Last Call for Carbon Credits

It would seem that the ‘commodification of carbon’ is now well and truly in its final throes, and that the remediation efforts against of Climate Change will need to seek out a better method of self-correcting via the various (Consumer?) Markets. The death knell for carbon trading in North America is the significant, yet curiously under-publicized news that The Chicago Climate Exchange (Inc.) will close down its cap-and-trade market by the end of the year, as announced by spokeswoman Brook McLaughlin via CNN.

What’s curious is that hardly anybody else, out there in the more Mainstream Media, is so much as batting an eye – let alone packaging this news (and it’s deeper implications) for easy public consumption.  It seems that this letdown in the domestic trading of carbon credits is primarily due to political and public opinion shifts in the U.S. resulting in the failures of last years disappointingly de-clawed U.S. Clean Air Act.

The decision also coincided with a significant Republican victory and the loss of Democratic Control in the US House of Representatives. However, if you look abit deeper, we can all see that the Carbon Cap and Trade concept was indeed flawed at a much deeper level…and that this failure might also betray some underlying motivations for this financial scheme to begin with!

Germany…A working model for Renewables

Last year, news was broken by Das Spiegel that the EU emissions trading system, which was underpinned by the Renewable Energy Law (EEG), was allegedly not reducing carbon emissions by a single gram in Europe. Instead, Germany’s impressive 15% level of energy production from renewables was simply creating an economic vehicle for polluters to GreenWash their operations, avoid the costs of upgrading their facilities, while enhancing their “Green” Public Relations efforts, all without producing any reductions in net emissions whatsoever.

So how did this scheme work here in North America under the stewardship of the notorious Wall Street icons at Goldman and Sachs?

Somewhere in America…

It seems that unlike the SO2 emissions caps and trading systems that actually made it too expensive for coal plants to create acid rain, the carbon trading system was entirely too well managed by those middlemen and brokers who sought to profit from the exchange itself, rather than letting the cost of carbon rise to the point where it would put enough stress on the price to force a Sellers market. Some might also suggest that the full weight of market shifting organizations like Enron weren’t able to bear down and properly manipulate the game of carbon trading, due to the internal legal turmoil that had ensued within existing lines of business.

The once highly touted Chicago Climate Exchange (CCX) has seen a scarcity of Buyers for months now, and carbon credits are market priced at roughly 5 cents a tonne, which basically tells us what we’ve already known for many decades… That as far as Financiers and Industrialists are concerned, carbon emissions are virtually free!

To illustrate…For the price of flying an entire delegation and their entourage over to Copenhagen for a Climate Conference, Canada could probably pay for (erm, “offset”) it’s entire annual output of carbon emissions at these current rates. Minus the various taxes and additional expenses and emissions produced by the airflights and local transportation to and from hotels and restaurants, of course….but we digress, sorry.

The real question is…
Why did Carbon Credit trading fail ?

• It was given millions of dollars in start-up subsidies from various sources, including from Chicago’s Joyce Foundation when Barack Obama was a board member, without ever having a proven working model to operate under. This kind of ‘bass ackwards’ style of business rarely works, especially when startup costs are artificially covered without any need for prior due diligence
• Buying and selling imaginary carbon credits was going to lead us to a bold, green future, when people would pay billions — Al Gore said trillions! — to buy into solutions to global warming before wide acceptance of the concept had been properly established.
• Carbon trading is underpinned by an equally ambiguous derivative product called ‘carbon off-sets”, most of which are taken on face value by the buyer. Not based on an actual ton of carbon emitted, rather governing agencies are issuing certificates for a fictional commodity of emissions not emitted. A clearly virtual and shifty concept to base a market economy upon.
• It has been nearly impossible to verify with certainty which of these thousands of so-called off-set projects in the developing world are actually legitimate. In the coming years, we will no doubt see or read a number exposes detailing the depths of this Green murk.
• If only Enron and Bernie Madoff had been smart enough to stay out of trouble and call their pyramid schemes “Green Funds”, this trading scheme might have had the corporate backing and credibility it needed to get past it’s growing pains.
• The Climate Exchange was created by a professor named Richard Sandor. In 2002, Time magazine called him a “Hero of the Planet” for that act, yet Mr.Sandor was publicly outed as a profiteer in The Investor Business Daily, when he cashed out his stake in the exchange for a cool 98.5 Million!
• The exchange used esoteric terms like “vintages” to describe carbon emissions from different years. Thus, instead of making carbon credits seem more real, such practices just made them seem even more virtual and illusory.
• Carbon Credits were rapidly being exposed as a fabrication to make insiders wealthy, and to levy a tax on the rest of the economy, under the auspices of an Environmental necessity.

If you think this view is too cynical, you might consider the value that Enron was planning to extract from this scheme, before it was brought down by the swindling greed of it’s own Insiders.

There’s also a superb video presentation (below) that should explain any remaining questions you might have as we move on to try address the issue of Global Warming at it’s root causes (ie. Industrial Growth and rampant Global Consumption), rather than simply allowing Financiers to profit from our global ennui, under the guise of a fabricated ‘solution’.