brereton

Both California and the UK are imposing a minimum carbon price so that when the markets stagnate it still looks as though there are trades to the outside world. It’s time for a new film “Wall Street 3”, remember the phrase in that husky predatorial voice “Green is Good”.

Frosty

Squidly says:
December 16, 2010 at 11:14 pm
I have decided to open an Nitrogen trading company in my garage.”
You could be on to a good thing, Community co-op sustainable carbon club – All the jet setting the Greensters are doing, they would jump at the chance to offset their guilt. Get them to put their money where their mouths are.

Shevva

Over here in the UK we can’t be bothered with Cap and trade where just going to add it to everyone’s fuel bill, hum I wonder who suffers the most when the fuel bills go up, I’m guessing it’s not he climate scientists at UEA? the politician’s? or the most vulnerable in society?
I understand in society over decades we have had disputes CFC’s, Swine/Bird flu and such but is this the first ‘chicken little scare’ where the solution will kill more than the problem? I can see people having to decide if they eat or heat there home’s (although i’m thinking the UK here as i’m guessing California doesn’t need to heat there homes that much). All down to good old CO2.
Sod the human’s lets save a planet that doesn’t need saving.

John Trigge

In South Australia, while justifying a 12% increase in electricity prices. our Energy Minister was reported thus:
————————————————-
Mr Conlon said power price rises were “inevitable” until the Federal Government set a carbon price. “This is a stiff increase in the price of electricity but unfortunately, it’s not unexpected,” he said. “Until such time as we land a carbon price, we’re going to continue to see significant increases in the price of electricity.”
Mr Conlon said uncertainty over the future of a carbon tax meant providers were using expensive generators, driving up long-run costs.
“What it means is that people will not put in the most effective or efficient form of generation, they’re putting in the cheap and expensive generation until they can get some certainty.
———————————————-
So, it appears that our illustrious State leaders expect electricity prices to FALL when our Federal Government sets a carbon price, which one would expect to INCREASE power prices as it is an additional cost to the producers.

John Trigge

Will there be a levy or tax on goods coming into California from other states or countries?

Robinson

How can you call the Chicago exchange a fail? A few people made tens of millions of dollars from setting it up!

LabMunkey

@ dave turner- first comment,
Tell me about it- Chris Huhne’s stupidity and ideological blinkedness angers me immensley. How can one man be so stupid.
He has one, proven, efficient and reliable lowcarbon (bleurg) power source ready for use- nuclear.
Yet he is pouring subsidies into wind, solar and carbon capture.
The man ACTUALLY has a way to prevent the release of more carbon by building nuclear power stations- yet he’d preferr to catch the released carbon instead.
Words literally fail me. It seriously makes me want to leave the uk sometimes the idiocy of your politicians.