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Carbon trading Godfather

Carbon emissions trading might be useless tackling climate change but it is highly profitable for the financial engineers behind it.

The Godfather of pollution trading is an American called Richard Sandor, famous as one of the founders of financial derivatives in the 1980’s at junk bond trader Drexel Burnham Lambert, where he pioneered the “collateral mortgage obligations” that eventually brought the financial markets to their knees.

He was also architect of the first pollution permit trading scheme (in sulphur emissions) in the US in the 1990’s.Now he chairs the company controlling more than 80 percent of EU carbon emissions trading, Climate Exchange plc, which regularly launches “innovative” carbon products such as daily futures contracts and has set up trading exchanges in China, Canada and Australia.

Sandor meanwhile has been a big mover behind plans for a mandatory trading system in the US that would see his company’s income multiply.Under Sandor and chief executive and offshore insurance specialist Neil Eckert, Climate Exchange plc owns the European Climate Exchange based in London’s Bishopsgate, as well as the Chicago Climate Exchange and the Chicago Climate Futures Exchange.Business is especially booming in London, as Eckert boasted in a results announcement last week.

“ECX had a wonderful year and with the continuing EU discussion of an anticipated 30 percent cut (in emissions) by 2020 and particularly the move to 100 percent auctioning (of allowances) in 2011, shows significant long term growth potential.

Last year Sandor earned $1 m and Eckert £575,000.Sandors shares in the company are worth more than £40 m, and Eckert’s around £5 m on top of £7m worth of options.These riches came on the back of operating profits last year of £11.5 m, made almost entirely in London where trading in £70bn worth of emissions allowances by the European exchange’s 100 members, including such renowned environmentalists as Shell, Barclays and RBS, earned the exchanged £11.4 m.

Not that any of this finds its way into the governments coffers in the form of tax that might be invested in slightly more useful environmental measures.Climate Exchange plc is registered in the tax haven of the Isle of Man, where, according to its accounts, ”it is subject to tax at zero percent” having been set up there when it was simply a fund company in order to avoid capital gains tax.

The company also claims that its operating subsidiaries “are residents in various jurisdictions where they are subject to local rates of taxation”.In Britain this might be thought to refer to the company ostensibly running the exchange in Bishopsgate, European Climate Exchange Ltd.

But its accounts, filed quietly at Companies house, show that it is owned by an Irish company with exactly the same name. This is the company that earns the commissions.The synonymous British company is reimbursed for its costs of running the exchange while the profits that accumulate in Dublin are then returned to its ultimate parent company Climate Exchange plc in the Isle of Man  in the form of tax-free interest payments on the substantial loans from Douglas that fund the operation.

This kind of tax planning requires plenty of carbon intensive jetting off to board meetings in which ever countries the directors want their companies to be tax resident.This might not do much for the planet but it will good for business when airlines are forced into the trading scheme from 2012

 
Arctic methane causing concern

Huge quantities of methane below the Arctic seabed are showing signs of destabilising, according to research conducted in the East Siberian Sea. Scientists aboard Russian icebreakers have discovered that methane is leaking from the sub-sea permafrost far faster than had been previously estimated, raising concerns that climatic tipping points may have been reached.

As a greenhouse gas, methane is 25 times more powerful than carbon dioxide but emissions from subsea permafrost are not included in climate change prediction models. “The sub-sea permafrost should act as a cap or seal, preventing leakage,” Natalia Shakhova, of the University of Alaska. “Beneath it there is methane that has accumulated at high pressure.

But the permafrost is losing its ability to be an impermeable cap.” After water vapour and carbon dioxide, methane is the most significant of the gases that cause the atmosphere to retain heat. Levels have doubled since the beginning of the Industrial Revolution but 40 per cent of sources are natural, resulting from the decomposition of organic material in wetlands and other areas.

The permafrost that covers vast tracts of land in the far North is thawing, steadily adding methane to the atmosphere. The Arctic has warmed at about twice the rate of the rest of the planet. Climate scientists are concerned that as rising temperatures melt more permafrost, the added methane will raise temperatures further and so cause a wider thaw. Dr Shakhova said: “The climatic consequences of this are hard to predict.

This type of source has never been predicted by anyone and has not been included in climate models. We’re going to keep studying this region and investigating why this is happening. “Our concern is that the sub-sea permafrost has been showing signs of destabilisation already.” The permafrost covers the Siberian continental shelf, which extends up to 1,000 kilometres into the Arctic Ocean.

Dr Shakhova previously investigated methane releases from terrestrial permafrost and from northern lakes. Using Russian icebreakers to sample methane concentrations at various different water depths and above the surface at more than 5,000 locations, the team showed that methane was being released far faster than estimated.

They found that almost seven teragrams of methane, each equivalent to 1.1 billion tonnes of carbon, were being released every year from the East Siberian Arctic Shelf. A similar figure had previously been estimated to be the total for all world oceans. “This is a little alarming,” said Dr Shakhova. “We do not know how massive or sudden this outburst was.

We don’t know how many there were. We don’t know how close to the equilibrium we are. A lot of questions are still open.” Although difficult and expensive to conduct, surveys of oceanic methane production are crucial to the understanding of climatic tipping points.

According to the US Geological Survey, there may be twice as much carbon in the seabed as methane locked in ice, called methane hydrates, than that in known fossil fuel reserves. Only a combination of depth and temperature keeps them from being released.

Euan Nesbit, of Royal Holloway, University of London, said the work provided a vital baseline against which to gauge future changes. “This is an important marker point. Arctic methane emissions are clearly implicated in changes at the end of the last Ice Age, and they have shown that [methane from beneath oceanic permafrost] is a future risk from warming,” he said.

 
Sobering humour from the US

All of you out there in America and across the globe who have fought so hard to tackle the hideous enemy of our planet, namely carbon emissions, you know ....that bogus god you worship of "Climate Change" or "global warming" .....well, I feel it is necessary to inform you of some bad news. It really does pain me to have to bring you this disappointing information. 
Are you sitting down? 
Okay, here's the bombshell. The current volcanic eruption going on in Iceland, since its first spewing of volcanic ash this past week, has, to this point, NEGATED EVERY SINGLE EFFORT you have made in the past five years to control CO2 emissions on our planet. 
I know, I know.... (group hug)...it's very disheartening to realize that all of the carbon emission savings you have accomplished while suffering the inconvenience and expense of: driving Prius hybrids, buying fabric grocery bags, sitting up till midnight to finish your kid's "The Green Revolution" science project, throwing out all of your non-green cleaning supplies, using only two squares of toilet paper, putting a brick in your toilet tank reservoir, selling your SUV and speedboat, going on vacation to a city park instead of Yosemite, nearly getting hit every day on your bicycle, replacing all of your $1 light bulbs with $10 light bulbs ....well, all of those things you have done have all gone down the tubes in just the past four days.
 
 
The volcanic ash emitted into the Earth's atmosphere in the past four days has totally erased every single effort you have made to reduce the evil beast, carbon.  And, those hundreds of thousands of American jobs you helped move to Asia with expensive emissions demands on businesses... you know, the ones that are creating even more emissions than when they were creating American jobs, well I just know that seems worthwhile now.
 
 
I'm so sorry. And I do wish I had a silver lining to this volcanic ash cloud but the fact of the matter is that the brush fire season across the western U.S.A. will start in about two months and those fires will negate your efforts to reduce carbon in our world for the next two years.

 
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