Will carbon credit trading be the next financial melt down?
Will this need another trillion dolar bail-out, with the usaual suspects cashing in?
Will power utiities decide not to purchase carbon credits and just shut down to leverage higher energy prices?
http://www.pwc.com/ru/en/climate-change-emissions-trading/index.jhtml
http://www.wisconsinagconnection.com/story-state.php?Id=922&yr=2009
http://www.forbes.com/feeds/ap/2009/07/29/ap6716991.html
Will this be gamed by the bankers?
The new credit card law, for example, was circumvented by banks raising interests across the board in response to it.
The usual suspects are the profiteers of every issue. The ones that get into every issue to milk money out of it.
They won’t shut down power plants, really?
During the Enron melt down, and the electrical power crisis, when electricity was 1000 times above prodcution costs, power plant operators were shutting down for unneaded maintenance.
During the recent energy crisis, when oil and gasoline were at record high, once again, a lot of capcity if line for maintenance.
We do not have enough power plants for near futures demand. Don’t count on any investment on any new generating capacity.
Will you be sitting in the dark, while I am enjoying my 30kw of solar panels?
That’s the idea - the idea is that the tax will be a disincentive. The idea is that because of what amounts to an energy tax, there will be less energy produced / consumed.
That’s the idea - the idea is that the tax will be a disincentive. The idea is that because of what amounts to an energy tax, there will be less energy produced / consumed.
References :
1 - the US is at present NOT participating to carbon trading or only at a negligible scale.
2 - the need to amortize the initial investment keeps the powergenerator producing. When you invest billions, you need to produce and to produce you need to cash in by selling power. Not producing 1 MWh yields $20 in sellable carbon credits but would make you lose $40 on missed amortization of the initial investment. As a result:
The incentive you are talking about does NOT exist
3 - Prices of carbon assets decreased first as it is an easily sellable commodity for companies in financial turmoil: the market has showed to be robust, even more robust than many shares of large corporations.
4 - Companies are purchasing other companies in financial troubles. No need to bailout, the market is rationalizing itself and is not asking for any bailout (unlike many other sectors).
5 - I do not know which the "usual suspects" you mean are. The only people who really cashed in over the last years are utilities due to a lack of unbundling between power producers and grid operators.
6 - European power grids unlike US ones are dense due to the high population density. Shutting down would be compensated by competitors producing more as there is enough reserve capacity.
References :
Your link is on a US state. US markets are "under-regulated" and lack any clarity. The price of 60ct reflects that you get "nothing for nothing". Chances are that such credits would never ever be accepted by the UNFCCC.
There is an overwhelming likelihood that these are bogus offsets and will have no value when a US real cap and trade is implemented.
EDIT 1:Enron example: California was a perfect example of missmanaged market liberalization. It has only 3 operators and the state is poorly connected to the rest of the US. With stronger connection lines and a US-wide market, the same situation would not happen again.
EDIT2: Thanks to energy efficiency, California consumes less than 60% the electricity needed per capita in other states… This means that the potential for energy efficiency is so huge that there is no need for any single new large plant. Most developed countries achieve the same economic performance as the US with half the electricity consumption.
Probably not. It is government controlled. The current meltdown occurred because of these complicated derivatives the bankers made to get around the free market. The government had not part in this to the point they closed their eyes and let the bankers run wild. The major problem was a lack of government regulation which allowed the banks to move far away from free market principles.
References :