Posts Tagged ‘RECLAIM’

Cap and Fade?

Monday, February 7th, 2011

- A few years ago, the real green rancor in America was over Pres. Obama’s plans for a national greenhouse gas cap & trade. That looks dead in the water right now, but market enviros, no need to worry. We have the nation’s maiden smog market to wrangle over, and there’s a lot more here than meets the eys. Anyway, for those figuring all the excitement was in D.C., you might to reset your GPS for Diamond Bar, home of the South Coast Air Quality Management District.

From the L.A. Times:

“Southern California air quality officials adopted a plan Friday to allow industry to expand in the Los Angeles region by tapping into a public fund of free pollution credits. Environmentalists said the plan would add to the region’s smog and soot problems and open the way for new gas-fired power plants to be built in an already overloaded air basin. ‘This vote reverses decades of steady progress we’ve made to combat chronic air pollution,’ said Adrian Martinez, an attorney with the Natural Resources Defense Council. ‘Millions of people will find it harder to breathe, harder to see the horizon and harder to play outside with their kids on smog-filled days’ …”

- The Gubernator’s Green Legacy (from the L.A. Times):

“Gov. Arnold Schwarzenegger’s long effort to cast himself in the role of a national environmental champion is losing luster in the waning weeks of his administration, as green groups protest last-minute deals with polluting businesses. ‘How green is he?” asked Bill Magavern, the Sierra Club’s California director. “We came to the conclusion that he’s olive-drab’ …”

Does the Climate Bill Have A Chance?

Sunday, May 9th, 2010

Here’s my little Op-Ed on the lessons of former emissions broker Anne Sholtz, who defrauded the very smog cap-and-trade she helped concoct. We write about her spectacular and alarming escapades at length, as well as about L.A.’s air pollution market, in Smogtown: the Lung Burning History of Pollution in Los Angeles.

“In the toxic air of Los Angeles is a primer on human nature as we debate a national cap-and-trade for greenhouse gases.

During the 1990’s, Southern California manufacturers, weary of decades of stern regulation, wanted a new way to shrink their emissions of sky-smudging, health-damaging oxides of nitrogen and sulfur. Their answer was the planet’s first smog cap-and-trade system. Its name was awkward — the Regional Clean Air Incentives Market, or Reclaim — but its implications seismic. Industry finally had flexibility in achieving its cuts, and a motive to reduce more than their yearly pollution cap. They could sell unneeded “credits” for profit!

Though environmentalists caterwauled about corporate sellout, the anti-smog officials were on board. For years, they’d been sandwiched between federal clean air mandates and industry accusations that they had crippled the region’s manufacturing muscle with overzealous rulemaking. Why not allow the market to be the magic?

Leading this vanguard environmentalism was Anne Masters Sholtz, a 30-something Caltech economics professor and aspiring emissions-broker. Her brokerage, which used the Web and advanced software to match trades, lined up heavyweight clients and enlisted marquee financial institutions as trade clearinghouses. Sholtz bought a spectacular hillside estate, won niche celebrity, and had a seemingly blue-sky future in the mecca of whiskey-brown air.

The problem is the system was vulnerable. During California’s electricity brownouts in 2000 and 2001, speculators made a killing off the boutique, $90-million-a-year market by hoarding credits the utilities needed to run full time. By then, Sholtz had twice fleeced the system.

In 1996, she misappropriated roughly $2 million in credits belonging to Chevron, then Mobil Corporation and another client and sold them to Southern California Edison. A few years later Sholtz lulled another client, a New York-based trading outfit called A.G. Clean Air, into believing she owned credits the company needed to complete a lucrative trade with Mobil. In truth the credits weren’t available.

Predictably, local regulators were in the dark about both episodes until industry complained to them. As her case illustrates, and Europe’s cap-and-trade scandals corroborates, even the best-intentioned oversight is laps behind sophisticated schemers, be they full timers or just desperate like Sholtz. Concoct a market anywhere, whether for beads or subprime mortgages, and they’ll show up.

Two House Republicans today are moving to unseal court records of Sholtz’s federal prosecution in a ham-fisted effort to hurt President Obama’s chances for a carbon market. If there’s chicanery with smog, imagine a trillion-dollar greenhouse market, they say. But the Sholtz case is too important for politicization, because global warming is a global threat now.

I’m against Obama’s plans because a more straightforward carbon levy seems more cost-effective and less contrived. Yet cap-and-trades can work, as they generally have in L.A., as long as we remember that to make a commodity out of something is to arouse temptation.”

