Cap-And-Trade, Green Climate Fund Are Fraught With Fraud
“The cap-and-trade system of emissions trading is very difficult to control and its effects are diluted…It is precisely because I am a market practitioner that I know the flaws in the system,” George Soros
“We are a green energy company, but the green stands for money,” Jeffrey Skilling, then-CEO, Enron
Last week, China’s President announced a national cap-and-trade scheme for carbon emissions to be launched in 2017, covering such industries as power generation, iron/steel, chemicals, building materials including cement, paper-making, and non-ferrous metals. China first started cap-and-trade in 2010, and seven cities now have pilot schemes. But with no independent courts or independent regulatory bodies enforcement will be challenging to say the least. At 8.2 billion metric tons, ~28% of the world’s total, China is the largest emitter of CO2.
California and Quebec have linked cap-and-trade, but the U.S. Senate killed a bill (Waxman-Markey) five years ago that would have created a national program. Yet, the EPA’s Clean Power Plan would impose basically a cap-and-trade scheme in states that don’t submit their own plans to reduce CO2 emissions from power plants.
Cap-and-trade is a vastly overpriced system with “all pain and no gain.” For example, although Waxman-Markey had a lofty if not impossible goal of an 83% reduction of U.S. emissions of by 2050, this would have reversed just 3% of the human influence on climate, equating to about 0.09°F. From 2012-2035, one estimate has a U.S. cap-and-trade scheme causing an accumulated GDP loss of $9.4 trillion.
Fraught with fraud, the potential for market manipulation in the aptly named cap-and-trade scheme is particularly massive, since there’s no actual physical commodity delivered (see how it works here). Many companies promote cap-and-trade today, but Enron and Goldman Sachs were pioneers (see “Blood And Gore: Making A Killing On Anti-Carbon Investment Hype“). Enron helped establish the market for EPA’s SO2 cap-and-trade program back in the early-1990s. (See here to know why CO2 reductions and cap-and-trade are far more complex than they were for SO2).