New Way to Get Rich: Regulate Global Warming

Lissen up, Al Gore: The current issue of Fortune magazine shows how global warming regulation has been set up to enrich participants in cap-and-trade schemes. “There has never been a better time to own a polluting factory, landfill, coal mine, or chicken or pig farm in the developing world, ” writes author Marc Gunther, who explains that a new class of traders and financiers is preparing for a bonanza of wealth resting in so-called carbon credits. CRC’s Foundation Watch has described how the UN, EU and other global bureaucracies are working with investment bankers and venture capitalists to set up the the financial infrastructure that will let carbon traders like Gore’s friends and associates get rich.

Carbon traders will pay polluters for the emission credits they receive for controlling their emissions, hold the credits as investments or sell them at a profit to other polluters who can’t or won’t change their ways. In the U.S. these credits currently have no real value because there is no market outside those who voluntarily participate in carbon offset projects.

Writes Gunther, “Last year traders bought and sold about $60 billion worth of emissions allowances, mostly in Europe and Japan, where governments regulate greenhouse gases. If, as expected, regulation comes to the U.S., this country’s carbon-trading market is expected to be worth $1 trillion annually by 2020. That’s why investment banks, utilities, industrials, and hedge funds – among them GE (GE, Fortune 500), Goldman Sachs (GS, Fortune 500), J.P. Morgan Chase (JPNV.L), and AES (AES) – are rushing into the business of carbon finance.”

The interesting aspect of Gunther’s article is that he describes how entrepreneurs are preparing to profit from the emerging regulatory system.  When that happens left-wing greens will discover that brokerage houses can commodify their passion to turn off light bulbs and plant trees. Then the greens will belatedly denounce capitalist exploitation of the climate crisis while corporations celebrate their contribution to solving it. 

Gunther notes that Credit Suisse is already creating new investment products, bundling up carbon offset projects and then slicing them into securities priced according to risk:

 “If this sounds familiar, it should–it’s the carbon finance version of those collateralized debt obligations that investment banks used to sell mortgages.”