WEBVTT - What's the deal with carbon trading? 0:00:00.240 --> 0:00:02.880 Brought to you by the reinvented two thousand twelve Camray. 0:00:03.120 --> 0:00:07.480 It's ready. Are you welcome to Stuff you should know 0:00:08.080 --> 0:00:16.400 from House Stuff Works dot Com. Hey, and welcome to 0:00:16.440 --> 0:00:20.200 the podcast. I'm Josh Clark. There's Chuck Bryant. He's given 0:00:20.239 --> 0:00:22.680 a little salute. I did. That was good stuff you 0:00:22.680 --> 0:00:26.799 should know. Army Sir, supporting for duty. I need a 0:00:26.840 --> 0:00:29.880 beard and a cigar. Yes, yeah, Chuck. How you doing 0:00:29.960 --> 0:00:34.159 wet like castro? Okay? Thanks? You know me way too well. Yes, 0:00:34.320 --> 0:00:39.520 I'm doing great, Josh you I'm great, Chuck on the show. 0:00:39.560 --> 0:00:41.239 What's your witty set up here? I don't have a 0:00:41.240 --> 0:00:43.640 wity setup. It's more of a depressing setup. All right, 0:00:43.680 --> 0:00:47.120 it's here. Um. Obama finally conceded that the energy bill 0:00:47.159 --> 0:00:50.280 that Congress is going to pass under his first year 0:00:50.479 --> 0:00:54.440 or so of the administration is not going to have 0:00:54.480 --> 0:00:58.200 a cap and trade segment to it. No. No, it 0:00:58.320 --> 0:01:01.200 was going to the House passed at some thing with it. Uh. 0:01:01.280 --> 0:01:03.880 The Senate's like, no, we're not going to. We just 0:01:03.920 --> 0:01:06.039 don't want to. We're not going to. It's not that 0:01:06.080 --> 0:01:08.399 there's anything wrong with it, but we're the Senate, so 0:01:08.520 --> 0:01:10.800 nothing's ever going to escape. This is like the black 0:01:10.800 --> 0:01:15.119 hole of legislation. Nothing can escape it, you know. Um, 0:01:15.200 --> 0:01:19.280 So cap and trade is dead and that's um really sad, 0:01:19.319 --> 0:01:22.640 as we'll see, because it can be beneficial, at least 0:01:22.640 --> 0:01:26.200 in theory. Um. And as a result, all of these 0:01:26.440 --> 0:01:29.119 voluntary initiatives, because it was going to be a mandatory 0:01:29.160 --> 0:01:32.760 cap and trade um set up for the United States, 0:01:33.480 --> 0:01:38.040 a bunch of voluntary stuff. Specifically out West, there was 0:01:38.200 --> 0:01:41.600 a regional cap and trade scheme that was going on 0:01:41.800 --> 0:01:43.959 or about to go on, and the whole thing was 0:01:44.040 --> 0:01:48.080 proposed and underwritten by Arizona because its greatest champion. And 0:01:48.160 --> 0:01:50.760 now that the Senate is like, no, we're not passing this, 0:01:51.120 --> 0:01:53.400 Arizona is like, by the way, we don't really want 0:01:53.400 --> 0:01:56.720 to do this voluntary falling apart. Um, there's a bunch 0:01:56.720 --> 0:01:59.040 of them falling apart. It looks like the only one 0:01:59.680 --> 0:02:02.040 that's knew that hasn't been set up yet it's still 0:02:02.040 --> 0:02:07.160 going forward as California. Well, of course, yeah, wow, that's disappointing. 0:02:07.400 --> 0:02:09.519 It is. And do you think we should let everybody 0:02:09.600 --> 0:02:14.040 in on what cap and trade scheme means? Yes, Josh, 0:02:14.080 --> 0:02:19.160 we're talking about carbon and it's basically a way to 0:02:19.240 --> 0:02:25.480 regulate carbon emissions through a market based much like you 0:02:25.520 --> 0:02:28.880 know any market basing like the stock market, except it's 0:02:29.840 --> 0:02:32.600 limiting carbon emissions. So what you do is you set 0:02:32.639 --> 0:02:36.760 a cap. That's the cap part, which is the limit 0:02:36.960 --> 0:02:39.520 of emissions you're allowed to admit as as a factory, 0:02:39.600 --> 0:02:43.079 let's say. And then the trade part comes in because 0:02:43.120 --> 0:02:46.760 you can if you don't use all of your emissions credits, 0:02:46.880 --> 0:02:49.679 let's say, you can bank them or you can trade 0:02:49.760 --> 0:02:52.359 them and sell them with your with your factory buddies. Right, 0:02:52.400 --> 0:02:54.640 there's a good way to say. That's exactly. It's perfect. 