To read the entire New York Times “Room for Debate” online forum, click here.

Here’s the link to my last story about Sholtz and L.A.’s cap-and-trade. It’s a tale of environmental fraud and foreign intrigue unlike any others.

Carbon cap and fade: questions all around

Monday, December 28th, 2009

The new year could well ignite fireworks anew over the Anne Sholtz caper, a story we showcase in our book Smogtown and in Chip’s freelance articles about her intriguing case. It’s a tangled, air-pollution market story involving fraud, red flags, the CIA, a secretive prosecution and much more, with sticky lessons for the carbon market Pres. Obama wants enacted nationally. So far officials at Southern California’s smog-fighting agency, the South Coast Air Quality Management District, hasn’t wanted to acknowledge that their cap-and-trade, known acronymistically as RECLAIM, has been vulnerable to white-collar troubles, and the U.S. Dept. of Justice-L.A. office still probably wishes their mixed-bag prosecution of Sholtz went the way of Compuserve. As George Bush I would say, “Not gonna happen.” Probably.

From the Wall St. Journal/Dow Jones New Service story:

WASHINGTON -(Dow Jones)- U.S. legislators have obtained a court order unsealing documents in a case involving a multi-million-dollar cap-and-trade fraud.

Republican legislators say the records–due to be opened to the public in early January–could shed light on the potential challenges of policing a new, trillion-dollar commodities market that would be created under climate legislation that Congress is considering.

In a rare filing by House lawyers, Reps. Joe Barton (R., Texas) and Greg Walden (R., Ore.), the ranking members respectively of the Energy Committee and the Oversight Subcommittee, asked a federal district court in California to unseal all the closed records regarding the successful prosecution for fraud of Anne Masters Sholtz, a former California Institute of Technology economist.

Lawmakers say Sholtz’s case could expose the weaknesses of a federal cap-and- trade system because it involved the same market mechanism meant to cut emissions …”

Be forewarned there are a lot of errors in these Republicans’ understanding of Sholtz’s case. It involved cap and trade for two smog-forming chemicals unrelated to global warming, and did NOT involve counterfeit credits. However, the federal case against Sholtz did NOT even mention an earlier action involving 500,000 in RECLAIM credits that allegedly bankrolled a CIA-associated currency repatriation effort. See here for that.

For more on this story, here is Rep. Barton’s comments about it and the judicial order lifting the veil of secrecy thrown over many of the case’s key documents.

Meanwhile, some European shenanigans … story link

“The top cops in Europe say carbon-trading has fallen prey to an organized crime scheme that has robbed the continent of $7.4 billion — a massive fraud that lawmakers and energy experts say should send a “red flag” to the U.S., where the House approved cap-and-trade legislation over the summer amid stiff opposition.

In a statement released last week, the Europol police agency said Europe’s cap-and-trade system has been the victim of organized crime during the past 18 months, resulting in losses of roughly $7.4 billion. The agency, headquartered in the Netherlands, estimated that in some countries up to 90 percent of the entire market volume was caused by fraudulent activities.

“These criminal activities endanger the credibility of the European Union Emission Trading System and lead to the loss of significant tax revenue for governments,” Rob Wainwright, Europol’s director, said in a statement …”

Backloading the news … been busy

Tuesday, September 15th, 2009


You want links? You got ‘em:

The fantastical cap-and-trade fraud story involving former Pasadena emissions broker Anne Sholtz and a cast of shadowy players has kicked up a bit of dust, and they’ll followups. The story, which originally appeared in the Pasadena Weekly/Southland Publishing chain and here, has now run as a two-part installment in the California Energy Circuit (click here and here), and will make its debut on this Thurday. They’re both terrific sites, but I’m biased.

The story certainly has tickled emotions about whether a greenhouse gas market can work without massive white-collar fraud, and generated some conspiracy minded notions about Sholtz’s entanglements with men claiming to be currency hunters with CIA, Special-Ops and military backgrounds.

In other news …

Has cap-and-trade worked where it’s been rolled out? A very good enviro writer takes a swipe at answering this.

The Station Fire that chewed and flattened and burned so much of the Angeles National Forest blew enough smoke, ash and detrius to remind Southern Califorians of their decades strangled by man-made smog. Let’s hope it stays nostalgia. Relief is here.

What’s the future of the San Joaquin Valley? Bleak without some changes. Newsweek covers it.

While we dealt with recession, terrorism, subprime mortgages, and rising Earth temperatures, California showed it hasn’t lost all of its environmental courage in setting standards for chromium six, a subject I know a little about.