McCain Statement

I wonder if other Europeans get the same feeling as I do when they read Climate Change comments from the US politicos. Its a feeling that they don’t really understand what the trading issue is all about.

 

Sure, many politicians on every continent can be accused of the same thing. But something about the American view really is always so… unsettling. Okay, okay, you might say they have many issues to comprehend and speak intelligently about during the campaign season, and they cannot be blamed for muttering the blandest and acceptable comments. This is clearly understandable. Climate Change can be taught, but the many issues about trading? Caps? Allocations? The inaccuracy of credit production? The quelling of economic growth?

 

When I hear Hillary, Obama, and McCain speak, they seem so far from the Gore point of view. (Where is Al, anyway? Has anyone seen him? He’s not returning my calls).

 

Take a look at this one by McCain. (From PointCarbon.com a pay site)

 

20.03.08    McCain pledges commitment to reaching global climate agreement

US presidential hopeful John McCain on Thursday expressed his commitment to reaching an international agreement on climate change – an agreement that would include large developing countries, such as China and India.

“I am confident that we can reach a global agreement that would include China and India. I believe it is a compelling issue for the world’s environment, and I am committed to it,” the Republican senator and presidential frontrunner told reporters in London, following a meeting with UK Prime Minister Gordon Brown.

 

Considering that he will be the next president, it is a bit worrying.  (I say this because he is ahead in the polls if he faces either Obama or Hillary – and I am counting on them not agreeing to a joint ticket. Although, it might be a surprise if Gore comes back to be Vice President, or some other similarly surprising name).

 

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Why Many Different Credits Would Be Better

In the last few weeks there have been a few Carbon market 'firsts' announced.

 

The first UN Credits traded on NYMEX (RNK and Vitol), the first ECX UN Credit trade (TFS and Eneco), the first RGGI Auction 'announced' (New England states), and even the first CER deliveries to the Swiss Registry (by a bunch of arrogant Dutch fools).

 

What is more interesting about these events, aside from the PR value, is the filling in of the gaps in the curve.

 

Since the EUA has been issued, it has maintained it predominance in terms of liquidity and, dare-I-say-it, reputation. However, in my opinion we will soon we will see it being replaced as the benchmark as more CERs come to the market. The positon in the market of the other credits, as they become more liquid, will be similar to that of junk bonds.

 

Thats right, the CER will be the 30 year bond of the Carbon world and all others will gague their value against them.

 

o        The ERUs, the retarded sister of the CER, will perhaps trade closer to CERS.

o        The VERs and VCUs will be 'credits in waiting' like the "always the bridesmaid, never the bride".

o        The RGGI credits will be the exclusive toy of the posh New England players and market churners of White Plains, NY (like that Sulfur thing).

o        The California Credits will be owned by Stephen Speilberg and Tom Hanks.

 

About the only real value of an international and basis-risk play market is the amount of specialists employed due to the complicated nature of the various markets. With credits popping up all over the place, there will be plenty of jobs for those soon-to-be unemployed equity traders. 

 

 

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Bearish Markets and the Carbon Market?

    Right! Here we are folks in the beginning of a healthy correction/bear market. What does it mean for the Carbon Market?

    I want your views. What do you think? What types of influence do you see? List them for me in one-liners and I will publish them in the next weeks.
For example. With the coming lay-offs similar to what followed the 1987 collapse (Yes, i am THAT old) I expect quite a few financial market layoffs.This might bleed into the Carbon market as potential investment money might dry up.  But in this example we can say that there is a major effect and a follow on. Namely, if investment money dries up, another 20 things can be said to be connected. So list them for me in this way:

I expect investment money to dry up and a lot of people will be laid off. (Feel free to use the first segment over and over again, i.e., "I expect investment money to dry up and (therefore) .."

More examples (actually based on my views)

I expect the issue of global warming will move further down the food chain because employment will take higher precedence.

I think that investment into newer technologies will suffer since companies will reduce R&D in favor of shoring up the failing share price.

  Let me have your comments.

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