0:02:55.000 --> 0:03:00.320 As a matter of fact, Thank you, Chuck, Brian, everybody. So, um, 0:03:00.360 --> 0:03:04.200 there's a regional UM cap and trade scheme up in 0:03:04.280 --> 0:03:10.000 the Northeast that's been fairly successful so far. No huh, 0:03:10.320 --> 0:03:13.880 the northeastern states, like in New England, among I think 0:03:13.919 --> 0:03:19.000 electrical utilities, and it's voluntary UM and basically what so 0:03:19.080 --> 0:03:22.800 you have a body that's governing this and then they say, 0:03:22.880 --> 0:03:25.600 like they said, a cap, like you said, and let's 0:03:25.600 --> 0:03:28.400 just pull the number out of there. They can. All 0:03:28.440 --> 0:03:30.240 of the people who are members of this, all the 0:03:30.400 --> 0:03:33.760 electrical companies there are members of this combined are allowed 0:03:33.800 --> 0:03:37.520 to admit a hundred million metric tons of carbon dioxide 0:03:37.520 --> 0:03:39.760 next to you, and you're just making up that number, right, 0:03:39.880 --> 0:03:43.200 pulling it out of there. And then you you create 0:03:43.280 --> 0:03:47.200 these credits, right um, that are slices of that trenches. 0:03:47.680 --> 0:03:52.600 So let's say each trench is UM one. That means 0:03:52.680 --> 0:03:56.960 there's one million credits out there available for everybody. And 0:03:57.040 --> 0:04:00.680 let's say they're distributed evenly, maybe at first, but then 0:04:00.920 --> 0:04:05.440 Factory A puts out and there's ten factories, so each 0:04:05.480 --> 0:04:08.200 one can put out ten million metric tons of c 0:04:08.360 --> 0:04:12.800 O two next year. Okay uh. And then Factory A says, okay, 0:04:12.880 --> 0:04:16.800 we're accidentally putting out eleven million. Factory B, we noticed 0:04:16.839 --> 0:04:19.479 that you're on track to put out eight million. That 0:04:19.520 --> 0:04:22.240 means you have two extra credits. Can we buy one 0:04:22.279 --> 0:04:25.400 of those from you? Boom done? So these things now 0:04:25.440 --> 0:04:29.000 have a value money value, right uh. And there is 0:04:29.040 --> 0:04:32.960 a penalty for going over, which should be more than 0:04:33.000 --> 0:04:36.039 the credit is right right, otherwise there would be no 0:04:36.080 --> 0:04:42.640 incentive right to stay under right, Yes, very well said so, yes, 0:04:42.960 --> 0:04:44.800 So that is a cap and trade scheme and they 0:04:44.839 --> 0:04:47.800 are in existence, right, and scheme just sounds negative because 0:04:49.760 --> 0:04:51.560 scheme just sound they should change. The name has a 0:04:51.560 --> 0:04:54.400 negative connotation. It definitely does, and I can't help help it. 0:04:54.440 --> 0:04:56.360 Think that there are people out there like, oh, I 0:04:56.400 --> 0:04:58.640 don't want to cap and trade scheme. I don't really 0:04:58.640 --> 0:05:00.640 know about it. So that's just the word for it. 0:05:00.640 --> 0:05:05.000 Though it's not bad. There's actually a scheme in Europe 0:05:06.040 --> 0:05:11.320 that's fairly vital, heavily criticized, but still also it's the 0:05:11.360 --> 0:05:15.080 first mandatory one, I think in the world. Then it 0:05:15.120 --> 0:05:17.320 was born out of the Kyoto Treaty, right, Yes, the 0:05:17.360 --> 0:05:20.960 e t S, the European Trading Scheme is uh, like 0:05:21.000 --> 0:05:23.960 you said, born out of the Kyoto Protocol, which does 0:05:24.040 --> 0:05:28.440 not tell people, uh, tell participating countries how to participate. 0:05:29.040 --> 0:05:32.120 They just have to meet the standards. So Europe, the 0:05:32.160 --> 0:05:35.640 EU came up with the the e t S and 0:05:36.080 --> 0:05:40.640 it includes twelve thousand factories and utilities in twenty five 0:05:40.760 --> 0:05:44.200 different countries and each member state, I thought this odd 0:05:44.240 --> 0:05:47.960 sets his own emissions cap based on the Kyoto Protocol, 0:05:48.360 --> 0:05:50.520 which we are not a member of. No, we're not. 0:05:50.600 --> 0:05:52.920 I'm like, it's the Kyoto Protocol. This is the first 0:05:52.920 --> 0:05:56.800 time I've heard of this thing. That's not true? You okay, yeah, 0:05:56.800 --> 0:05:58.800 but well although we helped draw it up