Big Carbon

Hot gas.

So, how’s that carbon-trading thing going?  Big Carbon set up shop in the European Union in 2005, and is scheduled to make its North American-franchise debut in California in January.  How goes the trade?


The answer in Europe is: not well.  Carbon trading is a zombie in Europe.  It’s going to start eating flesh pretty soon.  It’s on a rampage stirring up the airline industry overseas right now (on which more later), but its “life” inside the Union is creepy and inverted.

Since the inauguration of the EU’s Emissions Trading Scheme (ETS), 97 percent of emissions certificates – “permits” to emit carbon dioxide – have been given away to commercial users.  The certificates actually being sold were going for over 14 euros each in 2010, but their price has fallen by 60% in the last year.  The stock exchange in Bavaria closed its ETS trading operation on 30 June, due in part to its pointlessness.

What this means, just to be clear, is that there isn’t enough demand for any of the things you have to buy carbon permits for to justify buying them.  If you can get them for free, great.  But if you have to pay for them, you can’t earn enough to make that worthwhile.

Starting in 2013, however, European power generating companies will have to buy all their permits.  Consumer rates and prices in general will therefore go up.  Germany, with the continent’s biggest economy, is also reportedly planning to cut the number of permit freebies by 56 percent next year, which will force more businesses to pay for their permits.

To be clear, one more time:  From 2005 to 2012, the EU economies have not had to absorb the full cost of carbon trading.  Three percent out of 100 is not representative of the actual scope of the cost.  The EU hasn’t truly implemented ETS, so the record to date is not an indicator of what will happen when ETS is being paid for by everyone.  (That said, the estimated cost to the European consumer so far was about 210 billion euros as of mid-2011 – for zero reduction in carbon emissions.)

We have learned what a boon ETS can be for fraudsters.  Ingenious criminals have been buying up permits and charging a VAT when they sell them in another country, but pocketing the VAT revenue instead of handing it over the authorities.  The fraud has amounted to billions of euros.

There have been other forms of criminal activity.  ICE Futures, Europe’s biggest trading exchange for carbon permits, suspended prompt trading in permits in early 2011 due to the high incidence of fraud.  Prompt trading remains suspended, and apparently no one but the crooks has missed it.

At least one industry slated to be hit with new carbon costs is the airline industry – and non-European airlines aren’t taking it lying downChina and India have already made policies that prohibit their airlines from paying the EU-imposed carbon-permit cost.  Russia opposes the carbon fee as well, and the US is leading a consortium of nations pressuring the EU not to go ahead with the plan.  The House has approved a law prohibiting US airlines from complying with the EU requirement, and the Senate is to vote on the matter soon.  (Don’t take too much heart from this: the US-led group wants to proceed with a global, UN-sponsored plan, rather than the regional EU plan.  It’s a dodge in terms of the current EU issue, but it keeps the door open to a globalized carbon-tax scheme that would gouge Americans the hardest.)

Airlines are warning the EU that the airline carbon tax will drive away business and stifle economic growth, but of course, the airlines are just hateful, racist, capitalist fat-cats who only care about killing old ladies and puppies with evil profits.  (Interestingly, the ETS giveaways have set up a number of European companies with big stockpiles of carbon credits, which they can theoretically sell someday for a profit, if anyone wants to buy them.  As described at the JoNova link in the third paragraph, enterprising Irish power producers have already passed on their future carbon-credit costs to their consumers.  They’ve been getting the giveaways that will end in 2013.  The Irish parliament, appalled at this, added a profits tax to keep the power producers in their place.  Naturally, the option of simply not doing any of this doesn’t occur to anyone.)

The UN’s Clean Development Mechanism (CDM) is tied closely to the EU ETS, getting much of its cash from ETS sales to the disadvantaged carbon emitters: the three percenters who haven’t been getting freebies up to now.  The problem with the nascent “global market” in carbon offsets is that it, like the EU market, is vastly oversupplied.  The CDM works as follows:

[G]overnments and companies in developed countries can earn emissions offsets (CERs) by investing in low-carbon projects in developing countries. They can use the credits to achieve their Kyoto targets.

