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  • Prepare for the Next Bubble…For a Made Up Commodity

    Carbon Dioxide

    At least when there was a housing bubble, there were actual houses involved. The next bubble could ostensibly be a carbon dioxide bubble; the newly-created, artificial market for a clear, odorless gas is growing at rapid rates. According to a new article from Mark Shapiro in Harper’s:

    Carbon trading is now the fastest-growing commodities market on earth. Since 2005, when major greenhouse-gas polluters among the Kyoto signatories were issued caps on their emissions and permitted to buy credits to meet those caps, there have been more than $300 billion worth of carbon transactions.

    Major financial institutions such as Goldman Sachs, Barclays, and Citibank now host carbon trading desks in London; traders who once speculated on oil and gas are betting on the most insidious side effects of our fossil fuel–based economy. Over the next decade, if President Obama and other advocates can institute a cap-and-trade system in the United States, the demand for carbon credits could explode into a $2 to $3 trillion market, according to the market-analysis firm Point Carbon.”

    The Kyoto Protocol allows companies to purchase offsets to reduce greenhouse gas emissions. Offsets allow carbon-emitting businesses to pay others to reduce their greenhouse gas emissions. Multinational firms hire carbon developers and carbon assessors to seek out carbon reduction projects all over the world. Businesses that have nothing to do with energy issues are diversifying. Shapiro, for instance, highlights one firm that primarily focused on product inspection, but once the opportunity arose to profit from carbon transactions the business took full advantage. These companies go around and evaluate the number of tons of carbon dioxide the project would eliminate from the atmosphere. One composting project in Brazil would reduce the equivalent of 67,000 tons of CO2 by turning food waste from grocery stores into organic fertilizer. The project is then subject to United Nations approval. If approved, at a carbon trading price of $22 a ton, the project would collect nearly $1.5 million.

    Projects like this exist all over the world and are highly susceptible to fraud. A company could build a coal plant and say they’ve created offsets because they were going to build a dirtier one or claim that they were going to cut trees down when in fact they weren’t in the first place. Bryan Leyland, chairman of the economic panel of the New Zealand Climate Science Coalition, said, “I first heard about carbon trading at a conference more than 10 years ago. I got up and said ‘If I was the financial adviser to the Mafia, I would advise them to get into carbon trading.’ Nothing that has happened since then changes my opinion – rather the reverse.”

    The failures to pass cap and trade legislation in the United States and to reach CO2 reduction concessions at the climate accord in Copenhagen may pop this bubble sooner than expected. According to the UK’s Guardian, “Banks and investors are pulling out of the carbon market after the failure to make progress at Copenhagen on reaching new emissions targets after 2012. Carbon financiers have already begun leaving banks in London because of the lack of activity and the drop-off in investment demand. The Guardian has been told that backers have this month pulled out of a large planned clean-energy project in the developing world because of the expected fall in emissions credits after 2012.”

    Given the recent scientific setbacks, the long-existing scientific dissent, and the insignificant effects these carbon reduction schemes would have on the earth’s temperature, it’s better to shut this plan of trading carbon emissions down before it evolves into multi-trillion dollar market that will likely have the bottom drop out of it just like the real estate market.

    Posted in Energy [slideshow_deploy]

    17 Responses to Prepare for the Next Bubble…For a Made Up Commodity

    1. Alex Salkever says:

      Actually, it doesn't have to be a "made up" commodity. Our company (Picarro) makes gear that can very easily measure CO2 at the local, regional and multi-national levels. In other words, we can quantify CO2 and help governments track back the emissions to their sources (for larger emitters). The cost of a global system of emissions tracking, we estimate, would run only $5 billion – a fraction of the total cost of, say, a single year's bonuses on Wall Street. So lets separate out the "made up" from lack of believe in the climate crisis at a more general level. We can prove and measure atmospheric composition, just was we could do so with SOX and NOX. We need the proper systems to do it. With that in place, we can start making more informed policy decisions.

    2. Mike In SATX says:

      Nick, great story. I knew about the carbon credit scam, but had NO idea it had already generated over a quarter-TRILLION dollars worth of ill-gotten gains. This reminds me a lot of the "(dot) com scam of the 1990s, except the dot-com'ers at least had some scraps of a product to hawk like the snake oil salesmen did a century ago.