right Clinton 0:05:59.080 --> 0:06:01.800 the Clinton administration and did yes, and then it was 0:06:02.160 --> 0:06:05.600 scuttled when it came before it came into effect in 0:06:05.640 --> 0:06:08.600 two thousand five by the Bush administration, right because of 0:06:08.640 --> 0:06:12.599 fears that it would aid that it wasn't properly put 0:06:12.640 --> 0:06:15.520 together to begin with, and be that um financial the 0:06:15.560 --> 0:06:19.880 financial impact might harm America's economy well. Plus also it 0:06:19.960 --> 0:06:23.640 was divided divided countries by Annex one and Annex two 0:06:24.040 --> 0:06:28.159 and next one being industrialized nations and Annex two being 0:06:28.480 --> 0:06:33.240 um developing economies. The problem is is two of the 0:06:33.279 --> 0:06:37.200 world's biggest developing economies, India and China, are also two 0:06:37.240 --> 0:06:39.720 of the world's biggest polluters as far as CEO two 0:06:39.760 --> 0:06:42.360 emissions goes. And that was one of the problems that 0:06:42.440 --> 0:06:45.400 the United States had with the Kyoto Treaties, that it 0:06:45.440 --> 0:06:49.080 didn't put heavy enough sanctions on developing countries because they 0:06:49.160 --> 0:06:51.520 they're not required to meet the same standards. And that 0:06:51.560 --> 0:06:53.919 makes sense. It does make sense um and there's a 0:06:53.960 --> 0:06:57.760 certain amount of Hey, we already screwed up the world, 0:06:58.600 --> 0:07:01.719 but we learned from it. So now you can't build 0:07:01.760 --> 0:07:04.200 your economy by screwing up the world. Because we've already 0:07:04.240 --> 0:07:06.719 learned the lesson the hard way, even though we wouldn't 0:07:06.720 --> 0:07:08.600 be in this mess if we hadn't already screwed up 0:07:08.600 --> 0:07:10.640 the world. But you can't do the same thing we did. 0:07:11.040 --> 0:07:12.960 So there's a certain amount of that, But at the 0:07:13.000 --> 0:07:15.680 same time, there's also a certain amount of Okay, we 0:07:15.760 --> 0:07:20.280 need to remain competitive in the global marketplace. And one 0:07:20.360 --> 0:07:24.440 of the things, well, the whole point of carbon tax 0:07:24.640 --> 0:07:28.080 is to make it harder to emit or to make 0:07:28.320 --> 0:07:32.120 economic sanctions on emissions. So that means that there's an 0:07:32.120 --> 0:07:37.200 extra cost that American companies have to bear that companies 0:07:37.240 --> 0:07:40.640 in operating in China or India don't have to write. 0:07:40.680 --> 0:07:43.120 That's not a carbon tax, though that's different than carbon trading, right, 0:07:43.360 --> 0:07:47.800 it's no carbon taxes just straight up, you put X 0:07:47.920 --> 0:07:50.520 number of emissions out, you pay X number of dollars 0:07:50.520 --> 0:07:53.720 on those emissions. So there's an incentive to reduce your 0:07:53.720 --> 0:07:56.800 emissions because you're paying a lower tax. But both of 0:07:56.840 --> 0:08:02.720 them are de facto taxes on pollution. So we were 0:08:02.720 --> 0:08:07.280 talking about the e t S, sorry, the European trading. Yeah, yeah, 0:08:07.520 --> 0:08:09.560 this is that you're saying that it was controversial and 0:08:09.560 --> 0:08:13.240 one of the reasons. It's controversial because they, um, you 0:08:13.280 --> 0:08:16.240 can the government can allocate kind of it will It 0:08:16.280 --> 0:08:21.240 seems like so preferred industries maybe might get some free 0:08:21.280 --> 0:08:24.720 credits if they're inching up towards their limit, their cap limit, 0:08:25.160 --> 0:08:28.600 And basically they call it a permit to pollut and 0:08:28.680 --> 0:08:31.840 it exempts those industries as favorite industries are the ones 0:08:31.880 --> 0:08:34.160 that have the best lobbyists. So that's no good. No, 0:08:34.400 --> 0:08:38.960 Like everything, it gets tainted, right. And it's also, um, 0:08:39.120 --> 0:08:42.280 there is a market over there. You can buy carbon 0:08:42.720 --> 0:08:47.839 credits from the e t S just as a speculator. Um. 0:08:47.880 --> 0:08:52.199 But it's mandatory, which takes a certain amount of market 0:08:52.440 --> 0:08:56.400 um fluctuations or market base out of the whole thing, 0:08:56.480 --> 0:08:59.720 the whole equation, right, the mandatory participation. Yeah, right, right, 0:09:00.120 --> 0:09:04.520 So if you have a voluntary participation trading scheme cap 0:09:04.640 --> 0:09:08.800 and trade scheme, UM, you would think that, based on 0:09:09.000 --> 0:09:12.440 Adam Smith's theories, this thing would be flawless. Right. Where 0:09:12.480 --> 0:09:15.920 would you find such a thing in the United States? Yes, 0:09:15.960 --> 0:09:18.160 you would, Yes, since we're not a member of the 0:09:18.559 --> 0:09:23.240 Kyoto Protocol, almost called it the Pyoto Protocol. I think 0:09:23.280 --> 0:09:26.960 that's what you should call it. Um. That is uh, 0:09:27.040 --> 0:09:29.120 that's what we have here now, so we have We 0:09:29.360 --> 0:09:31.880 didn't participate officially, but I think a hundred and thirty 0:09:31.920 --> 0:09:35.880 mayors across the country implemented their own programs in their 0:09:35.880 --> 0:09:39.560 city that met the similar standards as the Kyoto, which 0:09:39.600 --> 0:09:44.800 is as heartwarming as moose playing in a sprinkler. Yesedently. Yeah, 0:09:45.000 --> 0:09:46.640 So that's good though, because we're we're getting with the 0:09:46.679 --> 0:09:51.559 program anyway. And you you wrote about the Chicago Climate Exchange, 0:09:51.600 --> 0:09:53.719 is that right? Yeah, so tell me about that one. 0:09:53.920 --> 0:09:56.920 So there's a guy named Dr Richard Sandor and uh, 0:09:57.000 --> 0:09:59.560 I believe he's an economist. He's out of Chicago. I 0:09:59.600 --> 0:10:02.280 know that munch um. And in two thousand and five 0:10:02.360 --> 0:10:07.679 he founded something called the Chicago Carbon Climate Exchange, the 0:10:07.720 --> 0:10:12.040 c X r UM, and it functions exactly like a 0:10:12.040 --> 0:10:16.040 stock market does. Actually that's not true. It functions more 0:10:16.080 --> 0:10:19.800 like a commodities market does, so like pork belly futures 0:10:20.000 --> 0:10:23.720 or oil or gold or something. But what they trade 0:10:23.720 --> 0:10:27.920 on the Chicago Climate Exchange are carbon credits. Yes, but 0:10:27.960 --> 0:10:30.440 it's still legally it's voluntary, but it's still legally binding. 0:10:30.600 --> 0:10:34.000 Right when you sign up as a company on cc X. 0:10:34.040 --> 0:10:38.280 What you're saying is I agree to reduce my carbon 0:10:38.280 --> 0:10:43.680 emissions by x amount um, and if I don't, there's 0:10:43.679 --> 0:10:47.560 an actually huge penalty for it. It's five grand per 0:10:47.640 --> 0:10:52.200 metric ton. Yeah. Yeah, it does real quick, and it 0:10:52.280 --> 0:10:55.360 is legally binding. So the cc X can levy these 0:10:55.400 --> 0:10:58.680 really stiff penalties for people who don't meet their quotas. 0:10:58.960 --> 0:11:01.600 Now on the c c X what they trade our 0:11:01.679 --> 0:11:06.040 carbon credits, So on any given day they're like maybe 0:11:06.400 --> 0:11:08.440 three four bucks. I don't know what they're up to 0:11:08.559 --> 0:11:11.440 these days. I know the ones in Europe, since it's mandatory, 0:11:11.760 --> 0:11:15.120 they're usually about ten times higher ten times higher in 0:11:15.200 --> 0:11:18.280 value than the ones in Chicago. Um, but let's say 0:11:18.320 --> 0:11:22.199 four bucks for a hundred metric tons of c O 0:11:22.320 --> 0:11:25.600 two emissions. Right. So, just like what we were talking 0:11:25.640 --> 0:11:30.400 about before, a company who is going to emit more 0:11:30.960 --> 0:11:33.800 can buy these credits so that they don't have to 0:11:33.840 --> 0:11:37.400 pay these stiff fines, but they have to buy credits 0:11:37.440 --> 0:11:42.000 safe from somebody who another company who is coming in under. 