mcgeedo

From The Guardian (UK) Oct. 22, 2008:

Fresh from the devastation they have wrought on the global financial system, some of the world's leading investment banks meet in London today to discuss how they can "cash in" on carbon. But at least delegates and speakers at the Cashing in on Carbon conference are open about not trying to reduce emissions or helping the environment. Oh, no. This event is to see how "investment banks can profit today from an increasingly diverse range of carbon-related investment opportunities". Particularly reassuring is the emphasis on "hybrid and complex carbon credit structured products", and how to identify investor demand for them in the US; "derivative/synthetic carbon products"; and "sub-index arbitrage strategies". Also, we can refresh our knowledge of the basic options for "productising carbon" and of "access channels for producers ... speculators, proprietary traders and investors". Good to see that execs from Lord [Nicholas] Stern's company, IDEAcarbon, will be there, too.

The above article is clearly editorial in it's commentary, but it seems that the facts are there: Investors plan to trade in financial products based or derived from carbon offsets/credits and the like.

I suppose that if they are conservative with their risk management, it could be good business, i.e. profitable. On the other hand, it kind of sounds to me like investing on futures like the outcome of political races and sporting events, i.e. gambling.

Does anyone have any opinions as to whether this is good business? I'd prefer that the thread not be a discussion of whether climate change is harmful or man-made. I'd like to limit it to a discussion of whether this is good business or a potential scam, as the author of the original article might think.

genuinegirly

I don't see how this is a good business model, but I know little about such things.
Coal is carbon. Are they planning on investing in coal?
I cannot understand why carbon offsets have become such a fad. I do hope that the trend dies soon.

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guyy

I think it's based on the dated idea that TheMarket will magically solve our problems.

Think of the mortgage insurance debacle. You can hedge and derive all you want, but in the end, if people are defaulting, someone's going to take a hit. We can slide responsibility around with carbon emissions and offsets trading, but in the end, someone is going to have reduce carbon emissions.

roachboy

this link goes to an interesting critique of the whole idea of carbon trading...the rest of the book outlines the state of affairs around it, the linkages to neoliberal institutions, the idea that this derivative trade is somehow an alternative to regulation, on and on.

http://www.thecornerhouse.org.uk/pdf...arbonDDch5.pdf

it's basically an outmoded idea that's been put into motion across the kyoto protocols and will probably not last the mutation that's taking place as we write things back and forth.

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tisonlyi

Petro-dollars are dying, replaced by de-carbo-dollars? o_O

A massive supply of carbon credits from the undeveloped world to the developed, with fiat currency heading in the opposite direction, which is then 're-invested' in the host currency?

Bretton Woods 2.5?

Why not thermo-dollars/euros/yen/yuan?

Hmm. Probably 'banking' on a return/flight to coal...

*ponders*
-----Added 23/10/2008 at 05 : 45 : 39-----
Actually, it makes good sense. restrict the development of the undeveloped world, using a system of regulation entirely imaginary on both sides.

But then, I'm a wild conspiracy nut. [you love it]

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"I do not agree that the dog in a manger has the final right to the manger even though he may have lain there for a very long time. I do not admit that right. I do not admit for instance, that a great wrong has been done to the Red Indians of America or the black people of Australia. I do not admit that a wrong has been done to these people by the fact that a stronger race, a higher-grade race, a more worldly wise race to put it that way, has come in and taken their place." - Winston Churchill, 1937 --{ORLY?}--