I was just reading CNBC.com’s Carbon Trading May Dwarf Crude Oil and I thought I’d share an idea. I’m the special kind of jerk that looks at any system and thinks, “How can I game this?” Sometimes I think about personal gain, and sometimes I just think about throwing a wrench in the gears. This is in the latter category.

Some poorly researched background info: There’s a co-op project in Isla Vista (IV is the town where most UCSB students live). Started by some UCSB hippie students, it seeks to disrupt the rental market controlled by the various slumlords. The housing co-op buys housing and charges a modest rent (enough to cover the financing). In time, the properties become owned by the co-op, and the rent goes into a pool used to buy more housing. The rent charged by the co-op is significantly less than the rent charged by various property managers. The residents help maintain the properties. Honestly, I’m not entirely sure about the specifics. I hope you get the gist. The co-op slowly converts properties operated by the various slumlords into properties operated by the co-op.

If the carbon credits were permanent credits, the plan would be simple: put a bunch of money into treasuries, and invest the dividends into carbon credits, which would be permanently removed from the market. Unfortunately, the carbon credits are not permanent. If existing markets are any indication, they are likely to be auctioned off quarterly or annually. The treasury plan would still work as a method of randomly increasing the cost of credits. Alternatively, credits could be purchased and resold for a slightly greater price. Any profit would be rolled over into additional bids the next year. If the credit wasn’t resold, then that much carbon would be retired for that auction period. As long as some seed money was set aside to keep the program going, the effort would perpetually have the ability to be a conscientious nuisance.