0:11:42.320 --> 0:11:46.520 So the other companies provided a financial incentive for lowering 0:11:46.559 --> 0:11:50.640 their emissions in the form of these credits, right Uh, 0:11:50.640 --> 0:11:53.559 And then the company who's going over is being penalized 0:11:53.960 --> 0:11:56.839 in the form of these credits, right. You can also 0:11:56.920 --> 0:12:00.559 earn more credits, not necessarily just by buying some from 0:12:00.559 --> 0:12:05.560 somebody else, but by UM funding projects that actually reduce 0:12:05.640 --> 0:12:09.080 carbon right yes, as long as they're verified. Yes, And 0:12:09.120 --> 0:12:10.640 you can actually do that in the e t s 0:12:10.720 --> 0:12:15.679 as well. You can earn credits through to UM Kyoto mechanisms, 0:12:15.679 --> 0:12:20.240 the clean Development mechanism that allows you to help out 0:12:20.960 --> 0:12:24.880 poor Annex two countries that can't afford their own to 0:12:24.920 --> 0:12:28.280 reduce their own carbon output. And then joint implementation is 0:12:28.320 --> 0:12:31.800 when you can partner with other Annex one countries, which 0:12:31.880 --> 0:12:35.120 I guess that's a good thing too. Well. Yeah, either way, 0:12:35.120 --> 0:12:37.000 as long as you're reducing c O two. That's one 0:12:37.040 --> 0:12:40.920 of the one of the very UM distinct aspects of 0:12:40.920 --> 0:12:45.640 reducing greenhouse gases and c O two is that no 0:12:45.640 --> 0:12:49.520 matter where you do it, you're affecting everything. Yeah, So 0:12:49.679 --> 0:12:53.920 planning trees and like say Sudan or something well ultimately 0:12:54.000 --> 0:12:56.199 have an effect for the rest of the planet. Right. Yeah. 0:12:56.200 --> 0:12:59.080 A lot of companies offer that now, UM it's part 0:12:59.080 --> 0:13:04.199 of like a Now certain airlines and UM airline websites 0:13:04.280 --> 0:13:06.120 will offer like an extra if you want to pay 0:13:06.120 --> 0:13:08.679 an extra ten dollars on your ticket, they'll plant ten 0:13:08.760 --> 0:13:11.520 trees for you in some other country. Right, So that's 0:13:11.600 --> 0:13:13.720 kind of nice in a way. It is nice. So 0:13:13.760 --> 0:13:16.920 you're ready to talk about that. Yeah, First, let me 0:13:17.000 --> 0:13:19.079 let me correct myself. The cc X was founded in 0:13:19.160 --> 0:13:22.120 two thousand three, not two thousand five. Yeah, and you know, 0:13:22.200 --> 0:13:23.719 let me go ahead throw out a stat since we're 0:13:23.720 --> 0:13:26.320 still on c c X. They traded about four years 0:13:26.360 --> 0:13:29.720 ago a total of ten point two million tons of 0:13:29.760 --> 0:13:32.880 c O two and then and Chuck also, the the 0:13:33.000 --> 0:13:37.839 value UM went from like next to nothing a couple 0:13:37.840 --> 0:13:40.640 of years ago to I think as much as a 0:13:40.720 --> 0:13:45.520 hundred million dollars carbon offsets. The carbon market itself, I 0:13:45.559 --> 0:13:49.319 think generated about thirty billion dollars in two thousand seven. 0:13:49.559 --> 0:13:51.880 And what we're talking about is something that doesn't exist. 0:13:52.320 --> 0:13:56.240 It's a reduction. They represent a reduction in CEO two. 0:13:56.240 --> 0:13:57.760 It's sort of hard to wrap your head around it. It 0:13:57.559 --> 0:14:03.680 It definitely is um and it actually it can work. Yes, right, Um, 0:14:03.720 --> 0:14:07.000 there's a model that's very similar. Do you remember, Chuck, 0:14:07.080 --> 0:14:11.720 when we were younger, acid rain, whatever happened acid rain? 0:14:11.880 --> 0:14:14.560 I know the fears of school children everywhere to go 0:14:14.600 --> 0:14:17.360 outside and our skin would like melt in the rain. 0:14:17.640 --> 0:14:21.200 It was the Communists, AIDS, and acid rain. Yeah, the 0:14:21.200 --> 0:14:25.560 big three. We have a really rough childhood, didn't we. Yeah? Um, 0:14:25.640 --> 0:14:27.880 But acid rain you never hear about anymore. And the 0:14:27.920 --> 0:14:31.960 reason why is because the US government actually instituted a 0:14:32.000 --> 0:14:36.800 mandatory cap and trade scheme on UH methane emissions. Isn't 0:14:36.840 --> 0:14:41.320 that what it was that caused acid rain? Uh? Sulfur dioxide? 