Can Greed Be Green ?  

Posted by Big Gav

The IHT has an article on the money flowing through the European carbon market - "Carbon trading: Where greed is green" - with the trader interviewed claiming carbon will become the world's biggest commodity market. Call me a cynic if you must, but this sort of thing is yet another example of why carbon taxes are preferable to cap and trade schemes - if it does become the world's biggest market, you can be sure no one will want to kill the goose that lays the golden (if sooty) eggs by killing it - which is what the end game really should be. While I've got no problem with making money from reducing carbon emissions (or any other form of green business), it seems to me that if you don't want to "compromise on anything when you get out of bed in the morning", then you should be funneling money into cleantech investment, not arbitraging the carbon credit trade between the world's biggest polluters...

Seeking to match a desire to make money with his environmental instincts, Louis Redshaw, a former electricity trader, met with five top investment banks to propose trading carbon dioxide. Only one, Barclays Capital, was interested in his proposition.

Three years later, the situation has turned around entirely, and carbon experts like Redshaw, 34, are among the rising stars in the City of London financial district. Managing emissions is one of the fastest-growing segments in financial services, and companies are scrambling for talent. Their goal: a slice of a market now worth about $30 billion, but which could grow to $1 trillion within a decade.

"Carbon will be the world's biggest commodity market, and it could become the world's biggest market overall," said Redshaw, the head of environmental markets at Barclays Capital. But he said that in his current job, unlike some of his previous ones, including a stint as a British power trader at Enron, "I don't have to compromise on anything when I get out of bed in the morning."

If greed is suddenly good for the environment, then the seedbed for this vast new financial experiment is London. A report released Tuesday by International Financial Services London, a company promoting British-based financial services, said that British companies were the leading global investors in carbon projects and that more carbon was traded in London than in any other city. ...

To be sure, carbon traders and investors do not yet make the same staggering amounts of money as some of their counterparts in foreign exchange and corporate finance.

But remuneration is rising rapidly. A successful financier at Climate Change Capital, which manages a fund worth $1.25 billion to invest in credit-generating projects, might in a very good year take home as much as 10 times the basic salary, Woodall said.

"Do we pay the same as top investment banks? Not today, but maybe tomorrow," said Woodall, a former British Army officer who started his first company 15 years ago cleaning up waste and chemical spills.

The industry has run into criticism. One reason is that European governments handed out too many free allowances in preparing for the start of the program, rendering the system less effective than was hoped. The over-allocation fueled volatility, and some traders reaped fatter-than-expected profits.

Controversy has also dogged some of the projects promoted by the financiers to generate new credits.

But overall, prospects for the industry are good, especially if the United States joins Europe in establishing a trading system, said Imtiaz Ahmad, 34, senior carbon trader for Morgan Stanley in London. Ahmad has already lured a senior European Union environment official and a BP employee to join his three-member trading team, and he plans to hire more.

Human activities create about 38 billion tons of carbon dioxide each year, and governments regulate only a fraction of that amount. But if more governments decide to cut billions more tons of emissions, as leaders of industrialized nations discussed this month in Germany, and if the existing system in Europe is enlarged to cover transportation, there will be many more credits available - and a lot more finance and trading. ...

The IHT also has a environmental good news story from China (not a phrase you see too often) - "An ecological triumph in Hangzhou".
Until the early 1990s, crews on barges and boats chugging down the 2,400-year-old Grand Canal in China didn't need familiar landmarks to tell them they were approaching the scenic city of Hangzhou.

They could smell it.

"The water was black," said Zhu Jianbai, assistant director of the city government's Grand Canal Restoration and Development Group. "There was no life in it. If you lived beside it, you had to live with the stink."

Effluent from textile and petrochemical factories lining the canal, combined with raw sewage from the surrounding suburbs, had poisoned this section of the world's oldest man-made waterway.

At the time, Hangzhou was in the midst of a gathering economic boom that has since transformed this traditional tourist center into one of China's richest centers. But, this new wealth and a growing sense of civic pride did not sit easily with the foul stretch of canal winding through the city.

It was an embarrassment," Zhu said.

That shame and a growing realization that the canal could contribute to economic development were the catalyst for a makeover that has seen more than $250 million spent since 2001 on improving water quality and urban renewal along a section of its banks stretching for 39 kilometers, or 24 miles.

There is no deadline for finishing the cleanup and restoration work, but Zhu estimates that the final cost will reach about $2.5 billion.

