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.
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
Got to put this in, “Private Eye’s” cover!
http://www.private-eye.co.uk/pictures/covers/full/1122_big.jpg
LabMunkey says:
December 17, 2010 at 12:45 am
“Tell me about it- Chris Huhne’s stupidity and ideological blinkedness angers me immensley. How can one man be so stupid… 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.”
Seems that Huhne has had a sudden epiphany, and is now supporting nuclear power. Just put some links to that in the ‘Tips & Notes” if you missed that.
I recently drove the length of California twice. Each breathtaking vista begged the question “How the magnificence and potential of this state could be eclipsed by the idiocy of its government? “
“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.”
Or buy those companies out and keep them as carbon receptacles?
“LabMunkey says:
December 17, 2010 at 12:45 am”
Where would you go? All of the EU is heading down the same path, so too Australia and New Zealand.
“Adam Gallon says:
December 17, 2010 at 12:48 am”
Ah that image really cheered me up today!
I was going to try and make a limerick out of it but I’m both facepalming and headdesking at the sheer stupidity of it its interfering with my thought processes.
Do’h.
As a guest in the UK, I used to feel a little embarrassed being rude about my host country’s politicians but the truly bonkers Climate and Education ministers can write the most ridiculous things into policy and most of the population don’t even notice. The former believes that windmills work in a largely wind-free environment (it does blow up north, but the windmills freeze solid there just when electricity is needed to heat houses!) and the latter knows so little about math, stats, and education that he promotes the scary idea that most kids would perform ‘ above average’ if their teachers were all university grads.
I know the steady drip of Marxism in Western education over the years has worn away much of the independendent and logical thought that once typified educated people, but the reasoning currently emanating from political parties throughout the Western world seems to owe more to the collected works of the Marx Brothers than it does to Carl Marx.
I’d buy a ton of carbon for 5 cents. Carbon is very useful you know.
I have got 15 million Carbon Credits – prove that I haven’t.
Isn’t that the problem with Carbon Trading?
No laughing matter. This is merely profiteering on the business shakedown the state will engage in. The price will be meaningful long enough to drain vast amounts of wealth from CA’s business. The state will of course, approach the Fed for a bailout….which it can never repay……and that could extend it further. The parasites will milk it until the turnip can give no more blood.
CA is roughly 10% of the US economy if I recall, so we can likely count on it to drag the country down as well.
Time for a Federal BAN of all climate related legislation in ANY level of government.
‘“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.”’
I can see it now, light from the coming hippies commercials for promoting this new scheme.
Do you want to kill your grand children?
So why invest in dirty coal power plant producing future death that is going C11 as you read this?
That is why we exist to help you save future generations? So be kinder, gentler, greener and save the Planet today. Invest now–for cleaner smoke to huff and puff. Invest in Bongtechnology (incorporated since 2010.)
Born and raised in Calif. For a beautifully and tragically told anecdotal story of how disparate liberal policies combine to create third world conditions in one of the most beautiful, ideal and wealthy land masses on earth read this short essay. You will not regret the understanding you will receive.
http://www.nationalreview.com/articles/255038/enemy-within-ian-murray
If I owned a power station with these new rules, my options would be pay the price or stay within the carbon limits. The easiest option is to cut back production to stay within the limits. Thus I make a profit with less staff and a higher KW hr price. The only looser is the state who have to buy more power from nasty states like ‘Texas’. Now if I were also the owner of a Texan power plant and California asked for extra power to cover a short fall. I would most likely ask that a premium be paid, a ship load of premium.
I find it hard to believe that so many can be so stupid for such a long period of time.
This situation could only be possible if the brainwashing in the school system is working as planned. No other explanation could account for a herd mentality on such a scale. Walk the beaches of california and see the black lumps of oil and tar that wash ashore, a natural out pouring of natures gift to mankind. Tar volcanoes are a natural wonder of Californian waters. Sadness is all I can feel.
RGGI (Regional Greenhouse Gas Initiative) : FAIL in the Northeast
http://www.rggi.org/market/co2_auctions/results
In ten manadtory auctions for CO2 allowances in just two years, the bid to offer ratio went from 4.1 to 0.57, the price dropped from maximum $3.51per ton to $1.87 per ton – only because there is a set reserve price of…$1.87. And they dare to call it a market???