0:14:41.800 --> 0:14:46.480 That's right, so close. So the acid rain program, Josh, yes, 0:14:46.560 --> 0:14:50.720 limits sulfur dioxide that powers plants here in the States, 0:14:50.920 --> 0:14:55.320 and it has worked to the tune of emissions have 0:14:55.400 --> 0:14:59.480 dropped below what they were in nineteen Not bad, No, 0:14:59.760 --> 0:15:02.640 not at all. And they did it slightly differently. They 0:15:02.720 --> 0:15:06.800 put a um, they put a cap on, they divided 0:15:06.840 --> 0:15:11.080 it amongst um emitters of sulfur dioxide. To think, are 0:15:11.160 --> 0:15:14.800 again electrical plants or power plants are the worst emitters 0:15:14.840 --> 0:15:17.840 for it UM? And they said, here, your allowances don't 0:15:17.840 --> 0:15:20.000 go over and if you do, you're in big trouble. 0:15:20.200 --> 0:15:23.840 And they each year they revised the cap lower, lower, 0:15:23.960 --> 0:15:26.160 or maybe every couple of years. And that's the whole point. 0:15:26.200 --> 0:15:27.800 I don't think we talked about that. The point of 0:15:27.800 --> 0:15:30.000 a cap and trade scheme is that you don't just 0:15:30.040 --> 0:15:32.640 put the cap somewhere and leave it there. Yeah, it 0:15:32.640 --> 0:15:36.280 should go down. It should eventually go down with a 0:15:36.360 --> 0:15:39.080 moderate pace, because you don't want to go too far 0:15:39.120 --> 0:15:41.000 down or else the economy is going to be crippled. 0:15:41.400 --> 0:15:43.000 You don't want to be too high up or else 0:15:43.040 --> 0:15:45.560 there's not gonna be any point to it. But you 0:15:45.600 --> 0:15:49.520 do want to raise it systematically, which is actually lowering 0:15:49.720 --> 0:15:54.440 lowering it systematically over time. So, Chuck, have you noticed 0:15:54.480 --> 0:15:58.280 that the carbon credits were talking about sound an awful 0:15:58.360 --> 0:16:03.240 lot like something else called carbon offsets. I said that 0:16:03.280 --> 0:16:05.800 you and I can go on to the Chicago Climate 0:16:05.800 --> 0:16:10.720 Exchange and buy carbon, right, a hundred metric tons of 0:16:10.720 --> 0:16:13.440 carbon if we want, for like four bucks I think 0:16:13.520 --> 0:16:18.440 a pop? Okay Um. You can also find a broker 0:16:18.680 --> 0:16:22.200 and say I want to buy a carbon offset, and 0:16:22.520 --> 0:16:24.920 what do you give for that? Chuck, Well, these are 0:16:24.960 --> 0:16:27.000 pretty popular now what you get when you buy a 0:16:27.000 --> 0:16:30.240 carbon offset. Let's say al Gore made the headlines a 0:16:30.240 --> 0:16:33.320 few years ago, Mr Green al Gore, who I love 0:16:33.400 --> 0:16:37.480 and you do as well? Uh? Was he was under 0:16:37.520 --> 0:16:41.880 fire because of the amount of energy his large house 0:16:41.960 --> 0:16:44.800 in Tennessee consumed, which was a lot. Yeah. Right after 0:16:44.840 --> 0:16:49.280 Inconvenient Truth came out, Drudge Report broke like his bill 0:16:49.400 --> 0:16:50.720 or something like. Right, so they kind of held a 0:16:50.760 --> 0:16:54.480 speed to the fire and he said, no, I've purchased Wait, 0:16:54.560 --> 0:16:58.600 that was my Clinton. Good enough, he purchases car. Can 0:16:58.640 --> 0:17:00.160 you do a gore? Because it's so I do want 0:17:00.160 --> 0:17:04.960 to hear I purchase carbon offsets. That was actually really good, Chuck. 0:17:05.560 --> 0:17:07.639 So carbon offsets. Let's say you could go through a 0:17:07.640 --> 0:17:09.960 company like Terra Pass, who will talk about in a 0:17:10.000 --> 0:17:15.680 little more detail, and uh, he would buy basically um, 0:17:15.760 --> 0:17:18.240 he would invest in renewable energy in other parts of 0:17:18.280 --> 0:17:22.719 the world. So let's say if he's using uh, you know, 0:17:23.040 --> 0:17:26.560 a hundred credits over what he should be using, He'll 0:17:26.560 --> 0:17:30.359 buy a hundred credits worth of of renewable wind energy 0:17:30.560 --> 0:17:34.719 in um in Africa, because like make up for what 0:17:34.800 --> 0:17:38.840 he's using. If you alleviate CEO two emissions anywhere in 0:17:38.880 --> 0:17:40.840 the world, that has just as good of an effect 0:17:40.920 --> 0:17:44.800 at home. Sure, So making him carbon neutral, I believe 0:17:44.880 --> 0:17:46.960 is that is the word they like to use, right, right, So, 0:17:47.040 --> 0:17:51.720 like if he calculates that his electricity that he uses 0:17:51.840 --> 0:17:56.600 annually at his house equals fifty metric tons of CEO 0:17:56.600 --> 0:17:59.840 two emissions. He will purchase that. He can go buy that, right. 