Gar,

I'm not sure I understand why trading is bad.  Traders may be self-serving bastards, but that doesn't mean that trading collectively is a bad thing.  It certainly has proven massively beneficial in a zillion other markets, from a farmer who wants certainty on the price she'll get at harvest-time to an energy project developer trying to lock in a long-term power contract to an employee trying to plan for their retirement.  All of those things are only possible in a world that is full of traders - and the world is richer for their presence.  Will people make some money from the trades?  Sure.  Will they have an incentive to try and maximize that money?  Absolutely.  But so does everyone else. And without a vibrant secondary market for carbon, there's no way for an economy to devise innovative ways to buy, sell, trade or hedge those offsets... which means a substantial limitation in our ability to lower GHG emissions (as compared to a top down tax or other approach where the universe of options is dictated by regulators from the outset.)

In that context, the guy who says that additionality is impossible to measure is simply acknowledging a basic truth about GHG pricing - and one that is as obvious from a market perspective as it is surprising from a top-down regulated view.  This argues for more market, not less.  Of course, those markets need gov't oversight to ensure they remain competitive, but that's nothing that the SEC and others aren't already set up to do.

Not being able to measure additionality individually he thinks it can be measured sectorially. And the used to generate credits that will be used as permission to burn coal. You don't see anything wrong with that.

Trade is fine for things we want to increase. Not really a good idea for things we want to gradually dwindle to zero - like carbon permits.

Another thing to consider.
Much like the gasoline tax going to pay for roads.

As the gasoline we consume goes down, the money to pay for roads goes down.

So attaching those revenues to something seperate from reducing the emissions, results in eventually defunding a particular program.

Especially when you consider something like the lottery for California schools.  It was originally meant as an augmentation to school funding.  And then it instead replaced direct funding.

So in short, we'd definantly have to be careful to where we plan on spending those revenues.

Reason I favor Barnes' proposal.

Take the revenue from auctioned permits or carbon tax and return it directly to the people. Fund infrastructure changes and social spending both from more stable sources.

Additionality can't be measured accurately, whether you do it project-be-project or sector-by-sector, and however much time and resources you have.

So long as the CDM is not additional, emissions and money will leak out of statutory cap-and-trade schemes (mainly the EU ETS at the moment) in unknown quantities.

"...put a carbon tax in place or auction permits already. Forget game-playing CDM and the whole additional new carbon lobby that secondary carbon markets create."

That secondary carbon permit market will be the ultimate GHG reducing policy killer.  As hedge funds scam and energy prices to consumers rise, industry friendly politicians will say "see, we told you so, government intervention is destroying thje economy."

That will be the end of green politicians and GHG climate disaster cure.

Is this why many CEOs favor cap and trade?  That's my suspiscion.

But of course, withdraw subsidies for carbon heavy industries first.  Before imposing taxes or permits.  Subsidy diversion to renewables and conservation might be enough.  Tackle a tax or permit system if it isn't enough to propell energy revolution.   50 billion per year ought to be possible with diversion alone.

http://amazngdrx.blogharbor.com/blog

I don't think there's anything quite so dastardly going on with respect to the banks.  New coal-fired power plants simply don't pencil out, even without taking into account the carbon costs.  Plug $3000/kW coal, plus $1400/kW wires and 3 cents or so for fuel and maintenance into a modest (~10%) utility return on assets and you quickly realize that new coal plants are contingent upon one of the following happening:

Retail rates increase by 40%, or;
Gas and other cheaper options come on at the margin, forcing coal plants to lower equity returns (and debt service) in order to keep running.

It is neither surprising nor nefarious that banks are running away from coal in this environment.  Coal only makes sense if your capital is amortized.  New construction, by definition, isn't.  That is what is driving the lending community away, it is fundamentally good news.

That's a fair point, but note that coal plants are a lousy investment even if you have a longer investment horizon.  Indeed, private (as opposed to public) equity does take a longer view, and it's not investing in coal either.  Note also that the banks that are backing out of coal markets aren't on the equity (e.g., "wall street") side of the table but rather on the debt side, which is - while pessimistic by nature - inherently biased towards a long view by nature of what they do.  (e.g., short-term equity appreciation doesn't have any impact on debt coupons... but if there is any point over the term of the debt - typically 10 - 20 years for big power projects - when there is the potential that the borrower might not be able to make their debt payment, the debt provider loses.)  So while the short-term criticism is fair as applied to public equity/commodity brokers on wall street, I'm not sure that has anything to do with why banks are running away from coal.

Moreover, the underlying issues affecting coal are the same as those affecting other power assets: namely, that as we enter a build-cycle in the generation sector, one has to justify those investments on the basis of their marginal cost and capital recovery... but the price we see on the grid today, dominated as it is by old, dirty, largely amortized capital is much lower.  Thus, just about any new generation technology is going to raise the cost of power... and therefore, the current prices of power aren't high enough to justify any of them.  So do we build really expensive, really dirty stuff first, really expensive, really clean stuff first or sort-of expensive, really clean stuff first?  That shouldn't be a hard question, but for the fact that our regulatory model is biased towards the former.  We need a regulatory overhaul to build the better stuff first, and that's what a proper carbon market ought to do - but that means we need incentives to build the clean stuff today, not just out at some point in the future where we've built enough of the stupid stuff to raise the cost of power (both through expensive capital and carbon-compliance costs) to justify the stuff we should have built in the first place.  This is why it's so critical that our carbon regs have carrots for early action, not just sticks against polluters - and why carbon policy needs to reward anyone who lowers carbon, with all the flexibilty of a market rather than just a few government-picked winners.  In short, it's why we need a vibrant carbon market.

Isn't the point of all this carbon psycho stuff to create a huge trillion dollar "tax" base market to get into the worlds pockets and make the wealthy even moreso . A tax created from Nothing !! Nothing !! No back up to show whos emitting what amounts of CO2 . No accurate measurement devices . Just faith that the "wes" know what they are doing . Just like worthless subprime mortgages , made from nothing ( no asset backing) What disturbs me most is the mixing of the "new world worshop religion" with governments and business alike. Most ,like lemmings are beginning to bow at the carbon altar. Few are asking questions , fewer still are stating the truth about CO2 trading and sham global warming . Out of intimidation and fear . Good ole Al, sez if you don't believe his scam scheme you are a heretic (another religious word ) but he feels we should let gentle mother goddess earth be rid of gases that existed in larger atmospheric quantities 1,000,000 yrs ago than today - oh and its the coldest spring here in Michigan in last 100 yrs - global warming my kiester !!!