I applaud the U.S. House for recent passing the Cap and Trade energy legislation- the Waxman-Markey Bill. Finally our Congress has recognized that climate change (the term "climate disruption" is more accurate) is real, is induced by human activity, and needs to be confronted before the process becomes irreversible. So if you are a denier of climate disruption, you will get no comfort from the shots that I am about to take at Cap and Trade, despite it being a sign of progress.
Yes, Cap and Trade is intended to limit the total emissions of CO2 gases to a mandated level, while minimizing total cost to the economy. Yes, it's a market-based approach that allows trading of carbon allowances and offsets, and presumably is more "economically efficient" than direct regulation or even a carbon tax.
So what's the problem?
Well, it looks like we are being set up for another massive financial bubble, inflated with all the mutant toxic forms of financial instruments that has melted down our world economy. Rachel Morris sounded this warning very clearly in Mother Jones.The carbon trading market is expected to become a $2-trillion marketplace in the next five years. It will be the biggest commodities derivative product for big finance, according to Commodities Futures Trading Commissioner Bart Chilton. These "products" can be sliced, diced, bundled, and sprinkled with ratings pixie dust just like securities from the sub-prime mortgage market. Yes, it's the recipe that almost killed us before.
Big finance, like JP Morgan, Goldman Sachs, and Morgan Stanley, have already set up trading desks in response to the carbon markets in Europe and current voluntary markets in the US. Al Gore has founded a company GIM that has invested in a carbon trading exchange in Chicago CCX, also founded by ex-Treasury Secretary and ex-Goldmanite Henry Paulson. Nothing outrageous there. The real red flag to be alert for is waving frantically in Congress. A few years ago big finance did not give a cow fart about global climate disruption. Now the financial industry has over 130 lobbyists in Congress just on this issue, and is spending many millions of dollars in the effort.
I have emphasized before that big finance -"Wall Street" - is essentially so self-interested, powerful, and unconstrained as to be sociopathic and not trustworthy. I have emphasized finding local solutions and ways to circumvent its influence. Global climate disruption, however, is a non-localized problem with no primarily local solution. So we must create trustworthy national and international solutions and supporting institutions to solve climate disruption.
I don't believe the financial markets are ready to be trusted. Henry Waxman, who is no friend of big finance, says that opponents of his bill should not "let the perfect be the enemy of the good." I'm not sure what the right answers or institutions are just now, but I do know one thing. The only enemy of the good in this bill will never be confused with the perfect, except perhaps in its own propaganda or when it wants to pay out big bonuses to its own.
