Morgan Stanley

Market Manipulation in the Renewable Fuel Market Does Not Mean Market Manipulation in California’s Cap-and-Trade Program

It remains to be seen whether EPA will respond to the Times article by regulating the renewable fuel market in a way that virtually all other environmental trading markets do.

The New York Times article yesterday about Wall Street firms exploiting the market for renewable fuel credits and driving up prices could leave some observers worrying about the integrity of California’s market for carbon allowances under its cap-and-trade program.  It shouldn’t. Here’s why.