Climate change. It is one of the biggest “hot button” issues of our time, maybe the biggest. I used to be a firm believer in it.
Now I am not so sure. The most significant thing which has put me back near the fence came after I gave global warming some thought and did some researching on Capped carbon emmissions, Carbon trading, Kyoto accords, Carbon Trading, Exchanges etc…
From this, I realised that Carbon “trading”, the thing that’s supposed to save the world, is founded on yet another “free market” idea, ie: that a colourless and invisible naturally occuring gas can be “traded” as it turns from and into other chemical compounds by entirely natural processes. That thought in itself gives me the creeps. Free markets do have a place, but they have also reeked great havoc in many societies when left unchecked. It is beyond doubt that inequality has increased since these ideas became mainstream again in the 1980s.
So it seems a bit suspicious to me to link the “free market” with mother nature. I mean, we do it with oil – how does that work out?
And what will be next? Will we trade water and fresh air ? Oh wait, private corporations have already tried to “own” rain water in Bolivia some years back – that idea didn’t go down too well (pun intended) with the locals – and that idea was abandoned. But it does highlight the fact that no idea is too preposterous for “free market” devotees to try and slip into law, somewhere, somehow.
But let’s say Carbon trading is the way to solve this climate crisis – now to do this trading of Carbon, you need Traders and Exchanges, just like any other sort of commodity.
And who are usually the main beneficiaries of the efforts of traders and exchanges ?
The already wealthy.
Sure, some every day people benefit from trading shares, either directly or through some sort of managed scheme, but generally speaking, only the minority of ordinary people benefit from any form of share trading. Far fewer people – only a very tiny number – benefit from other forms of trading and exchange such as currency trading, futures trading and bonds trading.
Back to carbon trading – one financial opinion from London opined that greenhouse gas trading could become “the biggest commodity market in the world” if all the major polluting countries and corporations could be persuaded to sign up to an exchange.
How would you convince nations and global corporations to sign up to an invisible gas exchange ? You’d have to convince them that they needed to clean up their act… that they needed to reduce their “carbon foot print”, that they can actually profit from making themselves look good by becoming, at least on the surface, globally responsible citizens and saving the world.
Well, if you were already well connected in western political and financial circles that would help alot to get the ball rolling right? If you were already a known “brand”, and a trusted public figure you are half way there to convincing enough other influential people to start holding conferences, create UN committees, create lobby groups, get new laws and standards passed, get your friends in the media on board, etc….that is, to build a movement from the ground up.
Someone did take the plunge in the early 2000s. The first and most significant company involved in Carbon trading was “Generation Investment Management” – or GIM, founded in 2004. This company today advises its now huge list of major corporate clients of their responsibilities in lowering their carbon foorprints and going “green”. And advising them how to take advantage of the legal and political winds that might blow green or brown. It would be helpful to know the movers and shakers in Washington and Brussels to accomplish that.
But you also need a trading exchange as well in order to save the planet and fortunately for GIM, this exchange had already been created as well the previous year in 2003.
It was called the Chicago Climate Exchange (CCX).
The CCX was co-founded by Richard Sandor, a former research professor at Kellogg Business School, Chicago along with former Goldman Sachs Bank CEO, and later Bush Treasury Secretary, Henry Paulson, seen below on the right.
The CCX carbon trading exchange had connections with the Atlanta-based Intercontinental Exchange, (ICE) whose subsidiary is the International Petroleum Exchange, the world’s largest petroleum futures options market. The “green” founder of CCX, CEO Richard Sandor had served as an Intercontinental Exchange (ICE) board member since 2002.
Hmmm… not very green is it?
Anyway, by 2006 a new phenomenon had arrived around the world – A documentary movie called “An Inconvienient Truth” made by former American Vice President, Al Gore.
We all saw it. It even won an Academy Award for Best Documentary. Everyone was suddenly aware of climate change. Or global warming I think it was still called back then. Maybe this new climate change thing is really serious after all seemed to be the common thought back at that time.
I saw the film but I always thought the extreme right hand side of Al Gore’s temperature graph didn’t make sense…if CO2 today is “off the scale” – as the graph shows – why aren’t we all burnt to a crisp? Is Gore saying there is a lag effect which hasn’t shown up yet due to the huge time scale of the X axis? That we can measure CO2 content accurately but not temperature? Maybe that is true, I don’t know.
In Gore’s chart, the white temperature line simply stops following the already increasing CO2 red line.
These figures are now at least 15 years old now, so the increase in CO2 content in the atmosphere today, 2021, should be almost one-third the way along onto the “projected CO2 in 50 years” data point. Has today’s mean global temperature increased accordingly, looking at this chart?
But it is not even this chart or the science behind it that really concerns me the most. As a scientist, I am aware that you can create statistics, figures and charts to support any conclusion you want.
What bothers me the most about this particular mix of climate change philosophy are the types of people involved.
You see, An Inconvienient Truth in 2006 was not the first environmental creation of former US Vice President Al Gore. Before he created eco-movies Gore created Generation Investment Management (GIM) in 2004, the corporate carbon trading advisory company talked about at the beginning of this post.
Of even more concern, is that Gore’s co-founding partners in Generation Investment Management were former chief of Goldman Sachs Asset Management (GSAM) David Blood, along with Mark Ferguson and Peter Harris, also of Goldman Sachs. GSAM also became the largest Chicago Climate Exchange (CCX) shareholder, with about an 18% ownership.
Al Gore’s GIM was the fifth largest shareholder.
But the CCX didn’t do very well. People had not sufficiently understood Gore’s eco-movies it seems and in May 2010 the Inter Continental Exchange (ICE) – owner of the huge International Petroleum Exchange – agreed to purchase the Green CCX and its parent company Climate Exchange, along with two of its other exchanges – the Chicago Climate Futures and the European Climate Exchange – for $603 million.
By November 2010 the green CCX founder Richard Sandor had already pocketed an estimated $98 million from the CCX sale from his 16.5% ownership of it. Just how much Al Gore’s GIM and Goldman Sachs Asset Management ended up with from the sale is unclear – but they probably did okay out of their dealings with ICE.
So, we now know that Al Gore, ostensibly a global climate crusader had already set himself up privately to potentially make huge profits via his green GIM company, even before he became a public climate champion in 2006 via his famous eco-movie. If his public lecturing and climate policies were ever enacted, by say, the Kyoto and Paris climate accords, Gore was set to make potentially healthy profits from ventures he had set up some years earlier.
Is it a big deal that Mr Gore had pre-positioned himself using his well established public and political profile to profit from his climate change message? Is there a connection ? Does it matter?
And are Mr Gore’s dealings with Wall St types like Goldman Sachs, Henry Paulson and David Blood etc cause for concern? After all, these are the same types of people who had helped to create, and then profit from, the 2007/08 global financial crisis, and the subsequent taxpayer funded bail outs of the companies they ran.
Are these Wall St and Washington elite type activities well meaning efforts to save the world, or cyncial manipulations to grab more public money, or some combination of the two?
We can’t ever know for sure whether Mr Gore is genuine in his crusade, but, knowing of his pre-positioning of himself in the “climate business” does take a bit of the authenicity off of his message for me.
It may well be Gore is still correct in his climate beliefs. But after finding out a bit more background about his dealings, and who the people and organizations he has had dealings with, I’m now less convinced. I’m now back closer to the fence.
I’m now wondering is this whole thing just another elaborate Wall St scam?
Let’s hope it is. If it isn’t we’re all in big trouble.