Sunday, November 15, 2015

It is not "We", it is "Them"

A common misconception about climate change is that we are all responsible for the problem, and therefore no one is responsible. However, a scientific study revealed that two-thirds of the carbon dioxide emitted the Industrial Revolution can be traced back to just 90 oil, coal, and gas producers, dubbed the “Carbon Majors.” The "We are all responsible" is used to protect the most empowered of interests. Exxon is the world’s second biggest polluter, according to the study, contributing 3.1% of the carbon dioxide that has accumulated in the atmosphere. The vast bulk of pollution (90% give or take) comes from industry, transportation, agriculture and forestry. The answer is to expand the use of renewable energy, increase vehicle fuel efficiency, develop efficient energy technologies, reduce tropical deforestation, provide efficient mass transit, and protects low lands and their populations from rising sea levels. Unlike changing a light bulb or turning down the heat, those solutions, worldwide, require a truly enormous investment. While some of that investment will pay for itself and might well make a profit for some, it will not be enough, and the cost of reduction will still be immense. That does not mean action is not already being taken to counteract global warming; indeed, the efforts underway are much the same as those that would be utilized if the problems described above were solved. The difference is that they won’t be enough. We need to leave more than 80 percent of known oil, coal, and gas reserves in the ground to avoid triggering catastrophic climate change. That means shifting away from an economy driven by digging, pumping, and burning fossil fuels to one that puts people and the planet first.

G20 countries are doling out over $450 billion  per year to oil, gas, and coal companies for the exploration and production of fossil fuels—despite having vowed to stop doing so.
"It is outrageous that despite years of promises, G20 countries are still handing out hundreds of billions of dollars in public money every year to some of the richest, most polluting companies on the planet," said David Turnbull, campaigns director of Oil Change International, which just this week released a report showing that the U.S. government alone is providing more than $20 billion a year to prop up fossil fuels industry. "It is time to stop paying polluters to fuel the climate crisis and instead focus on supporting safe, clean, and renewable energy."
German divestment activist Paula Weninger of Fossil Free Berlin added: "We're taking action in Berlin to expose the hypocrisy of our German government posing as a leader in moving toward green energy—while in reality propping up the dying coal, gas, and oil industries with huge subsidies. It's time to stop funding the fossils of the past and reinvest in solutions."

Right now we have pledges that don’t add up 2°C by 2100, and—more important—they are “pledges” not enforceable commitments. What’s needed, is that tcommitments must be fairly apportioned among rich and poor nations—a mix that has proved impossible to achieve at previous UN Conferences. Furthermore, commitments must be verifiable by a trustworthy body or bodies, and violators must be punished with enforceable sanctions commensurate to the damage done. That’s a lot to ask of political leaders. What we’re likely to get are some iffy commitments with not enough transparency and a few promises to study sanctions.

Current “solutions” are (perhaps in combination):
(1) Voluntary reduction. It’s easy enough to turn off the lights at night at corporate headquarters and limit the use of the copy machines but going beyond simple conservation and tackling overall emissions is expensive and cuts into earnings. A voluntary program that limits profits cannot be counted upon.

(2) Regulation. Here in the US, the EPA has begun the regulatory process and obtained a moderately favorable Supreme Court decision. The trouble is that the Court said that it will insist upon a rigorous cost-benefit analysis to justify any standard the EPA eventually adopts. The very size of the problem and the consequent difficulty of calculating precisely the environmental and social costs of CO2 invite years of litigation likely to culminate in a Supreme Court decision that additional Congressional action is required, or some other “cop-out.” Regulation might fare a little better in Europe, and China, but without the US, the 2°C goal will fail.

(3) Taxation is an obvious alternative. It’s straightforward and less easily gamed. Alas, a carbon tax is doomed in a country like the USA, obsessed with the size of its national debt. Here’s the sort of thing you can expect: Exxon Mobile, a recent convert to the dangers of global warming, says it will happily support a carbon tax, but only if it’s other taxes are correspondingly lowered. Is that a solution, or what? And much the same is true in Europe.

