Hi CRISIS FORUM,

I said : "The Carbon Auction, by simple logic, cannot raise the kind of funds that are required to undertake full de-Carbonisation of the four kinds that are necessary : reducing Energy Intensity in all processes, increasing Energy Efficiency of all systems (not necessarily the same as the first), Energy Conservation (again, not always the same as the other two) and development of Renewable Energy Technologies."

Oliver said : ">>> What is your "simple logic"? My own calculations suggest the opposite, that a combination of investment from the funds raised, and the incentive from the carbon price acting through markets, can indeed deliver the goods, especially when combined with complementary regulatory systems (as discussed)."

I said : "The kind of investment that is required in the development of Renewable Energy of a sufficient scale to take up the Carbon slack is effectively the development of an entirely new infrastructure, and will therefore be a very large scale costing."

Oliver said : ">>> Yes, very large. But the Auction should raise funds on a very large scale."

My baseline for de-Carbonisation is to de-Carbonise for everyone, everywhere. What you are suggesting carries a very real risk that the wealthiest living in the developed countries will indeed have their lives, systems, machines and social services de-Carbonised, but that the rest of the world will have no access to energy of any kind, since they will be barred from using Carbon Energy.

Why do I assert this ? The usual pattern of investment over the last 60 years has created inequality between and within economies. Those who are resilient to a rising Carbon price are those who already have embedded wealth in their economies and those who have personal wealth.

What is investment ? It is a parasitical money-making machine : that parachutes in somewhere, creates an income stream for itself, then distances itself from the resulting social and economic problems. This is what a well-known supermarket chain want to do in my borough, and they call it "regeneration". But, anyway...

An Auction of Carbon Permits would indeed raise large sums of money (or rather, virtual electronic obligations). However, the investment that would be made would be made by private entities, looking to reap the largest profit from their de-Carbonisation investment. You have omitted to discuss that profit-making will change from the basis of Carbon Energy to the basis of Green Energy, and that corporates will be charged with the new Green Energy developments, and that they will still be seeking profit.

So, a Carbon Price will have Darwinian shakedown - in fact it already is having that effect. And Green Energy investment will have a survival-of-the-richest component as well - in fact it already is having that effect. Texas reaps the wind, and profits from it, on a large scale.

My simple logic is based on the fact that as Carbon Energy decreases in "investment value", i.e. Carbon Assets become "sub-prime" (the Al Gore logic), that the cost of Carbon Permits will be forced to remain "tenable", that is, within the budgets of those entities that need to purchase them. The cream on the top of the milk that can be skimmed off to make butter just keeps getting smaller.