We may note that the way CDM works doesn’t reduce the carbon emitted into the atmosphere, it just induces investment money into low-carbon projects in developing countries.  Investing in this manner is counted as a reduction in carbon emissions, even though that’s not what it is.  This is basically a whole bunch of snake oil.

But interest in it has flagged dramatically anyway.  Emissions offsets, called CERs under the CDM scheme, have lost 70% of their value in the last year.

US carbon trading

Carbon trading has plummeted into an abyss of disinterest, even the Chicago Carbon Exchange having gone belly-up in 2010.  (It’s now being sued for fraud, since its investors were attracted with promises of futures, and now there aren’t any.)

The Northeast’s Regional Greenhouse Gas Initiative (RGGI) has also seen plunging demand for carbon permitsNew Jersey pulled out of RGGI in 2011, and New Hampshire is considering it as well.  The New Hampshire legislature passed a new law last week requiring the state executive to get approval from the legislature for participation in any more carbon schemes.  The big complaints?  RGGI has driven up utility rates for consumers and isn’t making much money for the state treasuries.  (This site has a good history of the sluggish sales at RGGI’s auctions.)

You have to be really, really stinking-drunk rich to play pretend with carbon trading, and fewer and fewer nations (or states) can afford it with each passing month.

California’s big adventure

So what’s the overextended, under-revenued state of California planning to do?  That’s right:  open its carbon-credit market for business in 2013.  Oh, and Quebec is joining in California’s suicidal plunge.  The eight other US Western states originally signed up for the Western Climate Initiative (the state-chartered operator of the carbon-credit exchange, which incidentally is incorporated in Delaware, not California) have dropped out, but Quebec – on the other side of the continent – is hanging tough.

Governor Jerry Brown and his carbon bean-counters have already baked $1 billion in carbon-credit revenue into his 2012-13 budget proposal.  That’s an optimistic projection, to be sure, but a characteristic one.   In the Unhatched Chickens Sweepstakes, the state also assumed $1.9 billion in revenue from the Facebook IPO (I’m not kidding) for the same budget proposal.  And those two highly risky assumptions still leave California with a $16 billion current deficit on paper.

Now it’s time to guess which state-chartered agency has been exempted, with a legislative sneak-by in 2012, from California’s “open-meetings” law, which stretches back to 1967 and explicitly includes state-chartered semi-private organizations.  Yes, it’s the Western Climate Initiative.  This agency that’s going to implement policy on effectively taxing carbon emissions gets to meet in secret, without public scrutiny, to make its decisions.

Keep in mind, carbon-trading is an entirely artificial activity, created out of no concrete need, but from an abstract and unproven theory about catastrophic warming.  Sadly, each one of the points made publicly in furtherance of the theory has been proven to not be based on observable fact:  there are four to five times as many polar bears now as there were 40 years ago; the globe has not warmed at all in the last 20 years, but has cooled slightly; the Antarctic ice pack is bigger than it was 30 years ago, even though the Arctic ice pack has receded (but is regaining thickness again in the last 3 years, a prelude to horizontal expansion); the globe was demonstrably – based on actual temperature observations – warmer from the 1920s to the 1940s than it has been for the last 20 years, yet human carbon emissions were dramatically lower in the earlier period; the famous “hockey-stick” graph was based on falsification of data, and the globe was in fact warmer in the Medieval Warm Period than it has been at any time since; and in any case, the UN’s own scientists have said that we don’t even have a method of observing or analyzing the “feedback” mechanism that is believed to create a warming danger for the earth, much less predicting its effects in the future.

The case for catastrophic anthropogenic global warming and/or climate change has fallen apart on examination so far.  Therefore, the whole carbon-trading scheme is based on a false premise.  It is an excellent moral lesson that nothing can go right with a policy that is based on falsifying and misrepresenting data.  From criminal fraud to tremendous loss of value, this is what you get when you impose artificial requirements that meet no valid real-world need on the people.  Nothing good can ever come of it – and this has been, so far, only a very small dose.  Any bigger ones will be much worse.


