Saturday, 6 December 2008

Sarkozy and the Poznan pantomime

As I throw another carbon-free coal on the fire to sustain me through the bleak midwinter my mind turns to the unstoppable global warming from which we are currently suffering. And where better to experience the full scorching effect than Poznan in deepest darkest Poland. Yes, it's international junket time again. Evidencing the self-sacrifice for which they are noted, the great and good from 192 countries have gathered to take the next step in the elimination of carbon dioxide from the face of history. The Poznan whine and cheese party is the latest in a series of conferences in which the successor to the Kyoto Protocol is expected to the formed. Kyoto hosted the conference at which specific targets were set for reductions in the emission of greenhouse gases by 2012 (the reductions being below 1990 levels). The overall desired reduction was 5.2% with larger targets set for industrialised countries or regions and smaller for developing nations.

It goes without saying that the Kyoto targets show no sign of being met without fraudulent manipulation of statistics and it is almost 2009 already, 2012 is just over three years away. Oh my ears and whiskers! What are we to do? The preferred solution of those benefitting from business class flights and five star hotels at taxpayers' expense is to hold more conferences and make further pious pronouncements which, again, will come to nothing. The next formal agreement, the successor to Kyoto, is due to be made next year.

Alongside the discussions towards a global plan, the EU wants to have its own plan, and this is where the fun begins. There is a small Frenchman currently at the top of the EU tree. All Frenchmen like to feel important, this chap is the President of France so he is required to feel extremely important; add to his status the presidency of the EU and it is impossible for Nicholas Sarkozy not to believe himself the most important person in the world. He has until the end of this month to secure agreement to an EU anti-greenhouse gas plan or his arrogant edifice will fall around him, like cheap underwear exposed to a 60 degree wash. His big chance comes at the upcoming EU summit meeting on the 11th and 12th of December, less than a week away. Mr Sarkozy has a problem. His big idea is for a cap-and-trade arrangement and it is too late for him to switch horses now, but some EU countries don't want to play that game.

As I understand it the way a cap-and-trade scheme works is that a figure is agreed for permissible levels of emissions of greenhouse gases (carbon dioxide in particular). Once the overall level has been set for a country, and individual level will be set for different industries. Those who produce less than their allowance will be able to sell their surplus allowance to someone else who is struggling to stay within his permissible limit. Heavy financial penalties will be imposed on anyone who produces too much carbon dioxide so you buy someone else's spare allowance in order to avoid the fine. Of course politicians like schemes which give them lots of other people's money to play with, so the initial levels are not just allocated, they are sold at the highest price they can possibly squeeze out of business.

Our German friends aren't very keen on this because they still make things and making things results in the production of carbon dioxide. Germany simply cannot make as much stuff as it does now and reduce carbon dioxide emissions; not unless a means is found to trap or filter the carbon dioxide before it gets into the sky and fries us all like sausages on a griddle. Our Polish friends are even less keen because almost all their electricity comes from burning coal (of which they have vast natural supplies). They cannot switch to nuclear because it is too expensive for them and would take a decade or more to come on line, so they either burn coal or they convert to gas and find themselves dependent on importing it from Russia. As Ukraine has found to its cost, Russia keeps the stopcock on its side of the border. France doesn't care much because it produces most of its electricity in nuclear power stations and doesn't have much heavy industry. For France, and Mr Sarkozy in particular, it is about being important not about whether the plan will work.

One aspect of all this that is, it seems to me, given too little attention is the obvious question: why has the world failed to meet the Kyoto targets despite apparent willingness all round? The answer is in three parts. First, industrialised countries have to increase their wealth just to stand still. Most of them have expanding populations which requires an increase in total wealth for the wealth per head to remain the same. So they need to expand industry, much of which produces additional carbon dioxide. Secondly, developing countries want toasters and microwaves, as well as option extras like warm homes and enough food, so they need to expand their industries to create the wealth required to provide these needs. That means making more electricity at the lowest cost, which means burning coal. Thirdly, no one is prepared to be the first to take a hit. The USA did not ratify the treaty containing the Kyoto Protocol because it was not prepared to sign-up to reducing its industrial base while its competitors were expanding theirs. In passing, let us not forget that it was President Clinton and his Vice President, St Al of Gore, who first decided not to submit the treaty to Congress for approval.