jo.
+44 77 17 22 13 96
http://www.changecollege.org.uk


> Date: Fri, 4 Jul 2008 00:47:26 +0100
> From: [log in to unmask]
> Subject: Re: A Carbon Cap is not Enough
> To: [log in to unmask]
>
>
> My responses below, Oliver.
>
> -----Original Message-----
> From: Discussion list for the Crisis Forum
> [mailto:[log in to unmask]] On Behalf Of jo abbess
> Sent: 03 July 2008 21:28
> To: [log in to unmask]
> Subject: Re: A Carbon Cap is not Enough
>
> Hi CRISIS FORUM,
>
> Oliver Tickell says : "A carbon cap is not enough, in that although it can
> in principle meet the core objective of cutting emissions it will do so (if
> not backed up by complementary measures) in a painful and economically
> inefficient way."
>
> I need to add to that statement the mid-term truth : if cutting emissions is
> all you seek to do in the short-term, at some point this endeavour will
> putter and falter : because there are certain embedded Carbon Emissions that
> cannot be wiped out just by waving a magic Carbon Permit wand and saying
> "Begone, Foule Emission !"
>
> Thus, a Carbon Cap cannot, in my mind, in principle or in fact meet the core
> objective of cutting emissions beyond a certain point.
>
> The British Columbia Carbon Tax ? Probably hit 5% of emissions.
> The EU Emissions Trading Scheme ? Probably hit somewhere between 10% and 15%
> of emissions.
> Cap-and-Hansen ? Probably somewhere around 10% of emissions ? Don't know
> precisely yet. Haven't looked at the projections.
> Voluntary Carbon Emissions Reductions ? 20% of people cut 15% of their
> emissions in the UK. Not a large number.
> Higher Oil Prices ? Cut 5% of road fuel use in North American and UK.
>
>>>> I think we agree here
>
> Oliver Tickell says : "There are many low and negative cost ways of cutting
> emissions which are not happening as a result of market failures. Regulation
> is the best way of addressing this problem, as with energy standards on
> goods from cars and computers to houses and power stations."
>
> I would like to cheer him on, but ask him why it is that these things aren't
> happening already if they are truly negative or zero cost ? Is it because
> nobody is being paid to do them, rather than regulations not being in place
> ?
>
>>>> It is because of market failures. It may be that a house builder want to
> build as cheaply as possible, and the house buyer does not know about energy
> conservation and in any case has no choice to buy a better insulated house.
> It may be that the IT Dept in a company has no incentive to cut electricity
> bills by buying more efficient servers, as the bill is paid out of another
> budget. Thousands upon thousands of examples ...
>
> Without vision, the people are lost. Without focus, the facilities managers
> in office buildings leave the lights on and the air con running 24/7.
>
> Oliver Tickell says : "We also need to recall the success of the Montreal
> Protocol which has done more to cut GHG emissions than the Kyoto Protocol,
> by accident."
>
> I say that the Kyoto Protocol didn't stand a chocolate teapot's chance of
> achieving any of the things promised, because the mechanisms in the KP were
> all prone to Carbon Leakage, by all the obvious compromises and blocks. Not
> only that, it was never seen as a way to cover all bases.
>>>> Agreed. The KP is "cap and trade" without the cap, leaving only the
> trade. So lots of trade but no emissions reductions.
>
> It is not possible to push the Cap-and-Trade model to cover Carbon
> Emissions, as our economies and markets are so highly, majorly dependent on
> Carbon Energy, that money is in fact a proxy for Carbon, and you can't pay
> twice for it...
>>>> I think it is possible. This is what the EU has done with the EU ETS,
> admittedly in a very cackhanded way, but it might be quite good by 2020 or
> so ... (which is of course far too late). One important thing is that people
> like us should not leave it to lobbyists from the power industry to write
> the rules, we should be in there making sure we get well designed markets
> that deliver the environmental goods in an efficient and equitable way. It
> has not happened yet but that does not mean it can't happen.
>
> Oliver Tickell says : "The Kyoto2 approach also wants to invest a large part
> of the approx $1 trillion proceeds of the Permit Auction explicitly into
> decarbonising the global economy, with a huge programme of investment into
> energy research, renewables, etc, including expanding access to energy in
> poor countries but entirely based on low-C technologies. Also energy
> conservation so as to reduce (in some countries) and limit (in others)
> energy demand."
>
> I say I think there are a couple of big problems with this :-
>
> 1. Ownership
