Michael Barone

Barack Obama's Carbon Emissions Plan Might Be Flawed

November 10, 2008 RSS Feed Print

Barack Obama and the Democrats seem determined to pass some form of carbon emissions reduction legislation. They might want to take a look first at this piece on the risky market in carbon emissions that has already emerged. Many smart people have been busy figuring out how to game the carbon market system, and they'll be well represented as the Obama administration and Congress fashion carbon emissions reduction legislation.

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environment,
Barack Obama

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I would refer everyone to an excellent monograph on climate physics and chemistry by Dr. James Peden at Middlebury College in VT. (Google it.) It's a cogent explanation as to why Mr. Gore is almost certainly full of you know what. There is at a minimum a more than a reasonable doubt about the claims of the global warming crowd. This nonsense really needs to be repudiated by the scientific community before serious harm is done to our economy by the nitwit lawyers that run our government.

Fred of PA 9:44PM November 13, 2008

It is increasingly apparent that the concept of anthropological global climate change has peaked and is now waning. The politicians were overselling the science and now reductions in solar output are taking away any tangible sensation of a problem with the voters.

Very few proposals on the ballot prevailed this cycle.

Obama will be swimming upstream on this one although he had a lot of support from those rent-seekers who would have made a windfall from such legislation. Obama's home town utility, Exelon, was especially well situated. Note that Bill Ayers' father used to head Exelon's predecessor, Commonwealth Edison. Even further back, the man who built the company from next to nothing was "Mr. Monopoly", the little guy on the get out of jail free card, Samuel Insull.

For another case, the holding company for Florida Power and Light (FPL) estimated that carbon cap and trade legislation would boost their revenue by up to $691,000,000 a year - for doing nothing!

Whitehall of CA 2:03PM November 11, 2008

Aside from the difficulties inherent in pricing carbon allowance volatility, there's the near certainty that new allowances, or unit adjustments equivalent to new allowances, will be introduced to the market regularly due to political pressures. This is what has devalued the EU ETR allowances so significantly.

In this environment, the logical response by credit owners will be to short them - i.e. sell them before the price declines in anticipation of being able to buy them back at a lower price. But this strategy carries obvious risks as well.

These are politically defined instruments, their levels and specification will be subject to the same sorts of political processes that we're seeing play-out in the recent credit market collapse and calls for bail-outs.

Jack 1:23AM November 11, 2008

Michael Barone

Michael Barone

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Michael Barone is a senior writer for U.S.News & World Report and principal coauthor of The Almanac of American Politics. He has written for many publications—including the Economist and the New York Times.

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