California – the Next Carbon Marketplace

George Rebane

Now that Prop23 has crashed and burned, AB32 will ravage the countryside and trading carbon credits will join tulip bulbs, Florida swamp land, and south sea islands in their historical niche of foolish markets.  In the last years people have lost their shirts trying to get a market going trading this ersatz commodity.  But as long as governments mandate CO2 emission limits along with the right to buy and sell such permissions, there is money to be made.

It is for this reason that major trading houses and consortiums have backed all kinds of ‘green laws’ that are based on the pronouncement that CO2, what all critters exhale, is a toxic gas.  They know that if money, lots of money, for such credits can be set in motion, then they can position themselves in the cash conduits and make a pile for themselves.

We recall that carbon credits are simply mandated ‘mother may I’ slips that will permit their holders to emit CO2 above and beyond the nominal limits set by agencies such as CARB.  Only so many of them will be issued/sold by the government, so they will become a valuable item for carbon emitting factories, utilities, and transportation firms.  The idea is to let the marketplace set their price so that emitters and investors can buy and sell them according to what they perceive the future market demand for them will be.

To do that efficiently you need an exchange like the NYSE or NASDAQ where stocks are sold.  And it’s the environmentally sensitive capitalists who are now focused on California as the only remaining venue in America where there will be a sufficient volume of these carbon credits in play as AB32 casts its shadow across the state.  These trading houses will take a little slice of every dollar that passes from carbon buyer to carbon seller.  The more dollars involved the mo bettah for the trading houses.  Now we see a more sophisticated basis for the environmental enthusiasm of these capitalists as they contributed to the downfall of Prop23.  (more here)

The hope of the greens has been all along that if the infection can be started in California, it will spread nationwide where until now it has been difficult to set up these markets because the feds have yet to pass cap n’ tax, and the other states with carbon limit laws are too small.

When we take a step back and see who benefits from all this goodness and light, we see the carbon emitters – they will be able to get the governments and greenies off their back by becoming legal emitters.  We also notice that the speculators are making their buck by leveling out market inefficiencies and providing liquidity (making sure there is a buyer for every seller), and, of course, those operating the trading exchanges where all these transactions take place.

What we nebbishes don’t notice is that all the monies that enter this new CO2 cum tulip mania comes from us.  Everyone else pockets their profits and/or charges it off as costs that are padded into the higher prices that we will pay for ALL of tomorrow’s goods and services in California.  And all along they told us we were voting for economic growth, cleaner air, and stopping man-made global warming.

Comments

[Mikey McD]

I can see it now... soon gym members will be required to pay a special 'exhaust tax' to The State due to the increase in CO2 exhausted whilst they exercise and Physical Education in public schools will only be permitted on days when the 'dispersion layer' is deemed acceptable by the CARB Mothership. All while our politicians are permitted to fill the air with promises their butts can't keep.

[Greg Goodknight]

Prop 23 was fatally flawed and poorly sold. 'Carbon is bad and needs restricting, but let's wait until California's financial woes are solved' was a loser, especially when faced with massive spending by foes heavily invested in the Green bubble.

No on 23 advertising promised no pain, all gain. Nasty black hearted oilmen just wanted California's kids to breathe dirty air. No Cap and Tax, nothing about CO2. Just affordable green energy in everyone's future. What the people will eventually see, sooner not later, is higher prices; then they'll be wanting to know why the bait and switch?

[Russ Steele]

Greg,

I agree that Prop 23 was poorly sold and they never challenged the crap put out by the "dirty air" propagandist. When I complained, they said that they had used focus groups to refine the message, and wanted to stay on message and not get into a gutter fight with the competition. I guess that was the only option when out spent three to one. The Pro Prop 23 did not have the money to be competitive. All the polls never asked the cost questions, how much were the poll targets willing to pay to reduce CO2. When talking to our local political leaders they kept bring up the poll results. Publishing bogus polls had an impact.

[Todd Juvinall]

There will be a tax on every transaction too.

[D. King]

More O.T. than usual!

George,

Have you seen this?

http://www.youtube.com/user/NewWorldKnowing#p/u/14/-KAWXC5Z0wU

[George Rebane]

Thanks Dave, that little speech to the European Parliament pretty well says it all.

[D. King]

Yep, it includes everything, Global warming,
housing collapse, flight restrictions, AB32,
QE2…………

The only question left is: Will the advocates
let the dream go, or, do they have an incarceration
wish?

[Dixon Cruickshank]

Good piece George but this market would equate to the penny stocks of yore - you are the market and the exchange, its a beautiful thing