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.