Friday, May 4, 2012

The Man Who Oversaw the Decline and Fall of Carbon Trading is Crabby on His Last Day at IETA

On November 19, 2007 we ran the position available ad:
Help Wanted: International Emissions Trading Association. President & CEO
Things were looking so good at the December2007 UN Conference on Climate Change in beautiful Bali where IETA made up the largest single contingent, fully 336 of the 4483 NGO gadflys (emphasis on fly, Bali is a long way from Geneva).

Good times, good times.
As Nicholas Stern (he of the eponymous report, then Sir, now Lord), Vice-overseer of consultancy IDEACarbon said:
“Bali will set in motion a process that will define the structure
of the carbon markets for decades to come”
“By 2020 the global carbon market could be worth EUR 240-
450 billion”
-Sir Nicholas Stern
"This (climate change) is much too important to leave to environment ministers"
-Sir Nicholas Stern
to Finance Ministers basking in Bali
Good times, good times.
Here's today's story from Bloomberg:
Carbon Market Lobbyist Criticizes ‘Whopping Falsehoods’
The carbon market has been damaged by three “whopping falsehoods” that slowed its growth and caused European lawmakers to question their belief in the system, said the retiring head of a carbon market lobby group.

“The political environment has been dominated by an ebb tide,” Henry Derwent, chief executive of the International Emissions Trading Association, said today by phone from Geneva on his last day at the lobby group’s headquarters. “The European Union emissions trading system is still there, though it’s bleeding from a few wounds, some self-inflicted.”

The first lie is that climate science is exaggerated, boring and unimportant, Derwent said. The second is that nations shouldn’t protect the climate because others aren’t and the third is that markets are not the best solution, he said. “It’s not surprising that those who don’t want to do anything are seduced by the falsehoods.”

EU carbon permits have plunged 80 percent since peaking at 34.40 euros ($45.17) a metric ton in 2008, the same year Derwent joined IETA as president. He previously helped advise U.K. Prime Minister Tony Blair. Stagnant economic production has exaggerated an oversupply of allowances in the EU, and almost- non-existent demand outside the bloc has deepened the surplus. Cap-and-trade legislation stalled in the U.S. Senate after narrowly passing the House of Representatives in 2009.

Carbon permits for December fell 4.33 percent today to 6.85 euros on the ICE Futures Europe exchange in London as of 12:18 p.m.

Advice to Successor
IETA should have joined with other business and environmental lobby groups around 2010 to better protect the idea of carbon trading, Derwent said.

“We really thought we were doing fantastically well,” he said. “We just did not realize how bad things could get. We might have managed to prevent it falling so far as it did.”

Dirk Forrister, the former climate adviser to U.S. President Bill Clinton, is replacing Derwent this week. “Watch out very carefully for the tides of changing opinion” is Derwent’s advice to his successor. “We must make sure that we don’t get beached by this ebb tide."...MORE
The Stern quotes were in a June '09 post, "Climateer Investing on Carbon Trading and Traders". Here's some more:
...The carbon markets are an entirely artificial construct, beholden to political paymasters for their very existence. Which may be why so many political types are planning to profit from them.

Directly, think Al Gore's Generation Investment Management's investment in carbon project developer Camco or Lord Nicholas Stern's Vice-Chairmanship of IDEACarbon's parent IDEAGlobal or indirectly as a source of campaign contributions for pols still in office, or an unaccountable slush fund in the case of the U.N.

The word artificial led me to think of it's cousin, artifice. Here's the Oxford Pocket definition:
ar·ti·ficen. clever or cunning devices or expedients, esp. as used to trick or deceive others: artifice and outright fakery.
The securities attorneys among our readers will recognize the word from the common state security law usage "...employ any device, scheme, or artifice to defraud".
Here's the view from Russia, quoted in The Bored Whore of Kyoto:
"I don't know if climate change is caused by burning coal or sun flares or what," said the Moscow-based carbon cowboy. "And I don't really give a shit. Russia is the most energy inefficient country around, and carbon is the most volatile market ever. There's a lot of opportunity to make money."
Here's 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.
-Former Goldman Sachs trader
New York Times, May 8, 2002
Good times, good times.