The Great Collapse of the Chicago Climate Exchange

cap in handPlagued by a free fall in carbon emissions prices and the perennial failure of Washington to pass any binding Cap and Trade Bill, it seems that the Chicago Climate Exchange is on its last leg, announcing that it will be scaling back its operations.

Chicago Climate Exchange or CCX, is North America’s sole voluntary, legally binding greenhouse gas trading and carbon “offset” projects in North America and Brazil. Rueters reported on Aug 11th that Intercontinental Exchange Inc, the operating body for the CCX, will be scaling back major operations this month, a move that includes massive layoffs. This is likely due to the complete market free-fall of their only product… carbon emissions.

Anthony Watts from the climate watchdog website Watts Up With That posts a graph from the CCX which shows carbon prices dropping like a stone, bottoming out this week at the embarrassingly low figure of 10 cents per tonne. Compare this to trading prices during its brief hay day in May and June 2008 where market highs reached $5.85 and $7.40 respectively, and you can say that most investors will be evaluating carbon as one of today’s more worthless commodities.

What a difference a year makes. It’s been nine months since the world watched the bottom drop out of a much-hyped UN Climate Summit in Copenhagen back in Dec 2009, with its neo-colonial agenda exposed within the first days of the summit. One of the keystones of the Climate Change alarmist movement was its audacious attempt to create a functioning market by monetizing the atmospheric trace gas known as CO2. Since last year, a number of scandals like Climategate have penetrated mainstream conversation, putting a rather awkward limp in the once nimble Man-Made Global Warming movement. Hence, apocalyptic frenzies and fears have dissipated and carbon prices around the world have continually been pummelled by the market.

Monetizing CO2: the carbon neutral dream that no country could ever afford.

A Financial ‘Boondoggle’
Unlike most real markets, the carbon market was created by banks and governments so that new investment opportunities could seamlessly dovetail with specific government policies. It’s a fantasy casino based on a doctrine of pure science fiction. Certainly, gaming the system has always been at the top on the agenda of the new green eco-trader. Most people, investors included, might innocently ask the fundamental question, “what’s the point of having a CO2 commodities market?” The answer to that question should be obvious by now, and you can certainly look to the initial stakeholders in the various international climate trading bodies for a ‘Who’s Who’ list of individuals that have actively been pushing the global warming concept from its inception.

As American’s own CCX nears total collapse, climate alarmists and their vested partners are pinning their hopes on Europe. With most European countries happily singing from the same EU song sheet, institutional investment in the carbon market has seen a slightly more sustained existence. Europe’s socialized historical habit of subsidizing anything and everything means that it has been a better safe haven for something as radical as a carbon market. Many financial analysts would say that carbon requires a relatively steady price of around €40 a tonne in order to spur industrial investment in cleaner technologies, but unfortunately, Copenhagen failed and the announcements of emissions cuts are not coming as expected. Perhaps the reality gap is beginning to set in between governments’ political capital in climate change and the peoples’ ability to believe in global warming. Either way, the market will not be able to deliver such lofty figures, which is why real investors are getting out of the carbon market in 2010.

The front end of this game of ‘supply and demand’ is heavily reliant on EU governments making lofty announcements about future emissions targets. Cutting emissions increases demand for EU carbon allowances. In the absence of such a restriction of the market, it was expected that the price would fall, and naturally that’s exactly what happened. In 2008, it cost €31 to pump out a ton of CO2, but today it will set you back about half that at €15. You will be hard pressed to find any financial pundit today giving a sermon on a bullish carbon market in the future —  it’s just not happening anymore.

On the back end of the game, things are a bit shadier to say the least. The industrial and monopoly power giants are of course, being allocated free EU Carbon Allowances until 2012, but from 2013 some sectors will have to pay for 20% of their allowances (those with weaker political influence in Brussels), rising each year to 60% in 2020. Many government/power company ‘green initiatives’ will automatically result in high energy price to consumers, which naturally means guaranteed profit increases for those same corporations (see Enron).

Off-set Scam
Carbon trading is underpinned by an equally dodgy product called ‘carbon off-sets”, most of which are taken on face value by the buyer. Not based on an actual ton of carbon emitted, rather governing agencies are issuing certificates for a fictional commodity of emissions not emitted. A rather wild concept. Worse than this however, it is near impossible to verify which of these thousands of so-called off-set projects in the developing world are actually legitimate. In the coming years, we will no doubt see or read a number exposes detailing the depths of this fantastic green scam.

