SPECIAL REPORT-The California Carbon Rush (Hold the Eureka!)
It could be worse than sticky, argues Gary Stern, a power utility executive. Stern lived through the disastrous deregulation of the California power market a decade ago and fears the carbon market will be small and open to manipulation. The state refuses to set a limit for prices. Traders could learn how to corner the market (think Enron) and then hold hostage utilities and factories with no option but to buy sky-high permits on the open market.
State officials say they are working on new safeguards to stop just such efforts and will unveil them in July. California also plans to hire an external monitor to watch the markets — a key recommendation of Stern. “I’m not saying we would expect the same thing to occur in the emissions markets,” he said. “However, we didn’t expect that to occur in the electricity markets.”
Even if all goes well, nine years of carbon trade won’t be enough to end worries about climate change, especially if other states and nations don’t pitch in.
“The ambition doesn’t add up in terms of what the science is calling for. In fact it doesn’t get close,” said Greenpeace forest campaigner Rolf Skar, who derides the decision to give away any pollution permits at all. He also turns up his nose at California’s plans to let industry pay for “offsets” — projects to soak up carbon, such as forest management.
Offsets are seen as an important price safety valve — letting a redwood grow bigger to capture carbon in its wood is cheaper than building a carbon-free power plant, and a substantial portion of California’s emissions reductions could come from such schemes.
Owners typically pay contractors to verify such projects — which is not dissimilar to a bond issuer paying a credit agency to rate it — but designers say the offset program avoids conflicts of interest and project standards are extremely strict.
To make a serious dent in emissions, regulators will target transportation. Cars, trucks and planes spew out 40 percent of the state’s carbon, more than utilities or industry.
The state’s climate change law could have been called the “California Petroleum Use Reduction Act,” Mary Nichols, California’s top climate change regulator, joked last year.
The state is the third biggest user of gasoline in the world, after the U.S. as a whole and China, but drivers can change emissions very quickly — by leaving the car in the garage or buying a new, more efficient, car.
“You are just trying to get people to drive less, effectively, which is probably going to be quite expensive,” said Sikorski of Barclays.
Auto fuels are pulled into the cap-and-trade system in 2015. Gasoline prices are sure to rise as distributors are forced to buy carbon permits.
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Last one to leave California, please turn off the lights….
A ‘green’ train wreck … just what California needs!
How is this a market? It looks like an auction for indulgences.
Whats to stop someone with a printer / scanner and Photoshop forging one of these ?
Lance says: February 18, 2011 at 6:33 am
“Last one to leave California, please turn off the lights….”
Unless it is a calm cloudy day, when the lights will already be off.
We need congressional hearings into the science ASAP. That appears to me to be the only way to stop this train wreck.
You guys have it wrong about California. What you want to be doing is jumping at the chance to buy property out here once the state completely tanks. You should be praying that the environmentalists screw the economy up so bad that a major correction is in order, just so you can capitalize on beachfront property.
It is an opportunity my friends, an opportunity.
As a hostage, oops, I mean resident of Kali I see what looks like a perfect storm ahead. I really think this all (crazy eco policies, out of control spending, tax payer/voter revolt) has to happens. The forces at work seem too strong for the voters to dissipate without a meltdown first. Hopefully I’ll be watching from Utah!
Someone has to be the example of “what not to do”. I can’t think of a better state than California. Let them reap what they sow instead of the rest of us.
You guys let us know how that works out! Sorry, A and the rest. Don’t worry, I’m sure we’ll be around to pick up the pieces.
Just goes to show how loonie the lefties are, is that they are still calling that power grab mess “Deregulation”. But what do you expect, with our Marxist education system teaching how bad capitalism is by telling lies and blaming all of the failures of socialist meddling on capitalism, no one knows what real free market capitalism is. That is the only explanation for passing laws that tell businesses what they can and can not do and call it “deregulation”.
Lance : “Last one to leave California, please turn off the lights….”
They won’t have to. Lights are next on the proscribed list.
People and Bats are very much alike. The longer they reside in one spot the deeper the guano gets. (A Parent’s Faint Hope: If we are able to pass anything to our children worth saving perhaps they’ll put it in a museum rather than chucking the lot and starting all over again from scratch.)
““You are just trying to get people to drive less, effectively, which is probably going to be quite expensive,” said Sikorski of Barclays.”
Expensive for whom? Obviously the normal route is to punish the person who wants to go anywhere. There is, of course, no viable public transportation that covers most of the state.
Once we watch California immolate itself over a false crisis and they have to sell the state to get out of their economic disaster, I’ ll glad to take land there for dirt cheap.
What will they say, in the distant future, the archeologists about these strange rituals of the men from the past?. Perhaps they will say that, as men are made of carbon, this element was considered a sacred element, the most valuable element of all, thus they eventually they forbade its use,and by fulfilling this prohibition they destroyed their civilization.
I seriously wonder if we as a collectively cognizant life form ( best I could come up with) will learn anything from this particular debacle when it is finally put to rest. I consider myself as reasonably sane, if there is any such thing, but my goodness – this idiocy is beyond stupid and I fear that we as humans are seriously stumbling and failing to learn from our past mistakes.
That of course is crucial and is the cornerstone of physical evolution but perhaps not mental evolution.
Stern? Any relation to our Lord Stern, the Economist, who suddenly became a climate scientist and foretold cataclysmic events which have yet to become true.
Probably not.
{“You are just trying to get people to drive less, effectively, which is probably going to be quite expensive,” said Sikorski of Barclays.}
and when well us trades people be able to load our tools and materials onto a bus that will take us at least within a block of our clients’ homes?
I have a feeling horses are about to make a comeback……
Lance,
What makes you think anyone will be able to afford to turn on any lights by then?
Without the commitment of Asian countries and in particular China, this is an utterly futile exercise. 67% of the world’s coal production is currently burnt in Asia and this figure is predicted to increase relentlessly every year. China alone is planning 400GW of new fossil fuel power generation by 2020.
Then we could mention the 120 new airports and the milluion new vehicles each year ……..
Its not good enough to say we all have to do our bit. a clear cost benefit analysis is required by all OECD countries otherwise we are looking at lots of pain and no gain.
It is clear that these fools have absolutely no idea what they are doing. And they don’t care because their intentions are so good and it is other peoples money.
Nice touch, with the red star.
It is highly ironic that the particular subspecies of bear that CA uses as its icon is extinct in CA. http://en.wikipedia.org/wiki/Grizzly_bear
Jeremy says:
February 18, 2011 at 7:02 am
I have been thinking the same thing lately. It looks like the light at the end of the tunnel is Godzilla.
I have some good friends, who, while in general are good people, on politics are insufferable, semi-demented, “progressives” from California. Only very harsh reality-training is going to clear their heads. Sadly, harsh reality is coming like a freight train, and many innocents will be hurt.
First of all, I live in the “People’s Republic Of California” and have watched this state go downhill over the years. AB32 is the worst thing yet. We did have a chance to stall AB32 with Prop. 23, BUT the environmental groups outspent the Yes on 23 by $3 for every $1.
People were told that is Prop. 23 passes, it would kill 650,000 “Green Jobs” jobs. In reality, they were talking about “Fantasy Jobs”, because the jobs do NOT exist. It was only a fantasy on the part of the environmental groups.
California’s unemployment is the third highest in the nation and our debt is staggering. The “solution” from Sacramento, raise taxes and enact new regulations that will drive businesses out of California. AB32 is a good example of a job killing bill.
I really miss the Golden days of California when Ronald Reagan was our Governor.