Friday, November 28, 2008

Flipping over Pharaoh's Pyramid


"But many who are first will be last, and the last, first" [Matthew 19:30]

Shortening the Long Tail ?

Means Testing for Carbon Credit Originators -- Vol. II

"Let them eat carbon!"

As implementation of the Carbon Micro Credit system approaches mega scale, the worldwide supply of carbon credits may grow faster than demand. What happens then ? Will a supply glut reduce price below marginal production cost, leading to no material gains for micro-originators? Will the Poor at the "Bottom of the Pyramid" be told there is no market for their laboriously-produced Carbon Micro Credits (CMCs) ?

No, rather, Means Testing should be applied to all producers or originators of carbon credits worldwide, and their produced credits graded or assigned a relative valuation according to social merit and redeeming value to Mankind. And the largest relative economic gains should flow to the most needy.

In short, the last should be first, and the first, last. The bottom shall become the top, and the top, the bottom. Or, to quote Karl Marx: "From each according to his ability, to each according to his need". Let the better educated in Developed Countries, or those in more developed "Developing Countries" fend for themselves. Rich pharaoh's pyramid shall be flipped over.

Hence, the current dichotomy under the Kyoto Protocol of "Developed" country versus "Developing" country-of-origin should be expanded to multiple levels of development and relative valuation, such as, from the most-valuable carbon credits to least:

-- (i) DevelopING Credits - Platinum -- relative valuation = 1.0

-- (ii) DevelopING Credits - Gold -- relative valuation = 0.9

-- (iii) DevelopING Credits - Silver -- relative valuation = 0.8


-- (iv) DevelopED Credits - Nickel -- relative valuation = 0.4

-- (v) DevelopED Credits - Copper-- relative valuation = 0.3

-- (vi) DevelopED Credits - Zinc-- relative valuation = 0.2

Such a hierarchy of rankings could be applied to countries as a whole, or to specific projects from within any country. The Relative Valuations would deflate or discount excessive supply from Developed Countries or large corporations in any country whose projects perhaps border on failing a test of Additionality anyway.

The Carbon Micro Credit Registry (CMC Registry) described in detail in an earlier post below will allow for end-to-end tracing of Carbon Micro Credits and ensure that like credits are bundled together, or, analogously -- that Champagne really is made from grapes from Champagne -- and not from Normandy or Brittany. Or, that AAA-rated mortgages are not bundled with sub-prime loans.

As Greenland becomes a big Bermuda, as the Northwest Passage becomes the Northwest Ocean, as Antarctica's ice shelves break off and float to The Falklands -- suddenly raising sea levels 1 - 3 inches in few years -- the entire world will get religion and start producing 100s of millions of tons of carbon credits via 1,000s of different programs.

A Carbon Cambrian Explosion will result courtesy of Wall Street and carbon gold diggers worldwide. Supply will exceed demand, including both voluntary and legislated demand. Who then should be first in line to sell their carbon credits, and at what price? Will the Poor eat carbon, like the mud pies in Haiti?

"But many who are first will be last, and the last, first" [Matthew 19:30]

Globally & warmly yours,

David Palella
Caped Carbon Crusader

San Diego, CA
tel: 858-793-0741