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Tuesday, November 23, 2010

"Good riddance CCX"

Does the closing of the Chicago Climate Exchange say anything about the viability of cap and trade?:

Good riddance CCX, by Gernot Wagner: The Chicago Climate Exchange, one of the first voluntary cap-and-trade programs, is shutting down next month. That's bad news for the planet, isn't it? Just take a look at today's Wall Street Journal editorial page for an apparent confirmation. There the news is being celebrated as "cap and retreat." Check.
That should indeed be confirmation enough. Sadly, what's good for the Journal tends to be bad for the planet. ... The full editorial is behind a firewall. That's just as well. The rest is as wrong as the beginning. ...
There's also a much larger point here. The CCX was voluntary. Companies volunteered to sign up. It doesn't take a Ph.D. in economics to realize that the only companies who sign up for reasons other than marketing purposes are the ones that have allowances to sell. Those that need to buy them, stay as far away as possible.
No market can operate under these conditions. If anything, it's surprising the market held up as long as it did—no doubt due to companies' willingness to write off their participation as a marketing expense. ...

CCX did provide some valuable lessons for participants. Chief among them, how to implement such a trading system internally, how to minimize emissions and make money, and whether and how it would be different from SO2 trading...

But CCX was never meant to be anything other than a precursor for a U.S.-wide system. ...

    Posted by on Tuesday, November 23, 2010 at 12:45 AM in Economics, Environment | Permalink  Comments (7)


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