At Least 10 London Banks Abandon Carbon Trading, Along With UBS, Deutsche Bank, Barclay's

[hatrack]

At least 10 London banks have scaled back or closed their carbon trading desks amid turmoil in the European emissions trading scheme.

The fledgling market was once seen as a promising growth area, with the City of London Corporation predicting in 2006 that London would become the leading provider of services to the “mushrooming” sector.

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This was supposed to provide a powerful economic incentive for industries to cut the greenhouse gas emissions blamed for climate change. But the price of a permit has fallen persistently because there are too many permits in the system – reducing the cost pressure on polluters.

A report by the Institute for Public Policy Research, a left-leaning think-tank, warns that problems within the emissions trading system (ETS) – the world’s largest carbon market – pose a “serious risk” to London’s status as the home of carbon finance. “The instability surrounding the ETS and the resulting crisis in demand for traded units . . . has jeopardised jobs in a number of banks and financial institutions,” it says. Barclays has sold its carbon trading business, Deutsche Bank has closed its global carbon trading operations and UBS has closed its climate change advisory practice, according to the report.

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http://www.ft.com/intl/cms/s/0/cbb749ba-506b-11e3-9f0d-00144feabdc0.html?siteedition=intl#axzz2l3kzb7e5

[Demeter]

1. Thank God

This Ponzi was worse than any other. So glad it never really got off the ground.

[kristopher]

2. What makes you say it is a scam, Ponzi or otherwise?

Here are the particulars that describe Ponzi schemes: http://economics.about.com/od/financialmarkets/f/ponzi_scheme.htm

The key element in that scam is using new investor's money to pay off old investors, and using the paid off older investors as a tool for recruiting new investors. At some point when the cash flow has been escalated to the desired level the grifter simply absconds with the money.

Carbon credits are nothing at all like that. It is an excellent policy for pricing the external costs of carbon into fossil fuels. The collapse of the market hinges on two problems, both of which are outside the control of carbon credit traders.

The first is an initial over-allocation of carbon allowances. The initial over-allocation was deliberate and intended to keep initial prices low as the economies adjusted, but, when that combined with the success of carbon reduction efforts and the economic downturn the need for the credits by industry flatlined and there are far more carbon credits available than there are buyers.

Where in that do you find a scam?

[Demeter]

3. It is an excellent way of picking the public purse to pay off banksters

You don't need a new financial instrument of theft to control carbon use.

You need regulation and enforcement of regulation. Planning and enforcement of planning. And equity so that there are shared inconveniences, not mass poverty.

[kristopher]

4. This is regulation

I hope you don't know that you are parroting meaningless right-wing, pro-fossil fuel talking points. The Koch Brothers etal have been spreading that kind of bullshit since day one - none of it is true.

If you think I wrong, please tell me the specific alternative policy you support and try to explain how carbon credits causes "mass poverty" when the one you point to doesn't.

[Demeter]

5. Get your reading glasses, then

Naked Capitalism shines a spotlight on Carbon Neutral Investments

http://www.redd-monitor.org/2013/11/05/naked-capitalism-shines-a-spotlight-on-carbon-neutral-investments/

Naked Capitalism is a blog set up by Yves Smith. She’s an expert on investment banking and the founder of Aurora Advisers, a New York-based management consulting firm. Carbon Neutral Investments is a company that, before it changed its name, provided services for a long list of companies that sold carbon credits as investments.

REDD-Monitor occasionally receives comments asking how someone with a training as an architect, an MSc in Forestry and 20 years experience as an environmentalist, can write about carbon credits as an investment. Here’s a typical comment along these lines (it also happens to be the most recent):

chris, who gives you the power to sit in Jakarta and blog non-sensical rubbish about a subject you no absolutely nothing about?

i doubt you have ever made an investment in your entire life, and probably do not no the difference between an IPO and a CFD.

Perhaps surprisingly, this wasn’t signed by Nigel Molesworth. Nevertheless, I think the answer should come from him: “A chiz is a swiz or a swindle, as any fule kno.”