0:18:00.040 --> 0:18:01.800 So what you do is you go to a broker 0:18:02.359 --> 0:18:06.000 who sells carbon offsets and cut and they sell them, right. 0:18:06.040 --> 0:18:12.000 They sell them for let's say nine bucks a metric ton, right, Okay, 0:18:12.080 --> 0:18:16.960 and I think that's about right. Actually. Um, So you say, okay, 0:18:16.960 --> 0:18:20.320 well that's great because I only need two hundred of 0:18:20.359 --> 0:18:24.359 these for the year. Yeah, you gotta have some coin 0:18:24.400 --> 0:18:27.320 in your pocket, a little extra spending money, sure, but 0:18:27.440 --> 0:18:31.479 for bucks you can offset all of the CEO two 0:18:31.520 --> 0:18:35.280 emissions that your family puts out for a year. It 0:18:35.320 --> 0:18:37.560 sounds great, It does sound great, and you know what 0:18:37.800 --> 0:18:40.640 it can be. We're not poop doing it. But there 0:18:40.680 --> 0:18:43.080 is another side to the coin, Josh, there definitely is. 0:18:43.240 --> 0:18:46.439 Um anything that sounds too good to be true, or 0:18:46.760 --> 0:18:49.000 lets you sit back with your hand down the front 0:18:49.040 --> 0:18:53.000 of your pants, drinking a beer and still somehow alleviating 0:18:53.000 --> 0:18:57.040 global warming, you should be suspicious of, yes, and a 0:18:57.080 --> 0:18:59.520 lot of people are because a lot of times what's 0:18:59.520 --> 0:19:02.160 happening as is, and this is the way I read 0:19:02.200 --> 0:19:07.000 this article was that it's not necessarily creating new initiatives. 0:19:07.480 --> 0:19:09.760 A lot of these initiatives where the money is going 0:19:10.840 --> 0:19:12.800 either we're already in place or we're going to be 0:19:12.840 --> 0:19:16.439 in place anyway. So these these firms are making a 0:19:16.480 --> 0:19:19.959 little extra cash, which they seem to appreciate. But the 0:19:20.040 --> 0:19:24.959 firms who are undertaking these CEO two emission reduction programs, right, 0:19:25.480 --> 0:19:27.560 they have said, and there's some quotes in the article, 0:19:27.600 --> 0:19:29.479 they said, you know, I made sixteen grand last year, 0:19:29.480 --> 0:19:30.879 and we're glad to get it, but we would have 0:19:30.920 --> 0:19:33.480 been doing this anyway. Right. That was a farmer who 0:19:33.520 --> 0:19:38.040 actually created or invested in um very high tech machinery 0:19:38.080 --> 0:19:42.119 that used methane emissions from his cows manure to generate 0:19:42.160 --> 0:19:45.080 electricity for his farm so he could save money. Well, 0:19:45.119 --> 0:19:49.120 he's actually paid money through the through investment in this. 0:19:49.640 --> 0:19:51.359 The problem is that this guy was going to do 0:19:51.400 --> 0:19:54.439 it anyway. It is good that he's being rewarded for it, 0:19:54.840 --> 0:19:57.440 but why aren't we seeking out projects that won't get 0:19:57.480 --> 0:20:00.400 off the ground unless there's investment, because then it means 0:20:00.640 --> 0:20:03.520 this farmer was going to do it anyway. And there's 0:20:03.520 --> 0:20:06.919 another project that wasn't gonna happen unless it got this investment. 0:20:07.200 --> 0:20:09.440 And it doesn't seem like there's a lot of active 0:20:09.840 --> 0:20:13.159 seeking out of investments. These brokers struck me as somewhat 0:20:13.240 --> 0:20:17.119 lazy and find stuff that's already there. Yes. And the 0:20:17.160 --> 0:20:20.120 other little hinky thing is that there's not a lot 0:20:20.160 --> 0:20:23.359 of transparency going on here. When you, um, when I 0:20:23.400 --> 0:20:26.680 think it was this Business Week, Yeah, business Week got 0:20:26.680 --> 0:20:28.199 in touch with some of these firms, and no one 0:20:28.200 --> 0:20:30.879 will say the broker won't say how much of a 0:20:30.920 --> 0:20:34.560 cut they're getting, They won't necessarily say who they're getting 0:20:34.600 --> 0:20:38.920 in touch with. Two uh, to help alleviate the carbon reduction, 0:20:39.320 --> 0:20:42.119 to help manage the carbon reduction. So there's there's not 0:20:42.200 --> 0:20:44.840 very much transparency and that has set off a lot 0:20:44.840 --> 0:20:47.639 of alarm bells with a lot of nonprofits. Yeah, and 0:20:47.720 --> 0:20:52.000 it should um. There there's also the farmer Darryl Vader. 