> Who will own the Green Energy plant and installations and networks after
> this investment is done ? It is important to know, as this will determine
> the future stability of all economies and markets and societies.
>>>> This is an important question which has no single answer. In some cases
> the Fund might make equity investments in power companies, in others it
> might hand over infrastructure to community organisations or local
> government, in others it might set up public interest companies ... what I
> certainly would not want is this money to be handed over to private
> corporate interests (which is of course precisely what *has* happened under
> eg EUETS with the grandfathering of Allowances).
>
> 2. Scale
> The Carbon Auction, by simple logic, cannot raise the kind of funds that are
> required to undertake full de-Carbonisation of the four kinds that are
> necessary : reducing Energy Intensity in all processes, increasing Energy
> Efficiency of all systems (not necessarily the same as the first), Energy
> Conservation (again, not always the same as the other two) and development
> of Renewable Energy Technologies.
>>>> What is your "simple logic"? My own calculations suggest the opposite,
> that a combination of investment from the funds raised, and the incentive
> from the carbon price acting through markets, can indeed deliver the goods,
> especially when combined with complementary regulatory systems (as
> discussed).
>
> The kind of investment that is required in the development of Renewable
> Energy of a sufficient scale to take up the Carbon slack is effectively the
> development of an entirely new infrastructure, and will therefore be a very
> large scale costing.
>>>> Yes, very large. But the Auction should raise funds on a very large
> scale.
>
> You can get away with cheap costings for the other measures, at least to
> start with until you hit the S-Curve of efficiency gains (as known as the
> law of diminishing returns), but Renewable Energies are going to cost big
> time.
>>>> In some areas you will get diminishing returns, in others increasing
> returns as mass production makes technology cheaper. We have already seen
> this with wind power and I am sure that with large scale deployment of solar
> PV and CSP these technologies will become highly competitive.
>
> It is this initial cost hurdle that cannot be paid for by a Carbon Auction
> if the price of Carbon is managed to keep the current status quo in the
> economy.
>
> Think about it for a while : do private corporations do large scale
> investment unless they absolutely have to ? Of course not. It costs big
> money.
>>>> This is why we need the powerfully coercive approaches advocated in K2 -
> carbon price, large scale spending and regulation.
>
> Therefore, if the price of Carbon is to be kept "sane" within the current
> scheme, and in the powerdown of the Cap, therefore the cost of Renewables
> development will still be relatively high.
>>>> We shall see (I hope) otherwise.
>
> jo.
> +44 77 17 22 13 96
> http://www.changecollege.org.uk
>
>
> ________________________________
> Date: Thu, 3 Jul 2008 15:12:12 +0100
> From: [log in to unmask]
> Subject: Re: A Carbon Cap is not Enough
> To: [log in to unmask]
>
>
>
>
>
>
>
>
> I agree that a lot of what Jo says is right. A carbon cap is not enough, in
> that although it can in principle meet the core objective of cutting
> emissions it will do so (if not backed up by complementary measures) in a
> painful and economically inefficient way. There are many low and negative
> cost ways of cutting emissions which are not happening as a result of market
> failures. Regulation is the best way of addressing this problem, as with
> energy standards on goods from cars and computers to houses and power
> stations.
> Because the result is often emission reductions at negative cost, this is
> actually anti-inflationary and people are better off as a result, giving
> scope to take other measures which actually do cost us, at least in the
> short term.
>
>
>
> We also need to recall the success of the Montreal Protocol which has done
> more to cut GHG emissions than the Kyoto Protocol, by accident.
> Again, this underscores the need for regulation at a global level, but
> backed up (as in the MP) by a Multilateral Fund to finance compliance in
> poor countries.
> This is a very efficient way of achieving our objective, viz the F-gas
> fiasco which achieved cuts of CHF3 production at a cost of $4.7 billion
> under the KP, when an MP approach would have done the same for $100m. Under
> Kyoto2 an MF for this purpose would be financed out of auction proceeds.
>
>
>
> The Kyoto2 approach also wants to invest a large part of the approx $1
> trillion proceeds of the Permit Auction explicitly into decarbonising the