      This carbon credits scam represents a new, much shadier breed of greedy money-grabbers.

      And believe me, this is nothing more than a slickly-crafted attempt by the Al Gores' of the world to bilk the world's population out of TRILLIONS of dollars of it's hard-earned money.

      Thanks for the info. GREAT READ!!!

    3. Jay says:

      You are absolutely right man. Next bubble is there and is coming very soon it will be here. From one crisis to another crisis keeping the herd mentality…

      This is a good essay about Herd mentality


    4. stirling, Pennsylvan says:

      I guess "Schemes" that try to fleece people out of their money have always been arround as long as people have been doing business. It's just gotten to a point these days when it's gotten to a global scale not just affecting a few, but all of us. If you want to discourage people who abuse, then track down the main culprits promoting this and make an example of them publically so the people know the name and the face. Once they are exposed anything they do in the future becomes a clear scam to be avoided. Mr. Gore should be seen as another Bernie Madoff (imho).

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    6. Lloyd Scallan - New says:

      It seams I'm using the word "socialism" far too much when commenting on either Obama or environmental issues. Sorry, but that word best describs what

      is taking place worldwide. We all know that term fits Obama like a glove, because that is what he is. However, the environmental movement has evolved over the past few years, for those that honestly believed in their cause, to those who push this lie (Al Gore anyone) who has realized the amount of money that can be made by keeping this "socialist" movement marching forward. Now, with the advent of of "carbon credit trading markets", more and more of the "Wall Street" types are finding a place at this feeding taught. It is so disappointing

      that what started out as a valid cause, has degraded into nothing but a

      money making scheme that will continue to effect everyone of us, wheather or not

      we believe saving the environmentent is still a noble cause

    7. vicki crawford, iowa says:

      Many years ago, the leader of the Czech Republic called global warming the new communism, and he should know. The ignorance of Americans is toxic to a free and civil society, and ANY concession, whether the means and technology to measure, or any desire to be seen as GREEN, legitimizes such tyranny in the minds of those who are woefully uninformed, and is a shame to us all. Those with the wherewithal to analyze and synthesize ought to take EVERY opportunity to educate and inform, NEVER to pretend there are any good intentions behind the scam, but to courageously stand for and on the truth until ALL understand and can make an informed decision- send the communists BACK where they belong- huddling around their measly fire eating the stale bread of their own greed and futility.

    8. Dennis Social Circle says:

      It is said that no politican lets a supposed disaster go by when he can profit from it. This cap and trade is just one of the supposed disasters in the future. The dems and obama are all for it and will push to make all believe that it is real.


    9. Drew Page, IL says:

      It's all about money and always has been. It's an all too predictable tactic. Find something, anything really, to scare people. Point the finger of blame at someone or something and demonize it. Then, have the government come up with a really expensive way to fix it, requiring of course lots more taxes to save the world.

      Cap & Trade is just such a scam. I'm sure Wall Street is frothing at the mouth to get into the billions worth of "carbon credit" trading. Cap & Trade legislation will do nothing to prevent pollution. Polluters will continue to pollute, buy "carbon credits" and pass along the cost to consumers of their goods or services. Who winds up footing the bill for all the unncessary billions? You guessed it, we tax paying simpletons.

    10. Pingback: There’s a new bubble in the air, and it’s made of air. « The Right of the People

    11. Don Harper, Lubbock, says:

      When the fraudsters at Goldman Sachs have something to do with anything, you can bet your bottom dollar (well, they already did that for you), that the folks at G-S will make millions in bonuses for shuffling whatever around. All the money involved in trading carbon credits is money added to the cost of the energy we use. If the carbon credit market falls apart, we taxpayers will be bailing out G-S again.

    12. Spiritof76, NH says:

      How about a class action suit filed on behalf of the US Consumers and taxpayers against IPCC, Al Gore, and the EPA? All their ill-gotten wealth through the man-made global warming hoax must be confiscated and all the carbon trading places shut down just like a prostitution ring.