The carbon offset certificate reflects a donation of 27,000 tons of emission credits to the Democratic National Convention in 2004 by Boston Carbon.  The credits donated by Boston Carbon to the DNC were created through the capture of fugitive methane gas from Jim Walter Resources, Inc., a coal mining company in Alabama.  Boston Carbon kindly donated to the Republicans as well.


J.E. Dyer’s articles have appeared at Hot Air’s Green Room, Commentary’s “contentions,Patheos, and The Weekly Standard online.

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11 thoughts on “Big Carbon”

  1. There’s no end to the folly in which men may engage. The silver lining is that Europe’s coming economic suicide will provide ample evidence of their latest folly. The ‘dark clouds’ of course is an increasingly economically interdependent world and the certainty that the left; it’s propaganda outlet the MSM and, their ‘useful idiots’ the supportive bleeding heart liberals, shall adamantly refuse to learn from history’s lessons. Ideology, for the fanatic and the cognitively insecure, always trumps reason and common sense.

  2. So-o-o, to summarize:

    “3%… [=] … about €210 billion as of mid-2011 – for zero reduction in carbon emissions…”

    Then to extrapolate: €210 billion x 30 ≃ roughly €6.3 TRILLION estimated cost to European consumers over the same period if the gov’t-backed Ponzi-scheme program were fully implemented…

    Nevermind what they’ve got in those “medical marijuana” shops in Berkley… whoever these guys are using for economists obviously get the very best stuff in all the world…

    “Cogito, ergo TEA Party.” ~ DeepWheat

  3. Yet another load of Opticon horsepoop.

    You can fly mile-for mile with Europe’s premier low-cost carrier, Ryanair ( point to point in Europe for less per mile than you can in the US with any US airline (and that includes Southwest). The big problem for European airlines is not the bagatelle of some carbon-tax but the continuing refusal of the US to impliment reciprocal open-access because of the lobbying power in Congress of the big high-cost US carriers.

    Far from being obliterated by a carbon tax, aviation fuel in Europe is zero-tax rated. In the meantime, Europe has a multitude of low-cost airlines competing in a far more deregulated operating environment than we have in the US.

    1. Massive government subsidization explains the lower cost. High taxes provide the government revenue. High taxes in a socialistic economy only work when you have a society with a very dedicated work ethic (Germany) and/or high value resources, such as oil revenue (Norway).

      Once those exceptions tied their fortunes to the European union, the very gradual slide into economic oblivion began. The European socialistic societies are out of ‘other peoples money’ and are almost out of credit. Once the PIGS and France, etc. drag down the rest, your Ryanair airlines ‘governmental sugar daddy’ will cut off access to the public trough. Enjoy the denial while you can because in the end reality always rules.

      Your attempt to blame the US for Europe’s coming economic debacle is pathetic.

  4. Now that you have lurched away from personal abuse to your other staple: – sheer nonsense – you should know that not a single one of the many European low cost carriers is subsidized by anyone. Ryanair, the biggest, is hugely profitable. All the old national flag-carriers have been privatized, or are in the process of being privatized. Most are now returning profits for their shareholders. For more than 5 years the subsidization of airlines by governments has been prohibited by the EU air-transport regulators. But they forgot to tell you that in the Washington Times and the other rubbish you swallow hook line and sinker.

    By restricting your diet to the far-right media you are only fattening your own hatred and prejudices. Enjoy your hate. It seems to be the only thing that gives meaning to your existence.

    1. More of your usual projecting; restricting yourself to MSM propaganda leads you to regurgitating the half-truths they spout in support of your/their agenda; “For more than 5 years the subsidization of airlines by governments has been prohibited by the EU air-transport regulators.”

      Ryanair flies high on subsidies
      20 May 2010 The Irish Times Dublin

      “Ryanair enjoys huge subsidies at many of Europe’s 200 or more regional airports. A number of competitors, Lufthansa and Air France among them, suggest that these subsidies low-cost Irish airline receive are not only questionable, but that it couldn’t survive without them.”

