Climate Change

Published on November 19th, 2010 | by Susan Kraemer


Elizabethan Era Bank Buys First Carbon Credits From the New World

November 19th, 2010 by  

The venerable British bank, Barclay’s, founded four centuries ago right at the end of the reign of Queen Elizabeth I, and NRG Energy Inc, the largest US independent power producer, have just completed a deal for the very first carbon permits to be offered by California’s planned cap and trade program to reduce pollution in its AB32 climate legislation, according to Bloomberg News.

The permits will be delivered in December 2012, according to the head of US emissions trading at Barclays in the UK, which has been involved in (EU) carbon trading for some time. The trading begins in 2012 for utilities and manufacturers, and by 2015, for vehicles.

(Tesla has already benefited from carbon trading, receiving $13 million from Honda in carbon trades, since electric vehicles reduce greenhouse gases. Honda has been one of the last of the major car manufacturers to move to develop electric vehicles, so by 2015, it may still need permits to produce gas cars.)

The first permits are offered at $11.50 a ton, but by 2020, could reach as high as $30 a ton. Market conditions can only determine the price to pollute, so the cost (to polluters) and the benefit (to innovators) can vary. By contrast, pollution limits are fixed. They cannot be exceeded.

The advantage of cap and trade over carbon taxes is certainty. Pollution is capped and reduced.

The cap: a total pollution allowance, is set in advance and reduced each year, in order to meet greenhouse gas reduction targets.

Carbon tax
With a carbon tax, by contrast, the price of pollution is fixed, but the limit is not, so pollution is not necessarily reduced. Theoretically, the rich could continue to pollute, because a tax is just money, (in the same way that the rich can afford to pile up the speeding fees that the rest of us cannot).

Despite an extremely well-funded and pervasive disinformation campaign by polluters that could end civilization by spoon-feeding lies to make us a nation of climate zombies, Californian voters managed by some miracle to stand up to the fossil industry, and to protect our chance at joining the rest of the world in developing the new clean energy future.

If we can transition to a clean power future, the human race can survive another four centuries, at least. Four centuries is as long from now, as when this image was painted of Queen Elizabeth I. but in only three centuries, half the planet will be too hot to live on by just 2300! In four centuries sea levels will have obliterated all of our coastal cities including of course London, Hong Kong, and New York.

According to the very readable economic historian Fernand Braudel (The Wheels of Commerce), it was in the Elizabethan era that we created the legislative foundations of economic life that continue to underpin modern capitalism in western democracies. Laws governing economic exchanges are the reason that western civilization flourished while more lawless places did not.

The polluters prefer the lawlessness of failed states, so they can pollute till they run out of extractable fossil fuels, which will hit them sometime later in this century. But if we don’t put a cap on pollution in the next few years, there won’t be a much of a world for future centuries.

Wouldn’t it be wonderful if we could have another four centuries of civilization?

If widely adopted, cap and trade would make this possible, by simply capping and reducing the dangerous greenhouse gases that foreclose our future. Queen Elizabeth’s legislative heritage, and the longevity of Barclay’s Bank shows us that good legislation like AB32 builds real civilizations that last.


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About the Author

writes at CleanTechnica, CSP-Today and Renewable Energy World.  She has also been published at Wind Energy Update, Solar Plaza, Earthtechling PV-Insider , and GreenProphet, Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times.    Follow Susan on Twitter @dotcommodity.

  • Ed

    The Cap and Trade problem is well addressed by other cementers. In simple terms our continued reliance on 19th Century energy sources and conversion technologies has been driven by flawed economics: stealth subsidies benefiting the Carbon Crowd over the past 75 years, unrecoverable private R&D and infrastructure costs needed for modernization, and piecemeal subsidies granted by fickle politicians.

    Cap and Trade sounds attractive in theory and it can work in limited situations. If used to address a fundamental problem, it can translate to a widespread casino-like roller coaster of financial uncertainty, not unlike the recent mortgage market. Cap and Trade cannot set the course for market-driven change to correct long standing, massive energy-related problems in the overall USA economy, and it cannot achieve social/political sustainability.

    The road to the future could be smoothed by a long term program based on CARBON PRICING and FINANCIAL TRANSITION tools. These tools (cart) must be used to address defined National goals and realistic supply considerations (horse). Change was made by many other nations following the petroleum supply “wake-up calls” of the 1970s. These proactive nations have not been dragged into making costly international security expenditures. Nor have they excessively suffered from adverse balance of payments with others linked to funding world terrorism.

