Carbon Trading Comes to Canada

New excitement from the wonderful folks who gave us the subprime mortgage disaster …

As we all know, markets are the very best way to make this a better world. That’s especially true of markets that don’t trade actual goods, but symbols of goods, and abstractions of symbols, and derivatives of abstractions of symbols … The less the market has to do with actual human economic activity, the better.

After all, if we didn’t have such markets, we would have missed out on many wonderful experiences. In the past decade alone we’ve had the dot-com bubble … the telecom crash … the sub-prime mortgage crisis … the collapse of Bear Stearns and Northern Rock

So of course we should all be delighted with this news:

The Montréal Climate Exchange (MCeX), a joint venture of the Montréal Exchange (MX) (TSX: MXX) and the Chicago Climate Exchange (CCX), announced today that it plans to launch trading of futures contracts on Canada carbon dioxide equivalent (CO2e) units on May 30, 2008, subject to regulatory approval.

“MCeX is moving quickly to launch the first exchange-traded carbon futures contract in Canada,” said Luc Bertrand, President and CEO of MX and chair of MCeX. “We are enthusiastic about creating this new derivatives market and about the launch of trading.”

“The demand for environmental derivatives continues to grow worldwide and the time is right to build a critical mass of trading activity in Canada,” said Dr. Richard Sandor, Chairman and Founder of the Chicago Climate Exchange. “MCeX products will meet demand from industrial participants to manage their emissions risks at the lowest cost while also creating continuous incentives for technological innovation that reduce carbon emissions.” … [MCeX News Release, March 14, 2008]

If that doesn’t just give you goosebumps all over, maybe you should pay more attention to our beloved federal Cabinet Ministers:

“I am pleased to see that organizations like the Montreal Climate Exchange are moving full steam ahead to set up Canada’s first carbon market,” said [Environment] Minister Baird. “As the Montreal Climate Exchange noted, our Government’s announcement on Monday of the details on our greenhouse gas emissions plan has allowed them to move forward and start trading.” …

“This is a good day for Montreal and for Canada,” said [Regional Minister for Montreal] Fortier. “The Montreal Climate Exchange has certainly taken a lead role in Canada towards setting up a carbon market, and I’m pleased to see that they are moving ahead. With tools like carbon trading available in our Turning the Corner plan, it’s clear that our Government’s actions in fighting climate change are on the right track.” [Environment Canada News Release, March 14, 2008]

Yes indeed, carbon trading, including trading in “environmental derivatives” is about to start in the Great White North. Multibillionaire Warren Buffet, who cannot possible be accused of sympathy for ecosocialism or anticapitalism of any sort, had this to say about derivatives, six years ago:

“I view derivatives as time bombs, both for the parties that deal in them and the economic system. … The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

The derivatives-driven credit crunch that started with predatory mortgage vultures and is now shaking global banking was the very toxicity event that Buffet predicted. And now the federal Conservatives and Quebec Liberals are letting similar vultures loose on our atmosphere.

Stand back, this could be nasty.

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Posted in Canada & Quebec, Carbon Pricing
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