> global economy, with a huge programme of investment into energy research,
> renewables, etc, including expanding access to energy in poor countries but
> entirely based on low-C technologies. Also energy conservation so as to
> reduce (in some countries) and limit (in others) energy demand.
>
>
>
> I hope this helps to dispel and misconceptions about Kyoto2, Oliver.
>
>
>
> ________________________________
>
> From: Discussion list for the Crisis Forum
> [mailto:[log in to unmask]] On Behalf Of Tom Barker
> Sent: 03 July 2008 12:26
> To:
> [log in to unmask]
> Subject: Re: A Carbon Cap is not
> Enough
>
>
> Jo is right.
> We need a renewables revolution, but we need a cap too, and it must be on
> carbon emissions to the environment, not on the price of carbon. Peak Oil
> will not be enough on it's own because of carbon intensive alternatives to
> oil. The wherewithal to solve numerous environmental problems has been with
> us for decades, but the will is lacking because of short-term economic
> considerations. That is why C&C has not been adopted already. The banks
> are likely to jump at 'Kyoto2' because it will give them control whereby
> they will be able to do what banks do best i.e.
> ensure continued profits for the industrial elite at the expense of everyone
> else. Big industry and their government lackeys will always try to dupe the
> people. In the 1980s, Thatcher said something like, 'Science will have
> solved all global environmental problems within five years'. They must be
> rubbing their hands with glee that the environmental movement is now divided
> over the issue thanks to ill thought out reviews such as Monbiot's.
> Tom
>
>
> At 10:56 03/07/2008, jo abbess wrote:
>
> Hi Crisis Forum,
>
> After some
> considerable thought regarding the range of Cap-and-Something overarching
> policy proposals being put forward at the current time (including Hansen's,
> Merkel's and Tickell's), my conclusions are that a Carbon Cap is not enough,
> that money cannot be used as a proxy for Carbon Control, that a de facto
> Carbon Cap is already in the arena with Peak Oil, and that all Capping
> schemes have the wrong focus.
>
> It is my assertion that any Carbon Control policy that does not deliberately
> and explicitly de-Carbonise the Economies and the Energy supply is bound to
> fail in its ultimate objectives, even if it has a measure of success at the
> start. This is because Carbon is so deeply embedded in all developed
> Economies, that it must be pulled out by the roots or it will continue to
> bring both Ecology and Economy to destruction by throttling.
>
> One of the problems with these Cap-and-Something schemes is that, although
> they start out with the best intentions, the premise of capping Carbon, at
> the point of designing an implementation plan, they end up proposing using a
> mechanism to effect this based on money.
>
> It then
> becomes a finance-driven operation, instead of a de-Carbonisation-driven
> operation.
>
> Non-Carbon sources of Energy are by their nature less Energy intensive and
> therefore we will have to accept lower Energy flow rates. This means that we
> must reduce our dependence on Energy, not only reduce our dependency on
> Carbon.
>
> If we do not explicitly regulate to ramp up Renewable sources of Energy,
> there will come a point where the Carbon Capping cannot be enforced, because
> there is no non-Carbon Energy capacity to replace it.
>
> It is true, that if we can somehow enforce a price on Carbon, the future
> projections are that the profit to be made from Carbon Energy will be zero,
> so that investment in Renewable Energy will look like a good wealth-creation
> option. However, it will be argued internationally, that even though Carbon
> Energy no longer has any profit-value, it is still necessary to support
> Economic function, and so Carbon will continue to be used, perhaps managed
> by some quangos.
>
> We desperately need to take the Carbon out of every part of the Economy,
> every part of manufacture, every part of agriculture, every part of
> construction, transport, heating, lighting, power...
>
> I think that if we rely on voluntarism to de-Carbonise, or trend-following
> after setting a Carbon Price by Cap or otherwise, we will not achieve the
> de-Carbonisation we need.
>
> Also, since there is already a de
> facto Carbon Cap in operation due to Peak Oil (in fact, Peak Energy), why
> should the suppliers of Fossil Fuels into the Economy be compensated for
> capping output ? Output is already being capped by Peak Energy...
>
> I
> know that the Energy Majors will be interested in Tickell's scheme, as a way
> of having a licence to continue clinging to the crag face kicking out dirt
