The California Air Resources Board has imposed a limit on carbon dioxide emissions on California businesses.  The limits will be lowered each year until 2020.  Industries can obtain carbon credits, initially free but which later must be purchased, in order to emit more carbon dioxide than the regulations decree.  See more of the story from the San Francisco Chronicle here.

These regulations will increase the cost of energy, hence the cost of doing business.  These costs will be passed on to consumers.

The carbon credits can be bought at auction and traded.  Experience in Europe and in other markets  in the U.S. shows that these schemes are ripe for fraud.  Back in 2010 it was found that 90% of the carbon trading volume in Belgium was due to fraudulent activities.

The U.S. used to have a climate exchange but that collapsed, see Carbon Credit Trading Collapses in US.  In 2010, The Chicago Climate Exchange saw prices of carbon credits go from $7.50 per ton to a nickel per ton before it ceased operations.  The Regional Greenhouse Gas Initiative, a consortium of ten Northeastern states, also collapsed last year.

Carbon trading is a wholly artificial market created by government edict rather than any real need for the product. Unlike traditional commodities, which sometime during the course of their market exchange must be delivered to someone in physical form, the carbon market is based on the lack of delivery of an invisible substance to no one.   And it may have contributed to the current financial crisis.  Major financial institutions such as Goldman Sachs, Barclays, and Citibank hosted carbon-trading desks.

The alleged rationale behind this scheme is that it will forestall global warming.  But observational evidence shows that carbon dioxide has no significant effect on global temperature.  Take a look at the graph below from a 1988 prediction made by climate guru James Hansen (h/t to Steve Goddard):

For more on Hansen and his predictions see: “Climastrologist” James Hansen versus reality

I predict  businesses that can, will leave California.  That will help reduce emissions.  This will be an interesting experiment; one whose negative impacts will perhaps show the foolishness of imposing a national cap & trade scheme.

See also:

A Perspective on Climate Change a tutorial

The greatest danger we face from global warming is that politicians think they can do something about it.

On December 6, negotiations will begin in Copenhagen for a new agreement to replace the 1997 Kyoto Protocol. The hope is these talks will produce commitments from each nation that, collectively, would keep temperatures from rising 2 degrees Celsius (or 3.6 degrees Fahrenheit) above pre-industrial levels. That will require deep cuts in emissions, as much as 80 percent among industrialized nations, by mid-century.

In his Sep. 22 speech to the UN’s Global Warming Summit, President Obama said:

“That so many of us are here today is a recognition that the threat from climate change is serious, it is urgent, and it is growing. Our generation’s response to this challenge will be judged by history, for if we fail to meet it – boldly, swiftly, and together – we risk consigning future generations to an irreversible catastrophe.”

Reality check: Global temperatures have been steady or falling since 2000, and the lack of activity on the sun portends further cooling. Also civilizations flourished in previous warm cycles. Where is the empirical evidence that climate change is ” serious, urgent, and growing?”

See the “WryHeat” blogs:

Your Carbon Footprint Doesn’t matter And Natural Climate Cycles

Obama: “Rising sea levels threaten every coastline.”

Reality check: Sea levels have been rising on and off since the end of the last glacial epoch13,000 years ago. The rate of sea level rise has not increased in recent decades over the nineteenth and twentieth century average. See: Sea Level Rising?

Obama: “More powerful storms and floods threaten every continent.”

Reality Check: There is no upward global trend in storms or floods. Besides, increased storminess is associated with colder climates. Clarke, M.L. and Rendell, H.M. 2009. The impact of North Atlantic storminess on western European coasts: a review. Quaternary International 195: 31-41.

Obama: “More frequent drought and crop failures breed hunger and conflict in places where hunger and conflict already thrive.”

Reality Check: The geologic record and other proxies show that in North America, droughts equal or greater in magnitude to those of the Dust Bowl period were a common occurrence during the last 2000 years. Studies in other parts of the world show no evidence that warming increases the frequency or severity of droughts. (CO2Science.org database)

It seems that President Obama is long on flowery rhetoric and short on facts. And he seems to be ignoring the costs.

A new Congressional Budget Office (CBO) report “The Economic Effects of Legislation to Reduce Greenhouse-Gas Emissions” ( http://tinyurl.com/mou685 ), shows just how weak the case for the proposed cap-and-trade plan really is. In fact, the CBO demonstrates that the theoretical benefits of Waxman-Markey to the United States fall far short of its costs. Also, the CBO report reveals that the costs borne by the U.S. may exceed the benefits to the entire world. The CBO estimates that even a pessimistic estimate of the danger posed by climate change is 3 percent of GDP, which won’t occur until 2100. At the same time, CBO estimates the hit to the U.S. economy from H.R. 2454 is in the range of 1.1 to 3.4 percent of GDP by the year 2050.

By the logic of the climate bill, we will be spending current dollars in the hope of saving future discounted dollars. The effect of carbon restrictions in the U.S. will be further discounted if other countries don’t go along with their own restrictions. See

http://canadafreepress.com/index.php/article/15010 for an analysis of the CBO report.

Of course, if Congress fails with Cap & Trade, the EPA is set to regulate carbon dioxide as a pollutant based on some fantasy data, mainly from the IPCC.

The U.S. Chamber of Commerce, trying to ward off potentially sweeping federal emissions regulations, is pushing the Environmental Protection Agency to hold a rare public hearing on the scientific evidence for man-made climate change. If the EPA denies the request, as expected, the chamber plans to take the fight to federal court.

Why are many politicians pushing for carbon control? Some may be doing it through ignorance or hope of political gain, but others realize the controlling carbon controls energy, the life-blood of industry. With government control of energy, governments will control the means of production, and that is the definition of socialism.

It is time to ask all our senators and representatives: “where is the evidence.” I’ve asked that question in letters to President Obama several times so far, but he must be too busy to respond, or maybe John Holdren is still looking for it.