‘People don’t trade carbon because they are good people,’ exclaims Patrick Birley, the chief executive of the ICE European Climate Exchange

The entire system is based on fraud:

Global Warming Scam Exposed:

Prof. Ian Clark: ‘Rises in C02 lag 800 years behind temperature rises. So temperature is leading CO2 by 800 years!’

So the Al-Gore link is the wrong way round and CO2 can’t be responsible for rises in temperature and global warming.

Study: CO2 levels remained constant since 1850! (University of Bristol)

It is all about the money!


European Climate Exchange chief Patrick Birley defends the carbon trading system

The coal-fired Fiddlers Ferry power station in Warrington emits vapour into the night sky
The coal-fired Fiddlers Ferry power station in Warrington emits vapour into the night sky Photo: Christopher Furlong/Getty Images

“Why should it be different as a commodity to the way people trade oil or gas?”

As the man in charge of the world’s biggest exchange for companies, banks and hedge funds to trade permits to emit carbon dioxide, Birley is fed up with the environmentalists’ charge that dirty capitalists should not profit from the global effort to tackle climate change.

Ahead of the Copenhagen summit next week, campaigners such as Friends of the Earth have argued that the entire system is so flawed it may need to be demolished in favour of a straightforward tax on polluters.

Firstly, they insist, the European system has failed in its fundamental aim to reduce emissions, meaning its only effect is to redistribute wealth among companies and traders. Secondly, the market is a magnet for derivatives that few people understand, brewing up a second sub-prime bubble. Lastly, the opportunities for fraud are vast, given the intangible nature of the product. .

These well-worn concerns are resurfacing as the whole concept of carbon trading stands at a crossroads. This totally invented $126bn (£76bn) market has the potential to flare into a $2 trillion green giant over the next decade, if US President Obama manages to push his carbon trading bill through the Senate early next year.

The Commodities and Futures Trading Commission even believes that within five years, carbon could surpass crude oil as the world’s most traded commodity. Mr Birley is the first to admit that the European system “hasn’t actually reduced emissions” so far. But having run exchanges throughout his career, he has faith in the ability of the market to deliver in its own good time.

“The goal of the system is reducing emissions: why should it matter how we get there?” he asks.

With weariness, he debunks the idea that policymakers can control who makes money from reducing emissions. The point of a market mechanism is that the market decides.

“Carbon-related products are probably the most profitable part of trading for any of the investment banks right now, because the margins are so good,” Mr Birley admits. “Because it’s such a specialist area, a little bit of knowledge goes a very long way.”

Part of what makes the profits potentially so high are the price swings. Currently carbon is 20pc more volatile than oil, meaning utilities need the banks to help shoulder some of the risk associated with trading and provide liquidity.

But for many – maybe illogically – it still sticks in the throat to know that the vast proprietary trading desk of Citigroup or Vincent Tchenguiz, the property and carbon offset investor, are likely to end up with sizeable financial proceeds from a system that will have added to household bills by the end of the decade.

Underpinning resurging concerns about carbon trading is the world’s crisis of faith in capitalism itself. Markets have proved to be more capricious and uncontrollable than anyone imagined possible in the last year. Where does that leave the theory behind an artificial trading system set up to pursue a single, ethical goal? The economic concept is simple, but the practice itself has been fraught with complications. In Europe, since 2005, policymakers distribute permits to emit carbon to utility companies and heavy industrial polluters – at first for free.

Any allowances not used or extras required may be traded on the open market, as each country gradually reduces the amount of available credits and begins to auction them.

On top of that scheme, there is the Clean Development Mechanism, where companies can buy up a certain number of extra credits (known as offsets) from low-carbon projects in developing countries. However, the main problem is that industrial players, from cement-makers to paper companies, proved so effective at lobbying that they were showered with extra permits that they did not need in the early years.

Between 2008 and 2012, the UK power sector will make an additional €1.3bn (£1.18bn) purely from carbon trading, with windfall profits mostly going to the coal sector.

The recession has only exacerbated the glut as industrial emissions fall, pushing down the price of carbon credit to around €13. And instead of keeping their credits for the 2013 deadline when caps tighten in Europe, industry is liquidating its positions.

“You might have expected industrial users to hoard their permits for when fewer are given out for free, but they are selling them off just to keep afloat,” says the head of trading for a UK steel maker.

But does it really matter if emissions have been reduced due to the recession or carbon trading as long as the target has been hit?

When industrial activity comes back, defenders of the system argue that carbon price ought to rein in emissions below pre-recession levels.

All this, however, is threatened by the old risk of “carbon leakage”, where UK companies may relocate abroad to avoid a higher carbon price – shifting emissions elsewhere as well as damaging the economy.

The carbon trading system is expected to add £40 to household energy bills when the carbon price reaches €35 per tonne – but the cost to businesses could be even more crippling.

