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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Cheifio [BTW, is that as in “Chief Information Officer”, or “Yes, sir, Chiefio”?]. That was a great explanation of the house of cards known as the federal reserve system.
At the slightest hint of inflation, interest rates [especially long-term rates] will be jacked up, negating, or at least offsetting, the inflationary move. Maybe. Hopefully. Because inflation is easier to deal with than deflation.
But combating deflation is very hard. “Pushing on a string” is too easy of an explanation. The underlying cause is more basic: people want money more than things [like commodities, real estate, etc.]; unlike inflation, where people want things, rather than depreciating paper money.
But we seem to be entering the worst of all possible worlds: extreme stagflation. Deflation is certainly more scary than inflation, which we can protect ourselves from by buying real assets. But deflation is an attitude. It was the cause of the extensive, long-term ’30’s Depression. Folks just didn’t want to part with their money, fiat or otherwise. [eg, in 1921 there was a very deep depression. But the federal government slashed the budget by over 60% — and the crisis quickly passed, leading into the prosperous Roaring 20’s].
It worries me now that real assets are being sold cheaply for real dollars, fiat or otherwise. One of my best friends is a long time jeweler. Today he told me he had bought a 3 ct. diamond, listed on the Rapp sheet [the dealers’ wholesale cost] for $34,000 — for only $23,000. He said in the 45 years he had been in the jewelry business, he has never seen the Rapp sheet discounted.
This scares the crap out of me. It means that people will now sell formerly valuable assets for far less than their value of only one year ago [thanx, Obama, for increasing our debt by $5 trillion, and giving most of the confiscated/invented loot to your cronies like ACORN, the Government Motors unions, “carbon” scientists, etc. None of it is going into fictitious ‘shovel ready’ pot holes where it is needed].
The scary ‘tipping point’ isn’t the demonized but completely harmless CO2 molecule. The real “tipping point” is the point at which the government [OK, the federal reserve] loses control. This can happen very fast. Zimbabwe has issued a $100 Trillion note — since withdrawn due to non-stop inflation [and the $100 Trillion note was issued after twelve (12) zeroes had been deleted from the note it replaced].
Every bit of this looming disaster comes from the Cloward-Piven strategy [just do a search] that has infested all levels of Western governments. Something for nothing has never worked for very long. The climate scam is just a part of a devious and scary march toward a totalitarian world government. Keep that in mind when you vote.
Smokey. Thanks Again!
That’s TWO for today. You’re always there when succinct information is needed.
Like, in this case, reminding me of strategies, and enhancing my view on other topics…
like……………the 3.8 carat diamond ring for sale at an auction in the U.K. tomorrow.
(wouldn’t have remembered it without your comment!)
It’s opening price is 200 British Pounds and its actual value appraised at 8,000-10,000. So, I agree – it’s disconcerting to watch real assets being purchased
with real (and digitized) dollars…but, sometimes, heck. I’ll at least be able to bid, now.
Thanks.
C.L. Thorpe