The current stage of EU negotiations looks to be floundering, even according to the well-spun piece published by the BBC on the matter. Try though they might, they cannot hide the fact that some countries would be crippled by a cap-and-trade scheme unless they are given such extensive concessions that the scheme might as well not exist. There is talk of a compromise such that the countries most heavily dependent on coal will be given generous allowances for free while others producing less will have to pay a lot for a smaller allowance.

And that leads us to the essential problem with cap-and-trade schemes in this area. How can they result in lower emissions? For so long as we require manufactured goods, aeroplane flights, electricity and everything else that makes life comfortable, we will produce those things. There are only two paths to follow, either we give up some of the comforts of modern life or ways are found of producing those comforts without also producing current levels of carbon dioxide. Seeking to force people to give up comforts they take for granted is political suicide for any government. Have you ever heard a government minister say their electors should suffer a reduction in standard of living? Of course not. Now that a reduction is being forced on people through recession we see why it cannot be part of overt government policy.

So how does a cap-and-trade scheme cut emissions? The obvious answer is that it sets the cap at a lower level than current emissions. But how is that actually going to be enforced? The very nature of the scheme is that there are no physical means of lowering emissions, only financial penalties if you exceed your allowance. Build in distortions, such as Poland and Germany being given allowances for free because of their current industrial base, and there will be renegotiations tomorrow, next week, next month and until the end of time as those distortions prove unfair to other countries. Poland and Germany won't budge an inch, they won't need to, so restrictions elsewhere will have to be relaxed. Enforce the penalties in such a way as to require a reduction in living standards and countries will elect new governments committed to withdrawal from the scheme, unilateral withdrawal if necessary. It is not realistic to expect emissions to fall simply by imposing financial penalties. Perhaps they will fall for a time as businesses are bankrupted or goods are priced out of the reach of potential consumers, but that can only be temporary because practical politics will bring in governments committed to reversing the lunacy.

So that leaves us with new technology to reduce carbon dioxide emissions through some form of trapping or filtration. Some progress is being made in that field but we still seem a long way from it being of any great effect and still further away from it being even remotely affordable. In the meantime a cap-and-trade scheme might be introduced which will add vast additional costs to business, costs which must be passed on to consumers or result in the businesses closing. We don't even need to see whether there is sufficient evidence of runaway global warming to justify such a crippling blow to the economy, of itself it is utter madness to even think of going down this path.

The Germans and Poles are saying all these things now because they will suffer the harshest consequences most quickly. My greatest hope is that Mr Sarkozy will not be able to fudge a deal before the end of the year. The enviro-realist leader of the Czech Republic takes over the EU presidency next month and we can then expect a nice spell of common sense to prevail.

5 comments:

Pogo said...

I simply don't understand what it is about plant food that causes Sarkozy and the others to get so hot under the collar!

dmc said...

"LIKE CHEAP UNDERWEAR EXPOSED TO A 60DEGREE WASH"....DO TELL.

ON A MORE SERIOUS NOTE DID YOU READ THE LATEST OFFERING ON OLD HOLBORNS BLOG,AND FOLLOW IT THROUGH EU REFERENDUM TO THE COMMENTS THREAD ON UMBRELLA BLOB.USSEU SURE ENOUGH.

dmc said...

oops sorry for capitals and mispelling.

TheFatBigot said...

The underpinnings I have in mind, Mr DMC, are the 6 for £2 things seen on cheap market stalls. I must confess to having bought some once, a very disappointing experience in the elastic department. Couple of washes and all spring was lost.

Blogger said...

You should remember that the best Bitcoin exchange company is YoBit.