0:20:52.119 --> 0:20:57.080 Is this name? Um? Is it really Vader? D Vader Vander? Oh, 0:20:57.200 --> 0:20:59.560 it's too good to be true. Um, just like a 0:20:59.600 --> 0:21:07.040 carbon Darryl Vander who has his um poop powered electricity farm. Uh. 0:21:07.119 --> 0:21:11.480 He said that the right, Thank you for that, because 0:21:11.480 --> 0:21:16.159 I was about to start stammering. Um. The investment that 0:21:16.200 --> 0:21:19.359 he's getting is two dollars out of the nine dollars 0:21:20.040 --> 0:21:24.200 per less than two per ton. Yeah, Um, that that's 0:21:24.200 --> 0:21:27.879 what he's getting from this firm. So you have terror Pass, right, 0:21:27.920 --> 0:21:30.000 which is a broker, and then he was set up 0:21:30.000 --> 0:21:32.520 with terror Pass through a middleman. So from the nine 0:21:32.520 --> 0:21:35.840 dollars that a person is putting in too Terror Pass 0:21:35.840 --> 0:21:39.320 for that one ton of carbon dioxide, only two dollars 0:21:39.320 --> 0:21:42.080 of it is going to the actual program. And we're 0:21:42.119 --> 0:21:44.879 not poop pooing Terra Pass here. I mean, there's a 0:21:44.880 --> 0:21:48.600 San Francisco company that I believe a teacher at Wharton 0:21:48.760 --> 0:21:52.480 started and and he bikes to work, so he's he 0:21:52.560 --> 0:21:54.520 proposed to his students to come up with an idea 0:21:54.560 --> 0:21:57.520 and they did and it's working. Uh, they're they've got 0:21:57.520 --> 0:22:00.879 I think, what close to fifty customers, So I think 0:22:00.880 --> 0:22:03.040 they're trying to do the right thing. But it would 0:22:03.040 --> 0:22:06.920 be awesome if there were some new initiatives and not necessarily, Hey, 0:22:06.960 --> 0:22:09.159 we'll give this farmer some dough for this thing he 0:22:09.200 --> 0:22:11.240 was already doing to begin with. Right, But I mean, 0:22:11.280 --> 0:22:14.080 you can make the point that they are rewarding this 0:22:14.119 --> 0:22:16.560 guy for going above and beyond. Word gets out and 0:22:16.680 --> 0:22:20.119 YadA YadA YadA. Right. Um, there's a did you know 0:22:20.160 --> 0:22:24.920 that veils ski resort? Yeah, let's talk about that. Which 0:22:25.000 --> 0:22:28.600 what's the company called, uh, it is called Veil Resorts. 0:22:29.080 --> 0:22:34.160 Appropriately enough, they are a hundred percent wind power right. 0:22:34.800 --> 0:22:37.199 Did you know that not one bit of their electricity 0:22:37.280 --> 0:22:40.000 comes from wind. Yeah, so they're able to claim that 0:22:40.000 --> 0:22:43.520 they're power by wind when in fact they have spent 0:22:43.600 --> 0:22:49.919 a lot less money buying renewable energy certificates representing the 0:22:49.960 --> 0:22:53.560 amount of wind generated that uh that they would require 0:22:53.880 --> 0:22:56.359 to generate all their power. Right, So what the and 0:22:56.359 --> 0:23:00.760 and their pr flak is a pretty wrecked and saying 0:23:00.800 --> 0:23:02.639 we're in the resort business. We're not in the power 0:23:02.680 --> 0:23:07.000 generation business. But the resorts actually did look into powering 0:23:07.040 --> 0:23:12.159 themselves their entire resort with wind power. But they're like, whoa, 0:23:12.280 --> 0:23:15.640 that's a lot of money when we can buy these offsets. Right. 0:23:15.920 --> 0:23:21.119 But there's a guy who actually, um does wind power 0:23:21.920 --> 0:23:26.359 electrical generation. It's called FPL Energy, And he's quoted as saying, 0:23:27.000 --> 0:23:31.879 um that voluntary renewable energy certificates like the ones that 0:23:31.920 --> 0:23:35.600 the Veil Resorts company bought our pure corporate marketing and 0:23:35.680 --> 0:23:38.399 image management, and that's it. And this guy is actually 0:23:38.440 --> 0:23:40.560