The formula: create an investment vehicle, hype the new commodity, buy low, watch share prices rise, sell high. The result is money, lots of it. In some cases it’s been about driving up the share prices of companies Gore’s group has already invested in. In fact, the self-styled leaders of the climate change crusade Maurice Strong and Al Gore have already cashed in carbon fortunes already, whilst other active politicians like US President Barrack Obama, and United Nations IPCC Chief Rajendra K. Pachauri are engaged in similar play with their own financial interests in the Carbon Markets.

Like all government rigged quasi-commercial schemes, the only real beneficiaries are the initial shareholders — a special inner circle who are naturally ahead of the curve knowing about legislation and policy before it comes into existence. They are sometimes called the great and the good, the in-crowd, or the smartest men in the room (again, see Enron). Of these, almost all have jumped ship out of the market while their preferred shares– or in the case of the larger energy and manufacturing monopolies, their gratis “carbon allowances” given to them free by their governments- are still worth something. If you’re on the inside, it’s simple: get in early, make money and then get out.

Climate Change Based on Science Fiction
Pointing out the obvious is always a painful thing in the world of human affairs. The real reason for the complete and total failure of the concept behind trading an atmospheric gas like CO2 is something few within the green block will dare to even mention now, and it’s the same reason why the whole movement will go down in history as one of the most flamboyant efforts in the history of economics. It’s not just hubris. The whole idea behind making CO2 a commodity was to make it expensive and thus reduce the amount produced, which would (they hoped) reduce the effect of anthropogenic(man-made) global warming, or ‘climate change’ as it’s now commonly referred to. There was only one massive problem with this equation- there has been no global warming since 1998. So despite the hundreds of millions, perhaps billions spent on research and computer models addressing this possibility, no scientist or body has been able to show that man’s CO2 contribution has had any effect on the global temperature. Another massive blind spot for climatists is their almost religious denial that the sun might have any effect on the earth’s climate (studies show that it does, of course)- a major sore spot in any debate on global warming.

The movement was a merger of radical Collectivist ideas and huge financial opportunities. Men like Maurice Strong looked for their moral positions to be anchored by a small group of hand-picked ‘scientific authorities’, a latter day technocracy if you will. On the opportunist side we also see those same scientists who have made  their careers, many millions of dollars over the last decade alone, on grants to prove that global warming was somehow happening. Other financial opportunists will include Al Gore, scores of companies like Carbon Fund and a number of charities soliciting donations to save the planet, all of whom were hoping to cash in on this non-event until its financial opportunities eventually die out.

If you step back and marvel at the timing and combination of the climate change movement and carbon trading business it’s enough to make you dizzy. Never has the world seen a more stunning collusion between government and big business, a tango that makes fascist enterprises like Mussolini’s Italy or Franco’s Spain look like student internships.

Still hoping for some silver lining in this otherwise cloud of failure, most diehard green activists are laying the blame on governments for giving away too many free carbon coupons in recent years. Certainly there is a valid economic point there, but greens were all too eager to get into bed with Wall Street and the Fabian Socialists in order to realize their dream of a new utopia.

Patrick HenningsenThe current color-blind global financial system based on derivatives, futures and sub-prime gambling products will eventually take down the carbon market altogether, as speculators prey on untapped markets, selling more worthless paper to an ever decreasing naive minority. In the wake of the dot com boom and the housing boom, Wall Street certainly tried to make environmentalism sexy and trendy for investors, but we can see now that the results speak for themselves — CO2, a penny stock for kids. “Roll up, roll up. Anyone want a tonne of CO2 for 10 cents?”

In the end it’s just another age-old tale of grovelling academics, big business, politics, power and money. So it doesn’t require an expert to tell you that the carbon market was doomed to fail from the beginning.

Patrick Henningsen

21st Century Wire


  1. says

    This article is like my son’s ‘balanced diet’ (during his adolescence): half health food, half junk food.

    Yes, we should be skeptical about FINANCIAL scams – such as carbon credits and indeed all fancy derivative financial instruments – including those which are hyped in response to one or another NATURAL phenomenon.

    But such a natural phenomenon itself – one that is used as the EXCUSE for a financial scam – need NOT itself be a scam.