    13. Mike In SATX says:

      Alex, while your equipment is most likely highly technical in nature and your company full of highly-paid engineers and PhDs, the equipment you're selling and the services you're providing only feeds the frenzy amongst the worlds population, serving as an enabler to a greedy, self-serving group of individuals and corporations who create these "man-made crises" in order to bilk honest people out of their hard-earned money. A single volcanic eruption, like Mount Pinatubo (Philippines, July 1991) can cause more damage to the environment than all the pollution mankind has created in the last 150 years.

      But the Al Gore's of the world can't regulate, legislate or otherwise control a volcano, so they create crises like "global warming" and "global cooling (1974-1975 timeframe)", until science proves them wrong, or until the scienteists acting as the experts are caught manipulating data in order to achieve the conclusion they want. Then they retool and move on to the next "crisis"

      Don't misunderstand me, I'm a firm believer in being a RESPONSIBLE steward of our environment. That doesn't mean that we should stop doing the things that allows mankind to survive and flourish. We need electricity and transportation, but we cannot change from fossil fuels either to newer, cleaner technologies if we are not allowed to build a viable means from which to transition to renewable energy sources.

      Personally, a transition to cleaner/renewable energy would be great for me. I'd love to have a solar array or wind generator powering my house, so I don't have to pay the utility company the outrageous prices we currently pay for electricity. But the utility companies have a problem with me producing my own power, because I'm not paying them. So, they work with governments and regulatory agencies in order to place barriers to me building such a unit (licensing requirements, restrictive ordinances, laws prohibiting unlicensed installations, etc), so I must continue to pay for electricity.

      It seems like every time a company or person comes up with a creative, feasible idea for a renewable energy source (a solar farm in the Mojave Desert, for example), they are summarily crushed by legislators, private groups and government entities who act in concert to ensure that the new idea is allowed to come to fruition.

      There's always a reason for denying the cleaner power source, while continuing to increase restrictions on the use of fossil fuels. In my example, the solar array was axed by environmental groups like the Sierra Club because the array was going to encroach on part of the territory of the fringe-toed lizard. The same environmental groups stopped the construction of a wind farm off the Massachusetts coast, seemingly at the behest of Senator Ted Kennedy.

      Meanwhile, governments continue to strangle fossil fuels production through absurd legislation and regulation (the US EPA comes to mind), even though the abundance of these fossil fuels (natural gas or shale, for example) can be used to produce electricity for millions of homes at a fraction of the cost and at a fraction of the pollution current electrical plants create. The people that profit from this? Politicians, environmental groups that receive government grants, and OPEC. Oh, and those groups who continue to push for "green" construction.

      Here's a good example of this hypocracy: for several years, there has been a big push for homes and businesses to use CFLs (compact flourescent lights).

      The concern with CFLs is that they contain mercury and lithium, both toxic substances to humans and animals alike. The US EPA has quietly produced a 11-page manual detailing how a HAZMAT team should deal with the toxic substances contained in a single CFL.

      However, the fact that CFLs contain these substances has been glossed over by the people that stand to profit from their sale. For instance, Al Gore owns a substantial amount of Philips stock. Yes, the lighting company.

      There is another means which we could provide adequate lighting at a fraction of the power consumption of CFLs by switching to LED (light emitting diode) lights versus CFLs, without the environmental impact that CFLs create. Oh, and LED lights are dimmable and do not require ballasts like CFLs (which cannot be dimmed, only turned on or off).

      But that would cut in to Mr. Gore's profits, so the technology has been stifled for years, similar to the "100 MPG carburetors" that were invented in the 1970's and stifled by the oil companies by any means necessary.

      To make a long story short, we can do plenty to ensure the balance between mankind and nature, without resorting to the drastic tactics currently being used to prop up the greedy few while the rest of us suffer the consequences.

    14. Freemom says:

      I love it! A RICCO action against Al Gore & his U.N. cronies for organized FRAUD! PERFECT!

    15. Bryan Vienna says:

      please look into the Goldman/ Fannie Mae/ Barack Obama/ Joyce Foundation/ Gore/ Climate Exchange relationship and in particular Franklin Raines' purchase of deceased trader of Cantor Fitzgerald patent on CO2 emission tool for trading carbon credits.

      Thank you for your help

    16. Best you could edit the webpage title Prepare for the Next Bubble…For a Made Up Commodity | The Foundry: Conservative Policy News. to more generic for your blog post you write. I loved the blog post even sononetheless.

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