According to one analyst, a cap-and-trade market creates a
government-made commodity out of a naturally occurring gas to
regulate and tax businesses.
The California Air Resources Board has announced that a ton of
carbon sold for $10.09 at the state's first private cap-and-trade
auction of "pollution allowances"-- a few cents
higher than the $10 minimum set by the board. Officials call the
auction, which kicked off the state's cap-and-trade market, a
success. In total, roughly $290 million was spent on carbon
Tom Borelli, a senior fellow at Freedom
Works, thinks the auction was pointless.
"Carbon dioxide is a natural-occurring gas; there's nothing
really special about it -- it's ubiquitous," he points out. "And
now because of government action, they are trying to make this have
"But the value is only due to the state of California's decree.
There's no inherent value in carbon dioxide. It's not like a
diamond; it's not like gold; it's not like copper -- even pork
bellies or coffee."
Borelli is uncertain whether the price of a ton of carbon will
remain $10, as it is possible that
California's entire cap-and-trade market could eventually
"If the whole system falls apart, because again it's due to
government action, then the billions of dollars, the hundreds of
millions of dollars that are being used to buy these credits --
they could turn out to be worthless," the analyst poses. "So at the
end of the day, companies could … really get stuck with this
certificate of nothing that's worth … any value, because it's
essentially hot air."
During the first auction, companies bid as much as $90 for a ton
of carbon. The state's new cap-and-trade system is a provision of a
global-warming law passed in 2006 that seeks to cut emission of