Live from the Wall Street Green Trading Summit
We’re coming at you live with special Red, Green, and Blue coverage from New York’s very own Wall Street Green Trading Summit.
The WSGTS claims to be the longest running and most comprehensive environmental market event in the industry (and we have no reason to doubt them!)
Today (and maybe tomorrow if my schedule allows) we will be checking in on:
* Latest Innovations In Carbon Trading & Finance
* Insights Into Renewable Energy Market Opportunities
* Linkages of Cleantech Investment & Carbon Trading
* Strategies of Green Hedge Funds
* Why Energy Efficiency Presents Investment Opportunities
After the morning sit in session, I can say this: the conference assumes that people are inside baseball. Which is great. But it’s meant an early morning crash course on catching up with the Waxman-Markey bill, AKA the American Clean Energy and Security Act. I didn’t know what was in the bill coming into today, (it only published yesterday) so some of the stuff that I’ve been hearing has gone over my head. The big takeaway though: even if that bill gets through as is (and that’s not likely, right?) its still miles and miles away from anything that the UNFCCC is going to like.
Credit where Credit is due: It’s a Good Bill.
This, from TIME:
The sweep of the Waxman-Markey bill, known as the American Clean Energy and Security Act, is massive. It includes provisions to require that a quarter of U.S. power production be based on renewable energy by the year 2025; investments to facilitate mounting those new energy sources onto the grid; incentives for green buildings, appliances and vehicles; and an ambitious schedule to reduce greenhouse gasses by 20% below 2005 levels by the year 2020. The goals are even more ambitious than those in Obama’s plan, which only calls for a 14% reduction in the same period…
However, America’s position on climate change, even in Obama’s world, is still very much antithetical to the international mode. As of right now, the Obama administration has said that they would just love to pass a bill domestically in line with what the UNFCCC is doing, but that that is not going to be so easy. Remember all that hoopla about getting to 60 votes in the senate? Well, to ratify an international treaty, you need 2/3rds. Since the Minnesota seat is still up in the air, that leaves us with the nice solid round number of 66 votes to get in on an international treaty. That ain’t happening. So, instead they are building a bill that, while big in scope, is American centric to the max.
Lots of discussion has hinged on the Cap and Trade project. For those of you who, like me, are running a little beind, here’s the situation: The Gov’t establish a cap on Carbon. If anyone busts the cap, then they have to start a project elsewhere, and to the extent that you are able to introduce reductions into an uncapped country or market, you are allowed to go over by that amount. You bring the global environment up to speed, and you end up doing something good over all. That’s the theory, right?
Troubles in International Waters
Well, here’s the first potential sticking point in Waxman-Markey: to get credit for an offset, you have to investing in a country that is already doing better then baseline. In other words, a developing country needs to already be making overall improvements in the sector you are investing in… and then your offset program needs to improve it even more. If you are someone who wants to trade CMD’s in a third world country, this is trouble: it effectively makes your offset project useless unless the gov’t or the population in that country is already invested in improving the system. This point is clearly going to be one of crazy contention, but as of right now that’s a big deal. While it makes sense environmentally (incentivize third world countries to get the ball rolling, opening themselves up to the offset market) The UNFCCC is not going to look kindly on that sort of thing at all.
Second Waxman-Markey pressure point: If negotiations have not produced a commitment from major developing nations to reduce carbon, then the US will require importers of products from those countries to buy offsets/allowances to make up the difference. So, if a country out there like China won’t play ball at the Carbon negotiation table, then its going to start costing a lot more to import those “made in China” toys. That is not a provision that is going to pass easily. Lots of friction with the UNFCCC, and lots of friction for anyone who likes cheap cloths, toys, or xmas tree ornaments.
Ruben Kraiem, a partner at Covington & Burling LLP, did a fantastic (if dry) job of running down the other sticking points that he thinks the international community will have with the American centric bill, but in essence: Tariffs, protectionism and the American worker are not buzz words or buzz ideas that UNFCCC people are going to be thrilled about. We have a long way to go before Copenhagen in 250 (or so) days.
Sessions are starting back up: more to come!
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About the Author
Alan Smith Alan Smith is a Freelance Producer in Brooklyn New York who’s been fortunate enough in the past to work on a Peabody award winning radio show (the Brian Lehrer show, WNYC Radio) and an Emmy nominated TV program (Brian Lehrer Live on CUNY TV). Other highlights include PhilanthroMedia, a new media company which works for social change with non-profits and foundations across the globe. In my spare time, I’m interested in the science and politics of the current green movement, and write about those things in and around whatever else crosses my grill at www.livingtheamericangreen.org
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