Walkways and parkland now line sections of the canal, and some of China's most expensive apartment buildings have sprung up in what has become prime real estate. Water taxis connect historic piers and bridges along the winding route through the city where old shop houses and tenements are now being restored.

The canal does not smell, and small fish swim between the pylons supporting cargo wharves.

For a growing number of activists campaigning for the preservation of the 1,794-kilometer canal and its many cultural and historical sites, this success is an important step in reversing almost two centuries of neglect, during which long sections of the waterway that links Hangzhou with the capital, Beijing, were abandoned or fell into disrepair. ...



I'm a bit short of time, so I'll just include the links for the rest of tonight's post:

Reuters - Iraqi union leader urges opposition to oil law. Still haven't handed over the oil.
Technology Review - Biofuels: Beyond Corn
Grist - Sweden Leads The Race To Energy Independence. "Uh-oh, out of money -- time to think!"
The Guardian - China overtakes US as world's biggest CO2 emitter. Dumb and dumber.
Grist - Desalination won't solve world's water woes, report says
Grist - Rolling Stone on the climate crisis
ENN - Search for Water Gets Harder in U.S. Southwest
AllAfrica.com - Burundi: shrinking lakes and denuded forests
IT Week Business Green Blog - How "climate change" beat "global warming". Nice rug.
Jeff Vail (The Oil Drum) - Nigeria: A Closer Look at "Above Ground Factors". Strikes and "global guerillas" cripple production.
New York Times - Crunch Time on Energy
Richard Stuebi (Cleantech Blog) - The Real Price of Gasoline. Would be far, far higher if all the hidden subsidies didn't exist.
PR Watch - BP Loses Australian Bid to Trademark Green. Court says you can't trademark a colour - what sort of monster would even try, you might ask. Well - 20 other countries have fallen for it apparently, so this tactic is clearly working.
Reuters - Missing: Large lake in southern Chile. Reminds me of those Russian lakes that went missing a year or two ago. Maybe they are with my missing socks.
RU Sirius - Show #111: Who Knows What Evil Lurks in the Heart of Man?. Is Newt Gingrich the prototype of an American Fascist ?
RU Sirius - Show #110: Not the Prime Time Josh Wolf Interview. Where is the dividing line between journalists and bloggers ? And whatever happened to civic engagement ?
Iraq Vets Against The War - Soldier in Iraq Refuses Combat Mission - "Yesterday, June 19, 26 year old SPC Eli Israel put himself at great personal risk by making the courageous decision to refuse further participation in the U.S. occupation of Iraq. Eli told his commanding officer and sergeants that he will no longer be a combatant in this illegal, unjustified war. Eli believes that the U.S. government used the attacks of September 11, 2001 as a pretense to invade Iraq and that “we are now violating the people of this country (Iraq) in ways that we would never accept on our own soil.” Eli is stationed at Camp Victory in Baghdad with JVB Bravo Company, 1-149 Infantry of the Kentucky Army National Guard. This soldier’s decision to refuse orders puts him at great risk..."
Anthropik - Nine Nations: Bioregionalism in North America
AlterNet - 9/11 Families Stick It to Giuliani. Worse than Bush ?
Ron Paul - Abolish The Federal Reserve. Is the Fed really privately owned, or is this just a myth ? Down here our Reserve Bank is owned by the Government (and thus any windfall profits it makes contribute to government coffers, which hopefully keeps our taxes from being even higher).
Wise Camel - 10 Sales and Marketing Tips I learned from Strippers. Totally off topic but an interesting way to explain basic sales and marketing techniques.
The Infamous Brad - Not That the Actual Forbidden Knowledge is as Interesting as That There Is Forbidden Knowledge. Even more off topic, but I couldn't resist the forbidden fruit.

2 comments

Anonymous   says 1:30 PM

The "end-game" of a carbon cap-and-trade scheme is CO2-free industry. But once you've achieved that, you still need some system in place to ensure that industries don't seek to gain economic advantage by returning to cheaper, CO-2 emitting practices.
The point of the scheme is to profit those that can determine how best to reduce CO2 emissions - carbon itself isn't being turned into a tradable commodity. There are benefits in both carbon taxes and cap-and-trade schemes, and in the end we're likely to end up with some sort of mixture of both.

I understand how cap and trade schemes are intended to work.

I'm just cynical that if carbon becomes the single largest "commodity market" (in the words of the article) in the world, there will be a lot of market players (not just the carbon emitters) who now have an interest in keeping the market alive - thus adding another impediment to becoming carbon free.

Hopefully my cynicism is misplaced in this case...

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