    For instance, some years ago con artists and cults were profitably pushing over-priced clothing with sewn-in magnets as cure-alls for health problems. The scam was based on exploiting people’s fears and hopes about their health, using as a ploy a fascination with the quite natural phenomenon of magnetism. The actual phenomenon, magnetism, is real and exists, and is not a scam.

    Henningsen tells us correctly that carbon credits and other financial scams have been based on appeal to fears of climate change. But he’s wrong that climate change itself is a scam, or that it is not likely to have fearsome effects.

    What climate modelers do is exactly contrary to Henningsen’s claim (which mindlessly repeats that made by cultic ‘global warming skeptics’) that climate modelers deliberately disregard the effects of the sun on climate. On the contrary, the climate changes modelers are investigating are based on adding, to WHATEVER the sun will do, the ADDITIONAL effects of mounting atmospheric greenhouse gases.

    Henningsen claims also that there has been no ‘global warming’ since 1988. In two ways this claim is a rhetorical dodge. First of all, its truth (or falsehood) depends on what sort of events and measures you want to count as evidence for ‘warming’ or ‘cooling’. Second and more important, true or false, the claim is largely irrelevant to the actual issue.

    Contrary to the focus of shrill ‘skeptics’, what is at issue is NOT whether earth’s surface HAS LATELY (in the recent past) ‘warmed’ (or ‘cooled’) in some sense, but what LONG-TERM (in the future) permanent climate changes we can expect.

    And it’s easy for ‘skeptics’ to dodge that issue, because the eventual climate changes are of different kinds, and the precise mix of them to expect is not yet fully clear (it is the subject for climate modeling). However, the UNDERLYING MECHANISM for change is NOT in dispute and is NOT SCI-FI.

    Namely (as shown by ice core data) unprecedentedly high levels (as at least for the last million and maybe many millions of years) of atmospheric greenhouse gases (GHGs), notably CO2, have come to pass within the last 200 years, especially the last few decades.

    The main evident causes for the massive rapid GHG increase are human-origin, in the wake of the Industrial Revolution: notably fossil-fuel burning and nowadays also massive deforestation and massive raising of corn-fed methane-farting cattle.

    Two big predictable long-term future effects of the extra GHGs are that the oceans will get (indeed are already getting) more acidic, and the near-surface air will (and has started to) trap and retain notably more heat.

    That extra air-retained heat WON’T always show up as hotter temperatures, but rather also in two important other ways: faster ocean-surface evaporation, leading to more humidity and to more big storms, especially near coasts; and massive melting of ice sheets, land-based as well as sea-based, leading to sea level rise.

    Climate change models mainly differ in their predictions of relative importance of these various effects: would you prefer lots of Katrinas and Pak floods, or instead large melting ice chunks and eventually permanently higher sea levels, or just simply hotter days? We are seeing a hint of all, and will likely get a mix of them all.

    • says

      What “climate modelers” is program their own software to generate a prediction or outcome, even if their models do not even corralate with real scientific observation. Michael Mann erased the Medieval Warming Period to fashion his imfamous “hockey stick” graph which has now been thoroughly debunked. Climategate showed the UN’s own temp lab “hiding the decline” in global temps since 1998. And you still believe it…? That’s more like religion I reckon.

      Get educated, don’t just listen to a corrupt IPCC. I drive a Lexus hybrid, but I don’t believe in global warming.

      Patrick Henningsen

  2. Marshall says

    Any one who took the time to use Google to compare the two ideas, “cap and trade” or “carbon tax” would have known that cap and trade would have created more Carbon Madoffs than we could count. The defference is marked. Using the same Google, you can find oil in places the media and government leaders are clueless.

    Cap and trade needs to stay dead, use others ideas if need be.

  3. Elaine says

    It is a shame that “chicken little” Gore got so rich off of this BS. What makes me even sicker is all the classrooms he visited indoctrinating our children, telling them how stupid their parents are, & not to believe them. Bad enough that Obama & Gore have divided this nation, really bad when they come into your home & have your children turn on you & think of their parents as being stupid because the “vice president” from a long time ago told them so. I want the UN out of America & I want “CHICKEN LITTLE” GORE TO MOVE SOMEWHERE MAYBE TO VENEZULA OR BRAZIL OR MAYBE ARUBU ANY WHERE AS LONG AS IT IS OUT OF THE UNITED STATES OF AMERICA!

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