    A well structured CARBON PRICING and FINANCIAL TRANSITION program could promote orderly phase-in of economically beneficial, environmentally benign, CLEAN ENERGY SOURCES and CLEAN ENERGY CONVERSION TECHNOLOGIES (whatever they may be, based on predictable investment economics, NOT unpredictable subsidies granted by politicians, or casino-like roulette of the commodity market). The starting point (in the new era with no more entitlements) must be that REVENUE from any CARBON PRICING plan must be a $ for $ offset for REDUCED INCOME TAXS. This will plug using revenue for subsidies, or make-up funding for loopholes.

    If the USA adopted visionary energy policy in the 1980s based on known long-term supply and prudent National interest, would things be different in 2010? Think about the alternative picture of our Nation with a world-revered treasury; and a post-Vietnam, recovered shining image. Also think about today’s foregone possibilities for achieving clean energy, even if an Apollo-like expenditure was needed. Congress can still set the stage for 15 – 25 years of real progress, instead of perpetual partisan bickering while we taxpayers pay their salaries.

    Congress and the President must get on the same page to establish a National policy framework, not micromanagement of a yet-to-be-developed and long overdue program. In addition to the National framework (let’s call it NATIONAL SECURITY AND ENERGY CHIOCE OBJECTIVES), leadership must establish the legal authorization for the program: including the long-term milestones, schedule, and administrative budget. An example of this type of law is found in federal Clean Water Act at . Most of the “meat” is described in the first 25 pages of this 234-page (YES 234 PAGES) law which is mostly as it was when adopted in 1972, though periodically updated while it has continuously operated in all States and Territories. We have recently witnessed derailments resulting from excessive legislative detail by our paid political creatures who operate the presence of secretive lobbying networks.

    As with the CWA, it all begins with the Congress and the President, but then it must be lawfully executed by professional policy/management overseers and staff, similar to what is done by the FDA, NTSB, FAA, National Science Foundation, National Advisory Council for Environmental Policy and Technology, Federal Financial Institutions Examination Council, etc. Congress, however, must periodically hold oversight hearings to ensure focus and progress is being made to achieve the National Objectives. Over time, legislative update and court decisions will add to the body of law. If a long-term, thoughtful process is followed, the risks and commotion of our continued reliance on 19th Century energy sources and conversion technologies, will become a distant memory.

    If the 55 delegates to the Constitutional Convention could adopt the US Constitution in 1787, then the 535 serving in today’s Congress and the President should be capable taking prudent action to achieve 21st Century energy supplies and conversion technologies for the USA before China and others smother our economy.

  • Scott

    Frank and Kiki,
    I hate to so you both have it wrong. Carbon trading is a sham altogether! You cannot place a monetary value on nature as it is priceless! To even think that having a corporate entity buy carbon credits to save the Earth is delusional! This was a clever corporate veil pulled over your eyes! To overhaul the system is to still have belief in it, the whole idea needs to be burned in heap like the swaths of Amazon and Indonesia rainforest have been!

  • Kiki

    I agree with Frank. The cap and trade is still in it’s relative infancy. The so-called ‘wrinkles’ in the European system are a long way off from being erased and I suspect that what is needed is nothing short of an overhaul of the whole system.

    The problem is, no one really knows where exactly the faults lie in a system and as fundamental as the truism is that ‘without knowing the problem, there can be no way to test it.’

    Having said this, extensions of the cap and trade system and its continued use will allow us to (and pardon the expression) give the system a whack and a shake and see what falls out.

  • Frank Hanlan

    I think that this article oversimplifies the advantages of cap and trade and the differences from a carbon tax. Cap and trade can be manipulated by the financial markets and there have been well documented problems with the European cap and trade system.

    A weakness of carbon taxes is who administers the system and how the money gets spent. As we have seen in the U.S. gov’t is being blocked by the Republicans. In Canada the gov’t is not interested in taking any action in attempts to placate their base and businesses dependent on fossil fuels.

    While it is definite action and a starting point, I believe that US$ 11.50 a ton is far too low. Even Alberta’s C$ 15 per ton is far too low to be effective or realistic.

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