By Jim Kharouf
One takeaway from the Carbon TradEx America Conference this week is that this market has likely hit its low point in the U.S. When we look back at things a year or two from now, market participants might say, “remember when?”
Remember when we met in Chicago and experts in this industry were saying that there is not a single piece of moving legislation that will bring carbon, SO2, NOx or even renewable energy credits markets forward on a national level. Uncertainty was at its height.
Remember when executives from the United Nations and European markets told the audience that the U.S. has severely damaged its relationship internationally to the point where no one could trust its word about climate policy.
Remember when everyone was hanging the future of U.S. environmental markets on a national renewable energy standard legislation from Sen. Jeff Bingaman, a political move that some called a “Hail Mary pass.”
Remember when health care reform, financial services reform, the great recession, Climate-gate, White House cowardice and Congressional fighting formed the perfect storm against the Democrat’s push of the ultimate Republican-idea of a market-based solution to climate change.
Yes, 2010 will be remembered as the year in which emissions and other environmental markets had seen their darkest days. It may also be the year in which Europe firmly established its emissions market and continued to grow it. It could be the year in which China, Australia, even Japan made the decisive move to design a carbon trading scheme for those respective countries while the U.S. battled internally into gridlock.
For far too long, the emissions markets foolishly thought that they were just another commodities market -like natural gas, gold and soybeans – where participants gathered to establish a legitimate price for carbon. What this market didn’t realize, is that not only does the public not understand futures and forwards markets, but neither does Congress – and that includes the small group of Congressmen on the House and Senate Ag Committees who are supposed to be overseeing these markets. Without a basic understanding of how traditional markets work, who really thought they would put their political weight behind another commodity market that A) would likely raise the cost of energy and B) create a new derivatives market after Wall Street and AIG misused derivatives markets so badly that they ran the global economy into the ditch and then ran home to central banks like spoiled children to bail them out.
And it could be the year in which those who got outflanked by deniers, conservatives and Tea Partyers, decided to regroup and do something about it. Maybe it’ll be the year that emissions markets reclaim the high ground on this issue and use simple messages to convince regular folk in Wisconsin, Ohio, and Georgia that without a price on carbon, this country will not remain competitive in a global marketplace. If we do not put a price on carbon and establish a long-term energy policy, companies and utilities will not be able to plan for long-term development of manufacturing, power and transportation. Burying one’s head in the sand for a few more years might put you a bit more at ease, but its lazy. And while this country continues to rest on its old, antiquated energy supplies, other countries from Europe to Asia are investing in cheaper, clean and renewable energies that will give their children and grand children the upper hand economically.
This message ignores the scientists, which let the industry down in a big way in 2010. It even ignores the machinations of how a carbon market would work. But it delves into the real shorter-term issue that grabs attention – competitiveness and jobs. The issue of global warming is significant, and in virtually every other country, it seems to be the reason that governments and businesses are acting. But in the in the U.S., let’s face it, the message that “doing nothing is far easier and even better than doing something,” worked well in 2010.
So question now is, can this industry present a message in a way that will make 2010 look like the darkest days?