links for 2007-07-07
Simon Hoyle on Bear Stearns's CDOs

Somebody Give Robert Waldmann a Grant to Study Carbon Biosequestration!

Robert Waldmann notes what may be an arbitrage opportunity:

Robert's Stochastic Thoughts: The Price is Wrong: European Carbon emissions credits cost much more per ton than hard wood pulp wood does in Mississippi. European Carbon emissions credits cost over 20 Euros per ton of CO2.... Hardwood pulp wood costs about $8 an English ton in Mississippi so about $8.80 per metric ton.... Carbon could be sequestered by burying the wood in the desert, in permafrost, or sinking it deep in the ocean. How much would this process have to cost to make it a less attractive option than reducing carbon emissions in Europe?

First I have to convert... as water contains no carbon.... [P]ulp wood would weigh about 57 grams per mole of carbon. CO2 weighs 48 grams per mole of carbon, that is, 48 grams per million moles.... [T]he cost of a million moles of carbon in 2008 is $ (1.3598)(48)(21.70) = $ 1,416.37. The cost of the same million moles in pulp wood in mississipi is very roughly $(57)(8.8) or about 500 dollars per million moles.... I just don't see how transportation to someplace dry or cold could cost enough to make biosequestration of carbon uneconomical....

How much does it cost to ship a ton of coal from the Powder River Basin (Wyoming and Montana) to destination (seems to be average over all users)? Currently it costs about $15 an English ton.... [E]ven using $15 a ton to ship and sequester pulp... biosequestration would be profitable if it were part of the European carbon emissions trading system.