      Hoisted upon your own petard…

      1. Incorrect: (yet again)

        Being ignorant of the context of this “Irish Times” story you have got it completely wrong (as usual). Lufthansa and Air France (like all the premium high-cost carriers with expensive unionized staff) are hurting because European air-travellers are migrating to low-cost non-unionized carriers – Ryanair, in particular. And they (and the labor unions) don’t like the competition one bit. Ryanair (Much like Southwest) avoids the flagship airports with their high landing-charges. Ryanair tends to fly to smaller peripheral and regional airports and uses its bargaining power to win minimal landing-charges and other concessions from these smaller airports (For instance: Venice Treviso rather than Venice Marco Polo). In return, these airports get a large number of travellers using their shops and the other services Ryanair doesn’t have to pay for. Without Ryanair, many would go out of business. The big premium airports which have to carry the capital costs of premium infrastructure and unionized staff can’t offer the same low landing charges to Lufthansa etc. The big flag-carriers, have now gone whingeing to the EU competition-authorities complaining that some of the small airports Ryanair tends to use are owned by municipalities whose interest in their local airports is not, principally, making a profit from air-traffic operations but in providing a gateway for attracting tourists to their region (and money for local businesses). They are trying to argue that this constitutes an unfair “hidden subsidy” for Ryanair provided by the municipalities concerned. Rather a different suituation from what you assumed in your (usual) gormless way.

        The Irish have a word for people who triumphantly shoot themselves in both feet. It’s a word which would be familiar to readers of that excellent liberal newspaper, the “Irish Times”. That word is an “eejit”. Look it up in the internet. You won’t even require background or context to make the connection.

        Glad to have been of service, yet again.


        1. p.s. If there is anything less reliable as a source of information than the mainstream far-right media it is the PR put out by big corporations like Lufthansa and Air France and the labor unions that represent their staff. they loath the low-cost carriers – Ryanair in particular. The latter, run by the larger-than-life Michael O’Leary, is a free-enterprise hero that has waged unrelenting war against the regulations and restrictions which protected the likes of Lufthansa and Air France from competition. O’Leary has never received a cent in subsidies from anyone and has now one of the biggest airlines in the world (And, to gladden US hearts, the Ryanair fleet is equipped exclusively with Boeing 737s. He used the same bargaining power with Boeing as he uses to get low landing charges to get a deal from Boeing that the latter was subsequently unable to offer any other carrier. More “unfair hidden subsidies”, I suppose.

          1. pps Have you ever thought of working for a Romney PAC. You extracted this resume of a Lufthansa press-statement from an Irish Times article which DID in fact provide background (and the very different) context which you omitted. Now, my mum always told me that pulling stunts like that is dishonest.

            BTW, Your Lufthansa and Air France high-cost heros are trying to persuade the EU to introduce a tax or levy on the difference between what Ryanair pays in landing charges at small regional airports, and what they pay at places like Heathrow, Da Vinci, Frankfurt, and CDG. Thankfully, they haven’t managed to persuade anyone to buy their transparently motivated case.

  5. I’m the treasurer of the International Oxygen Consumption Regulatory Commission. As you probably know, everyone uses a lot of oxygen, many gallons per year of this valuable commodity are turned into noxious carbon dioxide by human activity. In addition to a base level of oxygen consumption for normal human behavior, there will be an additional charge, and further permits required, for things that generate increased consumption like jogging, romantic behavior, water skiing, and scary movies. Please send your application for an oxygen consumption permit, with as much money as you have, to me. in care of the West Bank of the Mississippi.

  6. I forgot. I’m also the new head of the Galactic Sunlight Depletion Remediation Council. You’re all using sunlight that can never be replaced, once those photons land on earth, they’re absorbed by substances, including you and your probably unfashionable and tacky clothes. Send the money for your personal sunlight use permit to the same place. We’ll use it to study the sun, maybe at Isla Mujeres or Majorca. Don’t send checks. Money orders are better.

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