Carbon credits: the new junk bonds
The carbon credits industry is set to be the next class of marketable securities to lack real asset backing. I heard somewhere that Enron had a hand in developing the idea of a carbon market for the Kyoto agreement that Clinton signed up to (and that the Congress choked on). I cannot fathom why one privately owned company would give its money away to another in exchange for a green-coloured certificate. It is irrational. I cannot fathom how a country could be forced by its own government to give money away to foreign companies and governments. That would be stupid; and yet that is where this is supposed to be going. The "business model" is not underpinned by mutually matched national interests.
I suspect that the market will suffer from verifiability issues surrounding proof of land use - that is the "base" upon which one form of credit is created - by the government - not quite out of thin air, but out of the tiny particulates in that air. And if that is the smoke then perhaps the debit side of the ledger are the mirrors to this financial slight of hand. The demand for the credits come from polluters - but what of the verifiability, the accuracy, of those figures. As I understand it national governments set the standards and verification for that too. Everyone is doing their own thing.
I haven't read through the Emissions Trading Scheme legislation that was passed by Labour in a chaotic manner a few weeks ago. Given it was so important to Labour (a flagship policy) we have not seen much use of it - or certainly no explanation of its contents - in the election campaign to date.
[UPDATE: Posted at 5:11pm by Matthew Hooton on the Kyoto deficit:
The Treasury has reported that the Kyoto deficit is now $562 million. The number is of course ludicrous. Look at the table at how much it goes up and down every few months, from over a billion in March to nearly half that now. No one has any idea what the real number will be.
Even more ludicrous is this: Does anyone really believe a New Zealand Finance Minister, Labour or National, will ever pay that money?
- precisely.]
[UPDATE: Posted at 5:28pm by Lindsay Mitchell on ETS costs heading:
Now where would you go to find the projected cost of the Emissions Trading Scheme?
Well, I sure as hell wouldn't have looked for it under Culture and Heritage. But there it is. Projected to cost the taxpayer a mere $billion within 5 years. But that's just the direct costs....]
posted by Tim Selwyn @ 2:07 pm
11 comments
11 Comments:
BUT WE TUMEKE BLOGGERS PREFER TO LEGITIMISE THE ANARCHIST-UTOPIAN TRADITION IN ADULT EDUCATION POSTING ANONYMOUSLY ON BLOGS INSTEAD WITH NO THOUGHT TO GETTING CAUGHT OUT BY CAPTAINS OF INDUSTRY OR UNIVERSITY AUTHORITIES.
Seriously - meds time.
There are already numerous carbon credit 'frauds' - people selling credits for carbon emissions reductions that simply don't exist. The greens demanded 'green' credits in their horse-trading, which will also push the price up.
Oh - and the world appears to be entering a period of global cooling. Hmm.
The whole thing is ridiculous. Take a company that owns wind turbines and coal power stations:
- The wind turbines earn carbon credits.
- The coal stations need to buy carbon credits.
- The coal stations buy credits off the wind turbines.
- According to Kyoto, all the carbon emissions have been "offset", which according to Kyoto should mean there is no net emission of carbon.
- In fact, the coal stations are still spewing out CO2 and none of this is being removed by the wind turbines. The scheme did nothing.
The scheme makes no logical sense. We must repeal it. But few parties are proposing to do so:
http://www.familyparty.org.nz/policy/environment
I've never seen such a fake, disingenuous argument, have you considered a career in politics?!! Lol, you're either an idiot or a misleading bastard... either way, only the stupid will vote for you so don't expect to make an impact out there.
If you really want to play the idiot and pretend, fine: it makes perfect sense. The owner of the coal station has to pay extra because it pollutes. The owner of the wind turbine stands to profit because it is a non-polluting technology. Net effect: wind turbines become more attractive to business, coal stations become less attractive. That's exactly what we want, did you really not get it?! Ha ha.
That last comment was in reply to "Mr Dennis" btw, not you Tim.
Anon @ 4.50 you must surely have down syndrome to post such a stupid comment.
The point "Mr Dennis" made was the pointless bureacracy created if a company owns BOTH coal and wind power stations, which will be common worldwide and won't be changing any time soon.
Come out of the party ranks to lick his arse did you Anon? Typical spin, get shot down on one point and try to find something he might have said but didn't: "but this is what he REALLY meant". The only "pointless bureacracy" (sic) is in your head.
The point, dumbass, is that wind turbines become more attractive to business, coal stations become less attractive. It doesn't matter if the same company owns both coal stations and wind turbines, the point still applies. Jesus, get someone to spell it out for you before you embarrass yourself further.
Anon @ 7:18: You absolute breathtaking handicap.
Do you really think it's feasible to replace all coal stations with wind ones? Even in a low population density country like NZ it's a major headache to find somewhere to put them.
Coal stations will only be replaced when a significantly more efficient technology is available, which isn't going to be anytime soon.
So whether a company owns wind and coal stations, or just coal ones, they won't be able to do anything except pass the Kyoto costs onto the consumer. Jesus, get someone to spell it out for you before you embarrass yourself further.
That's right, Kyoto drives up the price of electricity by distorting the market to push companies into alternative energy generation.
Granny may not be able to afford her electricity, but industries and more pollution will move to China.
Don't worry too much about Granny; she may be lucky enough to get the Green subsidised insulation before she freezes to death.
And if she can't afford her Baked Beans that will probably be a good thing, because they too will be made in China, where the manufacturers and growers don't have to worry about Kyoto Nonsense and they will put in a few "special" additives to make sure they meet specifications so Gran is better off without them.
If I can stop your bizarre/amusing "Family Party" rant for a second:
It doesn't matter if the incentive or disincentive is $1 or $100 000 000, because alternate power generation is either available (which isn't for most companies) or it isn't.
So this unfairly punishes companies who only have the option of coal power, who will then most likely go to China.
Maybe your IHC tutor can explain it to you.
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