Monday, March 10, 2008

California's cap-and-trade won't work

Here at Climateer Investing the comparison between California electricity deregulation and carbon trading seemed self-evident, based, if for no other reason, on the fact that the pals and alumni of Enron are the ones pushing the trade. Now the media is picking up on where the trade part of cap-and-trade is going. The LA Times gets it.

From the Los Angeles Times:
California deregulated its electricity industry in 1998, and shortly afterward the lights went out. Apparently, regulators hadn't realized how easy it would be for unscrupulous traders such as Enron to manipulate the state's power market once it was open to competition; the results were rolling blackouts and skyrocketing electricity charges. Californians are for all this -- in many areas, power bills are inflated with extra fees to cover bonds and other expenses incurred during the disastrous experiment....MORE

We have dozens of posts pointing out the incestuous relationships between Enron and the Carbon Cartel, Here's a good one:
Claussen: US cap-and-trade system 'by mid 2009' and Enron makes a Cameo Appearance

The Pew Center is a founding Member of USCAP. Eileen Claussen has lobbied relentlessly for cap-and-trade for over a decade, starting even before she invited Enron to join Pew's Business Executive Leadership Council.*
Here's the infamous Enron memo from John Palmisano, Dec. 12, 1997, on his activities in Kyoto.

...If implemented, this agreement will do more to promote Enron's business than will almost any other regulatory initiative...

In addition, a carbon emissions trading system will be developed. While the trading system will be implemented by 2008, I am sure that reductions will begin to trade within 1-2 years.

Palmisano thought those two points were so important, he put them in the second paragraph of the three page memo.

From "The Trouble With Cap-and-Trade" :
And this from a former Goldman Sachs trader:
The whole reason for the existence of traders is to make as much money as possible, consistent with what's legal...I lived through this: if you didn't manipulate the market and manipulation was accessible to you, that's when you were yelled at.
New York Times, May 8, 2002
I'd rather my mom's pocket wasn't picked by some Lehman or Cantor CO2e trader trying to up his bonus.
Last September:
Blackout: Enron and the California Power Crisis (Transcript)

And scariest of all, here's a meeting on cap-and-trade where the man from Enron is the smartest guy in the room:

That leads me to one of my favorite links in the vault, the transcript of a March 3, 2000 (21 months to the really big bankruptcy filing) roundtable discussion "Domestic Emissions Trading of Greenhouse Gas Credits". Batting lead-off, the Senator from GE's home state, Joltin' Joe Lieberman. More interestingly though (sorry, Joe it's true), batting cleanup, the Enron representative really does come across as "The Smartest Guy in the Room" (that ENE link is kinda funny, in a morbid sort of way)

  • II. Opening Remarks
    Senator Joseph Lieberman (D-CT)

  • III. Presentations by Panelists
    Dan Lashof, Natural Resources Defense Council
    Joe Goffman, Environmental Defense
    John Palmisano, Enron Corporation
    Jon Naimon, Light Green Advisors
    Ray Kopp, Resources for the Future
    Sue Gander, Center for Clean Air Policy

  • HT: Environmental Capital