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
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There are already about 23 other states that have a cap-and-trade program. I suspect CA will ‘integrate’ with these other states over time. I also suspect the rest of the states will eventually get into a cap-and-trade systems and viola, there is the national cap-and-trade program that the leftists have wanted.
It’s an estimated $20 trillion dollar/year market and major banks already have carbon derivatives almost ready to go. They stand to make huge profits off of the trading of life. I don’t see us winning this one.
“There is a simple way of defeating this carbon trading tax, if the power companies shut down….”
That isn’t going to happen. You can be sure the power companies will benefit from the scheme, and you can also be sure that the rules were written with their assistance. Remember, this whole business began with Enron.
I give these people full props for being so committed to their cause.
Now if they could only see how much they are basing “beliefs” on “faith” maybe the world might change for the better.
Enron started this mess. It seems they still cling to best business practices from the Enron model.
Creators of carbon credit scheme cashing in on it, Maurice Strong, Al Gore, Mikhail Gorbachev years after Enron.
“Starting gun” indeed! Thumb firmly on trigger, barrel gripped by teeth and tongue, “Ready, aim, …”
Even loaded with a blank cartridge, guaranteed fatal. Violent ejection of medulla and bone fragments from the base of the skull has very consistent results.
Not sure of the exact phrase, but isn’t it like ‘he who fails to learn from the past is bound to repeat it’ read Chicago Exchange…
Unfortunately, it might be wishful thinking that neighboring jurisdictions will take up the economic slack caused by the folly of Californians.
Californians will probably meet their carbon targets before 2020. They will teach us all how to live without electricity. Enviros have filed lawsuits preventing solar plants in the desert, nuclear power plants, ugly windmills that kill birdies, drilling their vast reserves of petroleum, and power lines across natural areas. Cal media railed against Texas companies for coming to their aid during their brown-outs, discouraging future aid……It will be interesting to see the upcoming results as the remaining power plants die from old age.
I think the link at the top has a far more interesting story than California getting in on carbon trading.
http://www.newscientist.com/article/dn19878-carbon-trading-tempts-firms-to-make-greenhouse-gas.html
“Fearful of a burgeoning scam, CDM officials recently began a review. The European Union wants all credits for HFC-22 outlawed. But last week CDM officials in China threatened that factories there would respond by releasing the gas into the atmosphere. This week’s issue of new credits to Juhua suggests that the CDM has backed off before its review is completed.”
“HFC-22 is 14,800 more protent than carbon dioxide.”
This is flat out extorsion. Interestingly, the Chinese firms doing the extorting are either willing to kill us all if they don’t get their money (if they believe that HFC-22 can cause CGW), or they’re willing to expose the CGW scam if they don’t get their money (if they don’t think HFC-22 will cause CGW). Since they got paid off, we can only speculate…
Will it be part of the show business, like Hollywood Science?
Crime endorsed by the electorate.
I wonder if they will get a lump of coal in their stocking this year…
If there’s a whole lotta buying of nothing to produce nothing causing energy prices to needlessly rise won’t this be a boom to lawyers and the court system.
Maybe that’s the real plan?
The new economy? Litigate to prosperity?
Kind of ironic but I always thought the great rift that would separate Cali from the main land was geological in nature, not atmospheric concentrations of carbon dioxide ponzi-scheming.
Or wait, maybe it is the sound of 500 companies uprooting and leaving town?
Interesting, n’est-ce pas? Government invents an imaginary currency, allocates it among its corporate cronies, then requires everyone to obtain it from those who have it. Sounds like something from Ayn Rand.
Time to buy stock in Bekins and United Van Lines.
Squidly says:
December 16, 2010 at 11:14 pm
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?
Squidly-
You are too late. Companies are promoting nitrogen for filling vehicle tires.
IanM
Question:
Will the state of California be included in the top 500 emitters? Surerly, with all its buildings to heat and vehicles (police cars, cars given to state legislators etc) they qualify. Ditto for municipal transit systems. Will they pay for carbon credits, or exempt themselves?
Good question.
This is absolutely asinine. We have bureaucrats with their fingers in their ears going “la la la” refusing to hear what has happened in Denmark and Chicago. This will not end well. I am leaving, I have had it … now to find someplace else to live. I like North Carolina … but I like the West.
With, our penchant for Unintended Consequences, this is going to be made into a dry ice trading platform. As for a carbon trading platform . . hello coal.
Purchase Dry Ice
Pellets, Blocks, Blasting Supplies 34 Locations – 34 Years in Business
http://www.continentalcarbonic.com
States in the US can’t print their own money. Putting them or their agents in charge of issuing CO2 credits is to give them the ability to magic money from the air. It is inflationary, in a way which will be beyond the control of the Fed. Of course it only needs everybody to act with the appropriate amount of self-restaint. Good luck with that.
The belief that CO2 is responsible for future catastrophic warming just goes on and on despite the fact that there is zero scientific proof that CO2 will have more than a minuscule effect on temperature. The latest contribution to the Chicken Little scare comes from the (Canadian) National Roundtable on the Environment and the Economy [http://www.climateprosperity.ca/eng/climate-prosperity-eng.php] in the form of their latest report: http://www.climateprosperity.ca/eng/studies/climate-impacts/report/degrees-of-change-report-eng.pdf
I am just starting to read it, but I fully expect to find that it is based on a complete belief in the IPCC reports.
IanM
I may be wrong but it seems that I remember a law suit some years ago when a state (I think California) tried to tax both companies and individuals that had left the state on their income because if they hadn’t moved the state would have had the tax revenue. This seems to be about the same mentality. The sad thing is that it took several appeals to get it out of the court system. It seems that some of the judiciary are on the wagon for the redistribution of wealth in any way possible. It will be hard for those retired that have worked all their lives and now the government and the scammers are going to devalue any thing of value to the point of near starvation for those that are on fixed income. This carbon scheme is just the start. God help us as we seem unable to help ourselves.
Bill Derryberry
“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.”
The market set the price of this commodity at under $0.05. It is impossible fool the market for that long.
“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.”
From the SFGate page, a story of how ‘Silicon Valley’ no longer has chip companies and they have all left due to too high costs.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/16/BUEO1GQRDV.DTL&feed=rss.news
This is an unfortunate opportunity for the rest of the country to watch in horror while California undergoes self-mutilation by intentionally making energy more expensive and in turn damaging their State’s economy and killing desperately needed jobs. The promise of replacing lost jobs with new green jobs is mostly wishful thinking and a cruel joke on the State’s working class. Let’s hope they come to their senses before they completely self-destruct.
Because the lesson from Spain’s experience was apparently missed, let’s also hope that the rest of the country is capable of learning from the California experiment that is about to begin.
“Cap & Trade: A Train Wreck”
(Analysis of a CBO report on how it would be structured)
http://www.zerohedge.com/article/captrade-train-wreck