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Yale forestry & environment graduates & carbon credits trading industry

I've been reading an article called "Can Carbon Credits Slow Global Warming?" via the How To Be a 21st Century Capitalist" article referred by sebchan

in the USA, graduates from the School of Forestry & Environmental Studies (FES) at Yale University have been entering the Carbon Credits Trading industry - actually helping to build this industry.

"The theory is that the invisible hand of the markets will find the fastest, cheapest, most efficient way to make the necessary reductions in greenhouse gases. Under a cap-and-trade system, pioneered in the United States for acid rain, a government sets a national ceiling on emissions (the cap), which lowers annually. The clever CEO will, in principle, figure out a way to reduce her company's emissions to below her allotment. By carefully measuring how much carbon dioxide she's saving, she can sell the difference to someone who is unable or unwilling to meet his own goal (the trade)."

"The likes of Goldman Sachs, JPMorgan, and Morgan Stanley, along with specialized environmental-investment firms such as EcoSecurities and Natsource, have begun buying, selling, managing, and advising on hundred-million-dollar portfolios of carbon-offset projects. They're developing an array of sophisticated financial instruments that can be bundled, sliced, and swapped -- with each transaction bringing in a tidy fee. U.S. trade in offsets doubled in 2005 and 2006, and nearly tripled in 2007 to a total of $330 million. The worldwide market in carbon, dominated by Europe, already tops $64 billion."

the part I don't understand is, the last statement - the companies who are unable or unwilling to meet their carbon goals. doesn't this mean that some companies will just not bother to meet the goals, and decide to buy their credits - via a trade which is now available due this system? eventually all companies will need to meet their goals won't they? so this would be the end of this trading system? perhaps it's just a short-lived, bubble system like the dot-coms?

I do agree with one part - they mention that the environmental issues won't be taken seriously until it becomes an economic issue - especially for the capitalist society most of us live in these days. it's an unfortunate reality but one I think exists nonetheless.

"It's no surprise that his former students volunteer statements such as, "I don't think wealth is inherently bad. I philosophically feel like, unless markets value the environment, it will be destroyed," as Kuppalli puts it. Says another Forgach disciple from Yale, now in private equity: "True sustainability has to depend on economic performance.""

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