as the ETS. In its first phase, meant to run between 2005 and 2007, prices for carbon moved with unexpected and astonishing volatility. But during those years the machinery was put into place—the exchanges, brokers, trading desks in companies, and a financial infrastructure—to support the ETS, centered in London. Meanwhile, Sandor’s Climate Exchange, the parent company, set up another joint venture in China, this with the Chinese National Petroleum Corporation, in the city of Tianjin, ninety miles from Beijing.
In 2008 the European Union adopted a very ambitious goal: to reduce by 2020 global greenhouse emissions, primarily CO2, by 20 percent, from 1990 levels. Trying to achieve that would ensure that carbon trading would become a very big business. How big? “Carbon markets are potentially the biggest commodity markets in the world, bigger than crude oil,” said Sandor. It was simple arithmetic. “After all,” he added, “carbon is released not only by oil, but also by coal and natural gas and other processes.”9
In 2010 Sandor’s Chicago Exchange PLC, the parent of both the Chicago and European exchanges, was bought by the Intercontinental Exchange, the major global rival to the NYMEX for oil trading. The price was $600 million.
THE POWER OF IMAGES
In the meantime, despite appearances, the political terrain in the United States was already changing. In 2003 Republican senator John McCain and Democratic senator Joseph Lieberman had introduced a cap-and-trade bill in the U.S. Senate. It garnered a surprising 43 votes. Yet it did not have wide resonance and still seemed somewhat abstract.
What was not abstract was what happened in 2005, when the devastating hurricanes Katrina and Rita struck the Gulf Coast of the United States. The media image of the hurricanes’ devastation—the desperate people in the Superdome and the refugees fleeing the submerged city—all this provided a grim metaphor for the storms and the ensuing destruction and chaos that could become more common with an increasingly more aggrieved climate.
The next year a different kind of media education took place. It was a rather unlikely movie, An Inconvenient Truth—a documentary, more precisely; the setting to film of a slide show that former vice president Al Gore had been showing around since 1990. He had been reluctant to turn his slide show into a film, but the producers were persuasive. The film played to packed theaters, and it had an extraordinary impact on the public dialogue. Some of the footage was overpowering, most notably the melting glaciers and the giant sheets of ice falling into the sea—the very kind of imagery that would have riveted John Tyndall and the other nineteenth-century pioneers of climate change research. An Inconvenient Truth became a global cinematic event. The British government had it distributed to secondary schools. And in February 2007 it won an Academy Award—a mighty achievement for a film that started as a slide show.
That same month, February 2007, the IPCC began releasing its fourth assessment. Its most sophisticated calculations had been done on the supercomputers of the U.S. Department of Energy, the only computers in the world capable of handling the problems. This new IPCC report was the starkest yet. One of its consistent themes was how much the science had advanced since the third report, in 2001. It was “very likely”—over 90 percent probability—that humanity was responsible for climate change.
But all this was only a prelude to the looming threat—a doubling of CO2 would likely lead to a temperature increase of 2°C to 4.5°C (3.6°F to 8.1°F). But “values substantially higher than 4.5°C cannot be excluded,” it ominously added. The report itself, if not its summary for policymakers, did identify a number of “key uncertainties”; for instance, “Large uncertainties remain about how clouds might respond to global climate change.” But overall, the confidence and definitiveness were much greater than in the previous reports.
Moreover, an even more alarming specter threaded throughout the report—that of “abrupt climate change.” The consequences, said the IPCC, could be devastating—no time to adapt, no time to mitigate. The images of thousands and thousands desperately fleeing from Hurricane Katrina could be replicated on a much larger scale in Bangladesh or coastal China—or Florida.10
The IPCC report had been preceded by a few months by another influential study, The Stern Review of the Economics of Climate Change. A couple of weeks after the Gleneagles Summit, the British government had asked economist Nicholas Stern to lead a team tackling climate change. The resulting thousandpage report argued that the costs of inaction on climate change would be enormous and that the costs of