(4) Cap and trade is a market-based mechanism in which a governmental body sets caps, or limits, on CO2 emissions. Each polluter is assigned a cap based on (but below) its previous emissions and receives, outright or by auction, allowances (or permits) equal to its cap. It can buy, sell, or bank those allowances. All that matters is that, when it comes to demonstrating compliance, every polluter holds allowances at least equal to its assigned quantity of emissions. The price of an allowance fluctuates with supply and demand in the market.
Because projects vary in cost, a firm will sell or bank allowances when the cost of a project to reduce CO2 is less than the price of an equivalent amount of allowances. Other firms, where a project is more expensive, will buy allowances because doing so is cheaper than carrying through with the project. Over time, caps will be adjusted downward; as a result, the price of allowances will rise such that firms will be led to spend more and more on mitigation.
(5) Cap and trade systems normally include another way for a polluter to satisfy its cap—offsets. An offset is a mechanism that allows a polluter to receive credits against its cap by investing in outside projects—for instance paying lumbering interests in the Amazon for not cutting trees. Crucial to an honest offset plan is the requirement (known as “additionality”) that the project invested in would not have been undertaken otherwise. It is, as we shall see, a slippery concept.

Right now the size of the CO2 market is around 100 billion dollars, but it is expected to rise to one or two trillion dollars, larger than any existing commodity market. As it does, serious risks and dangers will surface. Carbon markets, both here and abroad, will be dominated not just by world’s largest polluters, but also by the world’s largest investment banks. JP Morgan Chase, Goldman Sachs, Morgan Stanley and their European counterparts will handle the trades, fashion instruments to be traded, and create opportunities for investment. Hedge funds will likewise be involved. This will occur not only in formalized markets, like the US Commodity Futures Trading Commission and the EU Emissions Trading System, but also in private over-the-counter transactions where parties fashion their own unique deals. What about derivatives? Those tied to future prices will certainly be needed to ensure liquidity and to provide necessary hedges; other sorts may follow. Unfortunately, legitimate derivatives—like the futures contract an Iowa pork farmer buys to protect himself against unforeseen price changes—can, thanks to the “creativity” of Wall Street and the “miracle” of leverage, easily morph into vehicles for speculation, immensely profitable for bankers who hawk them, but risky and dangerous for the rest of us.

Then there are offsets—new, different, and, as such, especially suited to fraud and abuse; so much so that California’s cap and trade system took care to restrict them to 8% of its CO2 market and to provide careful oversight. It is easy, for example, to find a project in a developing country which would have been undertaken anyway and, with a little influence or bribery, slip it into one of the corporate entities designed by investment banks to undertake offset projects. Again, big profits for the bank and the polluter, but no net gain in CO2 reduction. And that is just one scam. Think how easy, and profitable it would be, absent stringent oversight, to inflate the predicted CO2 reductions of a third world project which has yet to be undertaken (and, perhaps, never will be) and sell that false promise as a legitimate offset. And so on. Little wonder that Pope Francis went out of his way to condemn cap and trade.

The history of how the military disappeared from any carbon accounting ledgers goes back to the UN climate talks in 1997 in Kyoto.  Under pressure from military generals and foreign policy hawks opposed to any potential restrictions on US military power, the US negotiating team succeeded in securing exemptions for the military from any required reductions in greenhouse gas emissions. Even though the US then proceeded not to ratify the Kyoto Protocol, the exemptions for the military stuck for every other signatory nation. Even today, the reporting each country is required to make to the UN on their emissions excludes any fuels purchased and used overseas by the military. As a result it is still difficult to calculate the exact responsibility of the world’s military forces for greenhouse gas emissions. A US Congressional report in 2012 said that the Department of Defense consumed about 117 million barrels of oil in 2011, only a little less than all the petrol and diesel use of all cars in Britain the same year.

Any decision emerging from the Paris climate summit will almost certainly fail to confront the real problem: our global economic model that relies on producing profits to power its engine of expansion. We live in a world where 'economic growth at any cost' turns people and ecosystems into collateral damage in many places around the globe. Socialism will pave the way for the kind of equitable, regenerative, new economy we need to survive on the planet. There’s no shortcut on the road that leads away from climate chaos and toward a more sustainable economy.




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