The Catskill Chronicle

By Mort Malkin

Only those simians with their eyes blindfolded and their ears muffed refuse to acknowledge that: glaciers are disappearing (or have already given up), the North Pole is covered by deep water during summertime, and the permafrost in Sarah Palin’s home state of Alaska no longer supports the oil pipelines from the North Slope during late July and August. If more evidence of global heating were needed, we could note that chunks of the Antarctic ice shelves the size of Rhode Island have broken off and are floating freely in the southern seas, and satellites with special sensors have determined that the thickness of the Greenland ice sheet has dwindled to a small fraction of its former self over the last fifty years. More basic, the atmospheric concentration of carbon dioxide is already at 387 ppm, the highest level in two million years. Climate chaos from the US west to Australia to Bangladesh to Great Britain and many places in between is now recent enough to remember. Only Senator James Inhofe would monkey around with the Goldilocks climate of the Earth by burning more coal to make electricity to sustain the American way of life. It is rumored that he has a small stove in his office to burn coal just for practice.

So, all the nations of the world got together in Kyoto in 1997 and pledged to cut emissions of green house gases, a little. In 2001 George H Bush effectively unsigned the Kyoto Treaty by refusing to submit it to the Senate. In 2009, Barack Obama, who had promised real change, made nice speeches but never said the word Kyoto. In Copenhagen, the next big O-My-God conference, the US pledged to cut emissions by 17% below 2005 concentrations, which comes out to 4% below 1990 levels, Kyoto’s base year. Smoke and mirrors? The climatologists, oceanographers, and geologists tell us we’ll need to cut carbon dioxide, methane, and nitrogen oxides by 80% (not a typo — 80%) before 2020 or we’ll be beyond the point of no return. Some scientists say we may already be at that “tipping” point when further global heating causes the release of more greenhouse gases from the permafrost and oceans which, [in turn] increases global heating … The chain reaction beyond that point will be beyond our control.

What to do? Will we close coal fired power plants? Will we require government fleets of cars to be all electric or at least plug-in hybrids? Will we put money into mass transit instead of highways? Will we switch rapidly to wind and tide and solar sources of energy? No, we will install a cap and trade scheme with offsets and allowances. The Kerry-Lieberman-Graham bill is a gathering storm in the Senate, but perfect it is not. The White House has expressed approval — the bill could hardly be more bipartisan. Obama is itching to sign it, and Wall Street is already salivating.

The polluting industries — coal fired power plants, steel, cement, chemicals, beef and pork — would be given a number of credits (or allowances) to pollute. They would also be given limits, a cap, on emissions. The members of each industry could buy offsets called certified emissions reductions. Buy permission to continue polluting?? Sure, just find a landfill gas recovery project near a big city or string up a series of windmills along a ridge in the north or start a plantation of eucalyptus trees in the south — anything anywhere in the world to lessen the greenhouse gas content of the Earth’s atmosphere. The UN would certify the project and assign a certain number of offset credits which the polluting corporation in the industrialized world would purchase to remain under the cap … on the books.

A whole industry has already grown up in advance of a US cap and trade scheme that President Obama is itching to sign and over which Wall Street is salivating. Led by the developed countries (the biggest polluters), the UN will authorize CDMs (clean development mechanisms), DOEs (designated operational entities), and CERs (certified emission reductions). A great commodities market in carbon credits (CERs to sound more official) is in the offing.

Knowing Wall Street and the advisors around President Obama (Advisor Summers and Secretary Geithner), carbon dioxide reduction promises will become the next bubble. Terms such as:  carbon markets, energy trading, project developers, carbon accountants and validators … are already in the “investment” lexicon. Carbon reduction promises will be better than pork bellies on the commodities market. Wall Street, unrepentant over the subprime mortgage market collapse, has been looking around for a new shell game. Better, the carbon credit market is infinite, given the amount of pollution we can generate at will.

The UN, with a staff of only 100 to check the many thousands of carbon reduction projects, is no match for Wall Street scheming. The big investment banks — Citi, Goldman Sachs, Bank of America, JP Morgan-Chase, and their ilk — already have carbon desks in London working the European Cap and Trade markets that were set up in Kyoto. When the US passes a cap and trade bill the market will surely fulfill its potential of a couple of trillion dollars. Fat Finance will be ready.

Then, with the Wall Streetery of derivatives, securitized bundling, and credit default swaps, wealth can be created without limit — infinity redefined. Relativity and Quantum Mechanics will finally be reconciled and we will have the Wealth Theory of Everything.  Or, we could just close all coal fired power plants, use less energy for couple of years, and put some substantial money into clean, renewable energy sources such as wind, sun, and tides. Let’s call our elected public servants in Congress and preempt Cap and Trade.