With more countries preparing for cap-and-trade schemes over the next decade, worries about global competitiveness ought to diminish. But the practical problem of international standards in auditing emissions remains.

Only this month, the UN banned Croatia from trading carbon after it cheated in the way it reported emissions. Greece has also been disciplined. And earlier this year, Greenpeace exposed phoney carbon offset projects in Bolivia, where 90pc of promised carbon reductions had not been delivered.

Architects of the US cap-and-trade system argue that there is time to iron out practical problems, but the concern remains that after almost half a decade of carbon trading in Europe, incentives still are not reaching those with a genuine commitment to reducing emissions.

While banks and hedge funds have created new businesses from their carbon trading desks, coal producers and heavy industry have banked billions in windfall profits. Meanwhile, utility companies complain that it is still cheaper to build a gas-fired power station than a wind farm or nuclear plant.

Joe Stanislaw, a leading independent energy economist working for Deloitte, argues that the world has no hope of hitting climate change targets without carbon trading.

“A lot of people can criticise Europe but it has led a brave experiment,” he says. “The US will need tighter caps and tighter regulation. It will take time, but I believe the world can learn from these mistakes.”

By Rowena Mason

Published: 7:47PM GMT 29 Nov 2009

Source: The Telegraph

Related information:

Climategate:

Climategate: This is the worst scientific scandal of our generation (Telegraph)

Climategate: The great climate change science scandal (The Times)

Climategate Scandal: The Whitewash Begins (Telegraph)

Climategate: Hacked emails include calls for ‘Earth Government’ as foundation of new world order, splitting of America

Lord Christopher Monckton on Climategate: ‘They Are Criminals’

Climategate: George Monbiot – aka the Great Moonbat – makes it all suddenly OK through medium of satire (Telegraph)

Climategate: Scientists Would Rather Change Facts Than Their Theories (RT)

Climategate on Lateline: Private climate documents hacked, published

Climategate Bombshell: Dr. Tim Ball on the hacked CRU emails

Climategate: The Day Science Died (TBR)

Climategate: how the MSM reported the greatest scandal in modern science (Telegraph)

Climategate: CRU director admits the emails flying all over the internet appear to be genuine (Herald Sun)

Climategate: The Final Nail in The Coffin of ‘Anthropogenic Global Warming’?! (Telegraph)

Follow the money and the New World Order:

EU President Herman Van Rompuy Announces 2009 as ‘First Year of Global Governance’

Congressman

Ron Paul on the Copenhagen Treaty and the Cyber Security Act: ‘They are

doing everything in the world to control the internet.’

Al Gore could become world’s first carbon billionaire

Lord Christopher Monckton: Is President Obama Poised to Surrender the Constitution and US Sovereignty to World Government? (!!!)

EU Proposes €50bn Climate Change Deal Ahead of December’s Global Climate Change Conference in Copenhagen

So global warming is really about the elite finding more ways to take away your freedom and your money!

Man-made global warming is a scam:

Lord Cristopher Monckton on Climategate: Shut Down The UN, Arrest Al Gore

Climate crunch: David Bellamy on global warming fraud

Global Warming Scam Exposed

Study: CO2 levels remained constant since 1850! (University of Bristol)

What happened to global warming? The warmest year recorded globally was 1998 (BBC News)

Global

Warming Expert Prof. Latif: Earth has not warmed for nearly a decade

and that we are likely entering “one or even two decades during which

temperatures cool.” (The Calgary Herald)

Solar Physicist Predicts Ice Age: “SOLAR CYCLE 24 HAS NOW GONE CLEARLY BELOW DALTON LEVEL.” (The Examiner)

The Great Global Warming Swindle (Documentary)

Ron Paul: Global Warming Petition Signed by 31,478 Scientists (Lew Rockwell)

NASA Study: Solar Cycle, Not Man, Responsible for Gobal Warming (DailyTech)

Global warming alarmists out in cold (Herald Sun)

Nobody listens to the real climate change experts (Telegraph)

Climate ‘denial’ is now a mental disorder (Telegraph)

Japan’s boffins: Global warming isn’t man-made (The Register)

Al Gore sued by over 30.000 Scientists for fraud (Video)

World is getting colder: It’s the sun, not CO2, that’s to blame (Washington Times)

Global warning: We are actually heading towards a new Ice Age, claim scientists (Daily Mail)

Scientists find greenhouse gas hysteria to be myth (World Net Daily)

2008 was the year man-made global warming was disproved (Telegraph)

Army: Sun, Not Man, Is Causing Climate Change (Wired)

World might be heading towards Ice Age (Economic Times)

Flashback: David Ballamy: ‘BBC shunned Me For Denying Man-Made Global Warming’ (Daily Express)

In the news:

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Nature knows exactly how to deal with CO2:

Carbon Dioxide Air Fertilization Improves Plant Growth and Quality, Cuts Operating Costs While Increasing Production:

If you really want to change the climate on this planet then:

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Greening the Desert

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