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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (9242)	6/15/2009 9:52:09 AM
From: Wharf Rat	Read Replies (1) \| Respond to of 24210

Economist shows the whole world how to go green Comments June 15, 2009 BY TED PINCUS Rich Sandor is a guy who lives in the future. He always has. In fact, he created some of the world's most advanced futures markets, and he's still at it. He says we're now on the verge of an environmental breakthrough. Sandor, 67, is the city's homegrown math genius and economics Ph.D. whose irrepressible imagination conjured up the interest rate futures market and an array of other new sophisticated derivatives. As VP and chief economist of the Chicago Board of Trade in the 1970s and later its vice chairman and a key adviser to the Chicago Mercantile Exchange, London Financial Futures Exchange, the United Nations, and Northwestern's Banking Research Center, he has been called "the father of financial futures." But it has been a second calling of paternity that has propelled Sandor since the '90s as perhaps the world's leading force in creating tradable entitlements for the Earth's reduction of greenhouse gas emissions -- truly the "father of carbon trading." Today, his innovations are not only setting the stage for implementing cap-and-trade legislation now pending in Congress, but providing the foremost marketplace tailored for it: the Chicago Climate Exchange. "This is by far the biggest challenge of my life," the ebullient, plain-spoken professor told me last week. "We're closer than we've ever been to realizing our goal in worldwide carbon emission control and attacking global warming. Very soon, carbon allowances will be the biggest non-financial derivative anywhere. Its trading volume could top $14 trillion per year." All this may sound like science fiction to you if you've only paid casual attention to the cap-and-trade fervor that is sweeping Congress. But just ponder that soon the world will be comprised of companies and organizations that will have lots of difficulty complying with the vast new emission rules and penalties -- and those who have far more "carbon credits" than they need. Under the new era to be ushered in this year by aggressive legislation led by Rep. Henry Waxman (D-Calif.) and ardently supported by the White House (and very likely to be passed this summer), companies will face strict Environmental Protection Agency standards designed to cut greenhouse gases to the 1990 level by 2020 and 80 percent below that level by 2050. Cap-and-trade is the mechanism that offers the economic incentive to make it all happen, giving the polluter time, and a temporary free pass, to prepare, and enabling the compliers to profit by selling the carbon allowance credits they don't need. To help facilitate the movement, Sandor first won a grant in 2000 from the Joyce Foundation to enable him to lead research at Northwestern's Kellogg grad school to examine whether his cap-and-trade market concept was feasible. In just the last year, Sandor has grown the Chicago Climate Exchange (CCX) to 470 members, including 17 percent of the Dow Jones industrials and a fifth of all CO2-emitting utilities. Its volume of contracts soared 205 percent in the last year to a record 707,655 contracts. Meanwhile, his Chicago Climate Futures Exchange had a 71 percent rise in trading volume (to a level now exceeding that of pork bellies, milk or lumber), and its new regional environmental markets are also surging, along with a new insurance exchange. Aptly, the peripatetic professor loves to quote Emerson: "Do not go where the path may lead; go instead where there is no path, and leave a trail." Ted Pincus is the former owner/CEO of the Financial Relations Board, and currently an adjunct professor of finance at DePaul University, an independent journalist, and managing partner of Stevens Gould Pincus LLC. suntimes.com