California Paves the Way to a National Carbon Trading Scheme or Tax

Will Sabel Courtney

August 25, 2016

Building on top of some of the strictest existing environmental laws in the nation, the legislature of California has voted to implement a measure to cut greenhouse gases in the state a further 40 percent beyond the current target by the year 2030.

The state currently is on track to meet its current goal, which seeks to reduce emissions that can hold in heat to 1990 levels by the year 2020. The new bill, approved by the state Senate on Wednesday, would lower greenhouse gases a further 40 percent below that in the following decade. A linked bill in the state Assembly was approved several hours earlier; Governor Jerry Brown has stated that he will sign both bills when they land on his desk.

"It's about the world in which we live becoming decarbonized and sustainable," Brown said during a press conference, according to Reuters. "These regulations will work to achieve that goal."

The bills will give the state legislature additional control over the California Air Resources Board, which, among other duties, sets emissions limits for vehicles sold in the state. In spite of being a state agency, it exerts a national influence; 11 other states have chosen to abide by CARB’s aggressive pollution controls, and the agency has been known to work with the federal government’s Environmental Protection Agency and Department of Transportation on fuel economy and greenhouse gas standards.

The new legislation builds upon the 2006 law that set the aggressive 2020 goal the state is currently working towards, which sought to cut down on the greenhouse emissions flowing from automobiles and industry alike. That law imposed a cap-and-trade program on pollutants in the state; in spite of the governor’s enthusiastic support for such measures, however, the system has reportedly not lived up to expectations, with only 34 percent of available credits being sold this month.

The new bills do not state if they would use cap-and-trade to controlling carbon emissions and the like, or if the state should seek out an alternate means of enforcing the standards.

The new guideline is likely to place even more pressure on automakers to push towards electric vehicles and other zero-emissions powertrains to lower their total carbon footprint. Between the long list of countries in Europe seeking to ban new gas-powered cars between 2025 and 2030 and this new California measure, it seems as though the next decade may prove to be the era when electric cars finally achieve dominance in the marketplace.

Then again, maybe California's robots will rise up before then and kill us all.

Chicago exchanges head for green war over carbon emissions

Ann Saphir
July 21, 2009

Green may be the hue of environmentalism, but it's still the color of money to the Chicago futures exchanges vying for control of the nascent trading market in carbon emission credits.

CME Group Inc., the world's largest futures exchange, and the Chicago Climate Exchange, led by Richard Sandor, inventor of bond futures, are both angling to dominate a market that could generate $120 billion in carbon-credit trading annually if a so-called cap-and-trade system becomes the law of the land.

“We are talking about what will be the biggest commodity ever traded,” said Mr. Sandor, executive chairman of London-based Climate Exchange PLC, which owns the Chicago exchange. At 6 billion metric tons, the U.S. carbon emissions market is expected to be about three times the size of the European market, where another of Mr. Sandor's exchanges dominates trading. “Every time a mandated market has come through, it's provided us enormous opportunities.”

Such a mandate is in climate legislation that passed the U.S. House last month; the bill faces a tough fight in the Senate, but the Obama administration supports so-called cap-and-trade regulations as a way to reduce global warming.

Passage of the legislation would set off a furious race between Mr. Sandor's Chicago Climate Futures Exchange and CME. The Climate Exchange has an early lead — it handles the lion's share of carbon credits trading under the Regional Greenhouse Gas Initiative, the nation's first mandatory carbon-emissions reduction program. It also dominates across the pond, where Mr. Sandor's European Climate Exchange has an 87% market share in futures on European emissions permit trading.

And Mr. Sandor brings deep experience: He helped design the U.S. Environmental Protection Agency's acid-rain reduction program, launched with the 1990 Clean Air Act and credited with driving down emissions of acid-rain producing sulfur dioxide. In 2003, he built the Chicago Climate Exchange, the first U.S. voluntary carbon emissions market.

The 'offering to beat'

The Climate Exchange is the “offering to beat,” Chicago-based Raymond James analyst Patrick O'Shaughnessy said in a recent note summing up the competitive landscape of cap-and-trade.

“We believe that the Climate Exchange's dominance in the European and U.S. carbon markets will be too much for other challengers to overcome,” he said.

But if any exchange can overtake Mr. Sandor, it's CME. The Chicago juggernaut, which handled contracts tied to a quadrillion dollars of assets last year, is in talks with regulators over the creation of a Green Exchange owned jointly with market participants including Constellation Energy Group Inc., Goldman Sachs Group (GS) Inc. and J. P. Morgan Chase & Co. By waiting for legislation to take clearer shape, CME may be able to craft its exchange to match the new regime.

“We are not too late, but we're not too early,” said Randy Warsager, director of green products at CME, which recently launched several emissions-based contracts, including ones targeted at the European market. 

Those contracts will be moved to the Green Exchange once it is launched.