Proceeds redistributed to foolish ineficient programs… In total $777M squeezed from power generators – guess where they got the money? Northeast has one of the highest electricity rates in the nation.
And the purpose of this folly?
‘The Regional Greenhouse Gas Initiative (RGGI) is a cooperative effort by participating states to reduce emissions of carbon dioxide (CO2), a greenhouse gas that causes global warming.’
Well, they must be doing something right after all, cooling the planet:
http://www.weather.com/outlook/weather-news/news/articles/northeast-storm-potential_2010-12-15
Who pays for the CO2 produced when people get their fingers burned by dodgy investment scams?
This is probably a stupid question but I can’t find anything on point. Is carbon the problem or is it just that we may be warming the atmosphere? Air conditioning systems are not 100% efficient so even though they cool air inside buildings, their net effect is warming the air. With heating systems, we are warming the air inside buildings, those buildings leak and that heat gets into the atmosphere. In addition, the equipment to heat this air generates additional heat. As the population grows and more of it lives in conditioned spaces, the net impact of all this goes up. Could this be a cause and how much of one for global warming?
Not the first time California has shot itself in the foot over energy policy. A few years back they deregulated the wholesale market for electricity but capped the retail price. Result? Consumption kept climbing but suppliers got killed. Suppliers ran away. Brownouts and panic. Shortfall made up at great expense by spot purchasing power from out of state. Cries of “gouging” and Bill Lockyer, State A-G, headed a lynch mob looking for villains. Not sure how that all shook out; Enron was involved and, for all I know, may have organized the whole thing to create opportunities for trading profits. But I think it shows what happens when idiots interfere in markets. Or, as here, force one into existence.
old44 says:{December 16, 2010 at 11:45 pm}
“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.”
That is an excellent idea!
old44 says:
December 16, 2010 at 11:45 pm
Pure genius!
Wish that politics and industry had a few more original thinkers like you!
Ralph says: “I have got 15 million Carbon Credits – prove that I haven’t. Isn’t that the problem with Carbon Trading?”
No, not at all! In fact, that is a feature, not a bug.
Seriously, we should all (and I include myself) stop acting as if we are having a discussion about well meaning but deluded people. This carbon trading scheme is a scam. Period, end of description. It is designed to be a form of fraud. It does nothing to help the environment and was never meant to. It is meant to allow a small group of people to make huge sums of cold cash from masses of people who think they are being helped in the process.
Pretending that these politicians are public servants is wrong. The flaws in the scheme are there on purpose. Those involved are nothing more than partners in crime. They are people who would fleece us like sheep.
Does this mean I can sell the future price? If so, then that’s as sure a way of making money as I’ve ever seen in my life…
I think most of you are wrong about this failing. Look at how certain people made millions from the Chicago exchange. Then there are the state subsidies. Then there is the reputation of all the power brokers and film stars. The state may die, but there is too much money at stake to let this thing fail.
Here’s another in-depth view of California’s “enlightenment”:
http://www.nationalreview.com/articles/255320/two-californias-victor-davis-hanson
Stupid is a really hard thing to fix.
We could spend the money on nuclear power development, and get rid of all the CO2, but apparently California is too dumb to figure that out.
I wonder why they call him moonbeam?
This is outlandish!!!! Cap and Trade is NOTHING but a Ponzi, or better still, Madof Scheme to rip off innocent people. If California, or any other state, wants to reduce its carbon footprint all we have to do is set an annual limit and shut down everything when we get to that level for the rest of the year. And I mean everything! Cars, Trucks, Trains, Aeroplanes, Tractors, Harvestors, Combines, Water Pumps, Sewer Treatment Plants, Factories, Coffee Shops, Beaches, Schools, Colleges, Universities, DMV Offices, Hospitals, Publishers, Post Offices, Border Control Checkpoints, Disneyland, Hollywood, The Central Valley, Dams, Reservors, Trams, Freeways, ChiPs, Heaters, AirConditioners, EVERYTHING! We need to get serious about this California! Now, let’s pull up our socks, teighten our belts, put away the surfboards, lock the car in the garage, and show the world how to do it right! No more tricks! No more Cap and Trade crap! Let’s just do it!