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Barbarians at the Turbine

Barbarians at the Turbine

In a recent column in Rolling Stone, Matt Taibbi described cap and trade as “a groundbreaking new commodities bubble, disguised as an environmental plan” and further asserts that it will “allow a small tribe of greedy-as-hell Wall Street swine to turn yet another commodities market into a private tax collection scheme.” A pretty scary critique.

Now I should start with the caveat that Taibbi is a somewhat opinionated and controversial figure, prone to hyperbole. He once described Thomas Friedman (NY Times writer and author of “The World is Hot, Flat and Crowded”) as someone who “flies around the world, eats pricey lunches with other rich people and draws conclusions about the future of humanity by looking out his hotel window and counting the Applebee’s signs.” He called Goldman Sachs “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money” and he also penned an infamous piece called “The 52 Funniest Things About The Upcoming Death of The Pope.”

But for me, the Enron-induced market manipulation of the energy markets that nearly bankrupted California still stings, as does the more recent mortgage backed securities fiasco that may end up bankrupting our country (thanks to the TARP, housing bubble, and stimulus packages that it has spawned). While carbon prices should drive us to demand greater energy efficiency and use less energy, the real underlying purposes of carbon credits are to fund ecosystem services (such as vibrant forests) and to finance the cost of permanent changes to the world’s energy production and consumption infrastructure. A poorly designed cap and trade scheme could lead to market manipulation and speculation that transfers most of the money to sophisticated financial firms and market intermediaries, rather than groups that actually do the projects. A carbon price “spike” could easily lead to $10 of paper profits for every $1 that actually funds firms making a difference.

We set up ClimatePath so that money goes to a nonprofit that permanently retires the credits…no resale or speculation. Many of our mission based project partners also insist that credit transaction lead to retirement, not resale. We avoid treating carbon as a commodity, by linking money spent to the underlying project work. These aren’t the only answers, and I do believe that market making firms are needed to make cap and trade work. But it is important that the final cap and trade bill contains strong provisions and penalties to prevent a speculative bubble. The language is there now, but as Mother Jones reports “regulation of carbon markets will probably be swept up in broader financial reforms that are the subject of intense lobbying and political pressure. It’s too soon to take for granted that cap and trade will contain rules that go far enough to prevent speculation and fraud.”

If you write rules for Wall Street, they follow them. If you leave loopholes, they exploit them. In the end, if your utility ends up paying $50 a ton while they transition away from coal, while the renewables supplier, forest preservation project, or conservation project receives only $10, then we have legislated the massive wealth transfer that Taibbi fears. Tell your congressman not to let it happen.

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Photo copyright artemuestra at flickr.com.

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17 comments

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7:25PM PST on Feb 11, 2013

Thank you for article, interesting comments.

7:25PM PST on Feb 11, 2013

Thank you for article, interesting comments.

7:24PM PST on Feb 11, 2013

Thank you for article, interesting comments.

9:47AM PDT on Aug 9, 2009

Since various readers can't seem to get past the analogies, here's a part of a summary I lifted Mr.Taibbi that may get your attention.

"Goldman has its alumni pushing its views from the pulpit of the U.S. Treasury, the NYSE, the World Bank, and numerous other important posts; it also has former players fronting major TV shows. They have the ear of the president if they want it."

"The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet." (Cap & Trade).

If we, the people, do not get vocal to stop the fraud, it will happen again.

11:30PM PDT on Aug 8, 2009

Cap-and-trade is simply another rhetorical, well-funded hoax disguised as an incentive.

8:37PM PDT on Aug 8, 2009

Ladies and Gentlemen, In truth, cap and trade, is just another scheme that was created by the energy interest and their servants in Washington, to take money from the people and give it to rich multi-national cooperations (just look at the bank and auto manufactures bailout), while not solving anything. In spite of all the tax dollars they stand to receive, the energy interest still want to put up coal burning plants in my home state, they still want to drill for oil in ANWAR & the shallow continental shelf, and the power companies still want to raise rates. Just like health care, fixing the problem won't be accomplished by throwing money at it and listening to some politician say "well we did our best, now let's wait and see". Solving the problem will occur when the problem is addressed with solutions that reduce and finally stop putting pollutants into the air, water and soil. Until we start doing that, were only losing money.

11:46AM PDT on Aug 8, 2009

Tom Blees in his book Prescription for the Planet says "This concept is so unutterably bogus that we should toss it on the slagheap right off the bat. In essence it is a deadly international shell game..."

10:56AM PDT on Aug 7, 2009

Panic and fear push people to make emotionally-based decisions, and people take sides in debates that are irrational to begin with. When I see any news reporter begin by calling on the spectre of the devil, anti-christ, the beast etc., I start off more skeptical than not and may in fact skip reading the article entirely. The issues at stake are not of religious ideology but about finding a way to strike a balance that allows us to prosper without loss of that which brings us good health and joy.
Yes, many a wealthy and powerful person or entity has its own "bottom line" and ever-clawing at them through the ages are those below them in the pecking order. Those clawing for a higher place in the "name of justice" or freedom" or "equality" but under any name it all boils down to the same thing. A desire for More than what you have.
Only the higher, civilized part of humans can choose to stop fighting and start seeing each other's sides.
Emotionalism caused lightbulbs to be replaced by CF at an amazing speed, without first letting the public know that this also created an environmental hazard: mercury to clean (and possibly inhale!) every time a bulb shatters. Rushing into ANYTHING will cause further imbalances.
The poor have often despised and feared the wealthy and vice versa, yet one cannot become rich without self and/or someone else laboring, and the labor would not exist without someone to supply and buy the work. Not all the rich are pigs, not all the poor are lazy.

10:29AM PDT on Aug 7, 2009

You gotta be joking!
When will you all wake up?
Have you got no brains? When will you realise these guys are just out to babble you with their lower lip and pocket your money.
We been trying to tell you for the longest time, these parasites want to add money from your pockets to support not a program that you can't be sure if it will actually help or maybe slow down the problem. And ask yourself will these or any part of the money your contributing actually end up there without lining someones pockets? Get off your bovine retentive structure and realise there is a better way..

Dummies all of you.
Get with it and help research the only one of it's kind. CMA energy, the only website that tells you about the deception all the leaders in government and industry are missing! BRAINS!
So WAKE UP and learn how to help. If not tell your friends to help! www.ClimateChangeMagneticEnergy.com
Will you be the looser?

10:17AM PDT on Aug 7, 2009

It's all about accountability really. One of Obama's campain promises was the make government agencies more accountable for what they do. A point he should be reminded of often. We cant make good choices or ask for the right things if we do not know what is going on. I ask my self often when I think of one program or another, where did the money go?

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