Richard Smith’s series of posts on Naked Capitalism about Carbon Neutral Investments is filed under “ridiculously obvious scams”. He’s on safe ground with that classification, at least since 29 March 2013, when the UK’s Financial Services Authority put out a warning against Carbon Neutral Investments. The Financial Conduct Authority (as the FSA is now called) subsequently updated the warning to include Gemmax Securities: MORE

Week two of Naked Capitalism’s series on Carbon Neutral Investments and other carbon credit scams

http://www.redd-monitor.org/2013/11/12/week-two-of-naked-capitalisms-series-on-carbon-neutral-investments-and-other-carbon-credit-scams/


Carbon Neutral Investments’ Trail of Disaster: How Carbon Credit Con Artists use Google Adwords to Work the Recovery Scam

http://www.nakedcapitalism.com/2013/11/carbon-neutral-investments-trail-of-disaster-how-carbon-credit-con-artists-use-google-adwords-to-work-the-recovery-scam.html


Gemmax Solutions’ Belated Admission About Carbon Credits Bought by Retail Clients of Gemmax’s Brokers

http://www.nakedcapitalism.com/2013/11/gemmax-solutions-horrifying-belated-admission-about-carbon-credits-held-by-retail-clients-of-gemmaxs-brokers-those-credits-have-been-impossible-to-sell-for-nearly-a-year.html

DO READ COMMENTARY FOR EACH POST, ALSO

AND KINDLY DO NOT ARGUE THAT A MARKET SYSTEM COULD REGULATE CARBON EMISSIONS...BECAUSE THE REALITY IS IT'S A NEW SCAM. I'M REALLY NOT INTERESTED IN THE WHOLE FREE-MARKET SCAM THAT HAS BEEN PERPETRATED ON THE WEST.

[kristopher]

6. So you don't actually know what you are talking about, do you?

If the only thing you can do is post a wall of links from an unknown blog and then end you post with a statement saying essentially "don't bother me with the facts" then it is obvious you don't know enough about the policy to judge it.

Another tip off is that you use "free-market" as incorrectly as right-wingers use "socialism".

A carbon trading policy isn't "free market". It is regulation - and that in any form is anti free market. The reality of a market system isn't at all the same thing as "free-market ideology". Until you learn to tell the difference, you are a better tool for the right wing than you can imagine.
.

[Demeter]

7. kristopher, you are a very young and dedicated DU member

but just because YOU have never heard of Naked Capitalism doesn't mean that it isn't one of the leading economic blogs in the world.

And if you want to have any idea of what you are talking, you had better get some education in economics, FAST.

Here is yet another useful link...it's video, so you won't have to strain yourself reading it:

http://truth-out.org/video/item/20095-imperatives-for-a-new-economic-model-that-saves-the-humans-truthout-interviews-featuring-richard-smith


Furthermore, you have no idea what a "right-wing tool" is. If you cannot handle reality, you will be the tool for whatever jargon appeals to your sense of style.

[kristopher]

8. I wish I were young

But as irrelevant as it is, I'm not. I also have a very good grounding in economics, which is how I know that you are not informed on the topic of carbon credits. When a person conflates free market ideology with the in-your-face-can't-be-denied-fact that people behave predictably when they buy and sell things, it is as good a tip off that they don't understand the topic as when a rightie claims that taxes equal socialism.

There are a number of ways to "regulate" commerce and industry to achieve desired goals. Using carrot and stick incentives (market based approaches) is often (but not always) one of the most effective. What your earlier links point to are instances of people gaming the system. There will ALWAYS be people gaming the system and criticisms of the carbon credit approach based on that are right wing bullshit analogous to when they say we need to dump food stamps because they think some people sell their food stamps to buy drugs. There is no difference, both are false right wing memes designed to appeal to populist anger and get unwary people to vote and act against their self interest.

[Demeter]

9. Sorry, no sale

Market-based approaches do not "regulate". Market based approaches are the right-wing method of appearing to do something good, while robbing people blind. Like Obamacare, for the classic example.

[kristopher]

10. How do carbon credit trading systems rob people blind?

Surely you can explain how this wealth transfer happens.