> on the rest of us below. Tickell's proposal is a licence to continue pumping
> Carbon into the Economy.
>
> Yes, everyone has something invested in the profit-making ability of the
> Energy Majors, and so everyone has an interest in them surviving. However,
> the Law of Increasing Profit Margins mean that with such a licence to
> continue profiting from Carbon, while ramping up non-Carbon Energy
> investment, the poor will still be paying for the de-Carbonisation through
> their Energy bills.
>
> Why not just abandon such a complex scheme as Tickell's and go straight for
> the jugular ? It costs hard cash to develop Renewable Energy infrastructure
> and plant. The companies are unwilling to cut their profits in order to do
> that (they are obliged to carry on making as high a profit as they can to
> please their shareholders). The Governments will have to manage the
> financing or incentivising the development of Renewables. That means one of
> two options that impact Citizen Consumers : Green Energy Tax or higher
> bills. Yer pays yer money and yer takes yer choice.
>
> jo.
> +44
> 77 17 22 13 96
> http://www.changecollege.org.uk
>
>
> Date: Thu, 3
> Jul 2008 10:21:10 +0100
> From: [log in to unmask]
> Subject: Re: K2: Monbiot
> in today's Guardian
> To: [log in to unmask]
>
> Aubrey, you seem
> to be making some assumptions here. Central Banks are well qualified to run
> the auction as they have ample experience of doing this kind of thing with
> the sale of Treasury Bonds, Bills, etc. This does not mean that they will
> own or control the funds, any more than if you sell an item on ebay, that
> ebay owns or controls the funds you receive. The sovereign body would be the
> UNFCCC. Of course it does not have to be central banks that run the auction.
> Maybe ebay would do a better job? If that's what is decided, no problem as
> far as I am concerned. This is a suggestion only, and if wiser heads than
> mine come up with a better idea, no problem.
>
> Oliver Tickell, K2.
>
> From:
> Discussion list for the Crisis Forum [
> mailto:[log in to unmask]] On Behalf Of AUBREY MEYER
> Sent: 02
> July 2008 12:05
> To: [log in to unmask]
> Subject: Re: K2: Monbiot
> in today's Guardian
>
> So K-2's answer on future 'agency' for fossil fuel production permit-auction
> is . . . . . . . "a coalition of the world's central banks" . . . . . buy
> that, and the UN has clearly had its day [which may be the case].
>
> No wonder K-2 were reluctant to answer this particular question.
>
> Where's the constituency of support?
>
> Are
> nations and their peoples just going to say that's OK [we're not really the
> affected consituency and we weren't really interested in all this climate
> stuff anyway].
>
> Are Texan, Angolan, Indian, Chinese . . . . 'a few thousand oil/coal/gas
> corporations' (~) . . . . going to accept regulation in a
> Government/UN-free world by a coalition of the world's central banks?/! [!!]
>
> Are Exxon BP etc http://www.oilmajors.com/ just going to decamp from Iraq
> the Gulf the Arctic [plus all the equivalent in Coal from the world's
> coalfields] because they've finally succeeded in deconstructing the UNFCCC.
>
> Is there any evidence that the banks are willing to co-operate and accept
> this role?
>
> Baron von Munchhausen fell off
> his horse, when the horse was left hanging from the Kremlin Spires in
> spring.
> This argument for the banks to officially run the global decarbonisation
> needed is like falling off my-little-pony in the middle of charge of the
> light brigade.
>
> ~~~~~~~~~~~~~~~~~~~~~
>
> "Tickell proposes
> setting a global limit for carbon pollution then selling permits to pollute
> to companies extracting or refining fossil fuels. This has the advantage of
> regulating a few thousand corporations - running oil refineries, coal
> washeries, gas pipelines and cement and fertiliser works for example -
> rather than a few billion citizens. These firms would buy their permits in a
> global auction, run by a coalition of the world's central banks."
>
> etc
> Oliver Tickell
> wrote:
>
> See http://www.monbiot.com/archives/2008/07/01/green-lifeline/
>
>
> George Monbiot previews Kyoto2 (the book) in The Guardian and concludes that
> the K2 proposals "could represent a classic Keynesian solution to
> economic
> crisis. The $1, $2 or
> even $5 trillion the system would cost is used to
>
> kick-start a green industrial revolution, a new New Deal not that different
> from the original one (whose most successful component was Roosevelt's
> Civilian Conservation Corps,
> which protected forests and farmland)."
>
>
>
>
> Aubrey
> Meyer
> GCI
> 37 Ravenswood Road
> LONDON E17 9LY
> Ph 0208 520 4742
>
>
>
> ________________________________
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