Christopher Rodriguez, CME's managing director of business development, said CME's advantage is partly sheer size, with its extensive list of clearing members and its global electronic trading system. Also important, he said, will be savings for traders, who will put up only one margin deposit to trade on the Green Exchange and the CME-owned New York Mercantile Exchange, which controls oil and natural gas futures.

Mr. Sandor, 67, points out that CME's dominance hasn't helped it establish much of a foothold in existing emissions markets like Europe, and that his clearing and technology agreements with IntercontinentalExchange Inc., Nymex's biggest rival in energy-futures trading, give him similar reach and efficiencies. Last month, Atlanta-based ICE took a 4.8% stake in Climate Exchange.

“We've done pretty well over the last three years of competition with the big boys,” Mr. Sandor said.

Will existing contracts go obsolete?

Still, Climate Exchange PLC has lost money during that time. And despite explosive growth in Europe, volume has tapered this year at its U.S. exchange in part because investors worry that existing contracts will become obsolete under the federally mandated cap-and-trade system.

As the bill currently is written, Climate Exchange contracts won't qualify for trading under cap-and-trade, said Allison Shapiro, who studies voluntary carbon emissions markets for Washington, D.C.-based Ecosystem Marketplace. Still, she said, if Mr. Sandor successfully petitions the EPA to admit the exchange's contracts to the federal system, trading “could see huge growth until 2012.” After that, she said, it's unclear what role, if any, established exchanges will have.

“The only thing definitive at this point is that the Commodity Futures Trading Commission makes the rules over this,” she said.

Ann Saphir is a reporter at Crain's Chicago Business, a sister publication of Pensions & Investments

The Pacific Carbon Trust: Corporate Welfare + Greenwashing = Unhappy Taxpayers

Canada Free Press
September 8th, 2011

If it ain't broke, don't fix it: that's what our parents taught us. But what if something is so broken, it can't be fixed at all?

The Pacific Carbon Trust (PCT) is broken beyond repair. It sucks millions of dollars out of taxpayers' pockets every year and deposits them in the wallets of big business, all in the name of carbon neutrality.

Set up in 2008, and wholly owned by the provincial government, the PCT sells carbon credits to government agencies, businesses, not-for-profits and individuals looking to be carbon neutral. The PCT then takes that money and buys carbon emission offsets from a variety of sources.

For example, a company that puts in a new boiler and saves 5,000 tonnes of carbon emissions can sell that carbon credit to the PCT. Government agencies then buy that carbon credit to cover, or "off-set" their own carbon emissions.

Put simply: it's corporate welfare in the name of carbon neutrality. And it's already cost taxpayers $19.4 million.

Of the 783,816 carbon credits sold by the PCT since 2009, 776,026 came from government and public sector organizations. That's 99 per cent of all the credits sold. A grand total of 11 credits have been bought by individuals.

School districts across B.C. have paid more than $4.4 million for these carbon credits. That's public money taken out of classrooms, and ultimately, taxpayer pockets. The University of British Columbia spent another $1.52 million.

Independent MLA Bob Simpson has done a lot of research on the corporate projects funded through the PCT with our tax dollars. It's not good news.

One example: Encana, an energy company with more than a billion dollars in cash flow, received an undisclosed payment from the PCT in return for "reducing and eliminating flaring, incineration and venting in British Columbia," according to BC Oil and Gas Commission documents (another PCT client, incidentally). No other details have been released, says Simpson.

It wasn't just Encana benefitting from tax dollars. Interfor, Canfor, TimberWest, Kruger Products, Sun Peaks, Neucel Pulp, Intrawest and Lafarge have all received PCT money—your tax dollars. You have to feel bad for Coast Hotels, one of just seven B.C. businesses to buy carbon credits from the PCT. Hopefully their $2,500 didn't go to any of their competitors, like the Pan Pacific Whistler Mountainside, the Whistler Westin, Whistler Marriott and Vancouver Four Seasons, all of which received PCT dollars.
 
Yet, B.C. Environment Minister Terry Lake and Opposition Leader Adrian Dix are both trying to put Humpty Dumpty back together. They want to fix the PCT, using millions of tax dollars on government greenwashing, by limiting the PCT to investing in public sector carbon reduction projects.

Interestingly, neither the BC Liberal Party nor the BC NDP buy carbon credits from the PCT to offset their own political operations. When it's tax dollars, it's okay—but when it's campaign donations, carbon neutrality falls by the wayside.

Even environmentalists like Mark Jaccard, architect of the BC carbon tax and professor of sustainable energy at Simon Fraser University, and Ben Parfitt, resource policy analyst for the Canadian Centre for Policy Alternatives, have written articles criticizing the PCT.

Taxpayers should demand that the Pacific Carbon Trust be immediately scrapped. In an era of deficit budgets and trying to plug the HST funding gap, the BC Government needs to focus on core services and maximize the use of every tax dollar. Government carbon neutrality is a frill we cannot afford—and lining the pockets of corporate greenwashers makes no long-term environmental or fiscal sense.
   
Read more:

https://climatechangeconspiracy.blogspot.com/