For Oliver Tickell and the CRISIS FORUM

I have paid attention to the new Kyoto2 book, and I feel I need to critique it, rather than just review it.

Although I accept a lot of what Oliver writes, I cannot accept some of the underlying premises, as you shall see if you want to be entertained by what follows...

Bear in mind this is only the start of my response.

jo.

=x=x=x=x=x=x=x=x=x=x=x=x=x=x=x=x=

page 1
-->   Sir Nicholas Stern pointed out that Climate Change is "the greatest market failure the world has even seen" - which maybe indicates that a market in Carbon cannot fix this problem.

-->   The Kyoto Protocol has indeed failed to control Carbon, and that failure is now embedded as a fixture - but again the ideas were noble and yet the practice compromised so maybe markets cannot respond in a way to correct Carbon abuse.

-->   Kyoto has however created a fine and very successful Carbon market - even though nobody appears to have taken responsibility for their own Carbon cuts.

-->   The market mechanisms put money into nice theories of Carbon offsetting instead of  actually cutting Carbon in total (some Carbon cuts have been made in industrialised countries, but have been overshot by further economic expansion).

page 2
-->  Agreed, the Clean Development Mechanism is not working - not even in "additionality"

-->   Yes, Sustainable Development is not followed up/through - Carbon credits being used to pay for industrialisation or economic expansion.
-->   "carbon market is driven by its own economic logic" - indeed - it's a market in apparently valued goods, using its own validation criteria.

page 3
-->   "the carbon market is not going to be able to put Sustainable Development and everything else into one price" quote - the same can be levelled at a global Carbon Auction as proposed by Kyoto2 - without clear channels for funds.

-->   Hydro - yes, there have been significant problems encountered with largescale, World Bank funded hydroelectric schemes.

-->   Yes, we all know about the "refrigerants" scam for creating valueless pricey Carbon Credits by now

-->   Yes, the inclusion of rainforests in Kyoto as a marketable product will invariably threaten the traditional users/keepers.

-->   Yes, we know about "avoided deforestation" - it means more de-forestation but less than business as usual.

-->   "The Protocol's essential framework is set to persist despite its astonishing record of failure". You better get used to Carbon Trading, therefore. What do you think the proceeds from your proposed Carbon Auction will be used for in many cases ? For trading, of course. How about raising the flag on how Carbon Trading, even if it works, cannot compensate for rich world emissions ? Why not point out that Carbon Trading is failing and demand cuts in the Global North's Carbon, real cuts, up-front, as the Global South have insisted has to happen ? 

-->   Biofuels in Europe (and I guess in the United States of America) was intended originally to be indigenous - but international trade arrangements ruined it by creating an incentive to poor regions to remove rainforest with palm oil to sell at prices lower than oilseed rape at home.

page 4
-->   Biofuels cannot be blamed for all the corrosion of the global food economy - Climate Change has a large part to play in decimating harvests.

-->   "Biofuels are also accelerating the destruction of forests" - no, they're not. The globalised market in Biofuels is causing deforestation, cheap outsourcing strikes again. 

-->   Kyoto is supposed to implement Carbon cuts in Annex 1 countries. We've tried the "flexible mechanisms". They've failed. Let's get back to demand destruction or supply quotas.

-->   "vast sums are being spent in the carbon market" to no avail, therefore give up using money / markets / auctions to try to control Carbon. Yes, we've been spending too much on the administration of the system, but the same would be true of a global Carbon Auction.

-->  "It sometimes seems that everyone is making fortunes out of the 'climate change business' except those who really need the money." Exactly, and the same would be true with a global Carbon Auction.

--> The European Union Emissions Trading Scheme EU ETS : it was a compromise to issue rights free of charge ("grandfathering"), and was only done after major lobbying. Do you think that lobbying forces are about to vapourise ? The Carbon Auction you are proposing could suffer similar compromising forces.

-->   There has been some work by FEASTA and others I believe in Germany, and the new economics foundation that indicates that companies issued with free EU Allowances EUAs have passed on the virtual cost of the allowances to end customers. There is some evidence that the companies have figured that since they know in future they will be paying for their EUAs that they should immune themselves to losses by passing on the prospective costs now before they need to pay for them. However, there are other factors that have been causing rises in prices, besides "future-proofing", and in my opinion it would be wise to consider these
as well, as these may well be more significant.

page 5
-->   Yes, clearly it will be bad news to have EU ETS padded out with "equivalent" CDM units, as yes it will strongly soften the Carbon caps.

-->   The Montreal Protocol only worked because it treated a small sub-set of economic  by-products. Only a small sector of industry was involved, and there were clear, easily managed changes to non-damaging chemistry. This cannot be compared to Carbon. Montreal has been in isolation from much of the world's economy, but Carbon is endemic. Besides, even though Montreal has been successful in cutting Greenhouse Gases GHGs, emissions have still risen.

-->   Yes to efficiency standards, which can only come about with strong regulation. We cooperate globally on the ISO International Standards Organisation for all manner of produced goods and services. Nothing can be sold in X/Y market unless it satisfies ISO A,B and C. Also, there is a gradual shift towards harmonisation of equipment, for example plugs and computer sockets. It is easier to agree on either HD or Bluray globally than it is on Carbon emissions, but even such things as which DVD technology are chosen could be significant for Carbon control.

-->   You mention "450-500 ppm (parts per million) range" and I'm not sure if you mean Carbon Dioxide or Carbon Dioxide equivalent (adding up all the forcings of all the GHGs). This is important.

page 6
-->   Yes, there is an agreed need to find new mechanisms for the Climate Convention.

-->   Yes, Kyoto is not fit for purpose, or rather, the "flexible mechanisms" employed rather than actual emissions cuts have been shown to be not fit for purpose.

-->   "new mechanisms that harness the power of the markets" - but, so far, no good has come of using markets in Carbon.

-->   Yes to direct regulation and funding.

-->   I think it is a good thing that Bali expressed the wish to "maintain continuity in the legally binding frameworks underpinning the carbon market". That means, if a marketising scheme is not working according to the Climate Convention aims, it should be ditched.

-->   So many believe in the healing power of free markets - except Carbon is not susceptible to standard market economics - it's too prevalent and has too few suppliers.

-->   There has to be some "top down" regulation and legislation here, or any kind of market cannot be made to work.

page 7
-->   The USA National Oceanic & Atmospheric Administration NOAA shows that for June 2008, the Mauna Loa average for airborne fraction of Carbon Dioxide was 387.87 ppmv, but that in July 2008 it dropped to 385.60 ppmv. This is part of a yearly cycle. The peak appears to be in May each year. In May 2008 the mean was 388.47 ppmv, two points over May 2007 at 386.54 ppmv, and May 2006 was 384.94 ppmv and May 2005 was 382.45 ppmv. Year on year the trend 
is ever higher. It is perhaps unwise to quote a yearly average until the year is over. It is also unwise to say that an absolute figure, such as 385 ppmv is the current amount :-

ftp://ftp.cmdl.noaa.gov/ccg/co2/trends/co2_mm_mlo.txt
http://www.esrl.noaa.gov/gmd/ccgg/trends/co2_data_mlo.html

--> You mention "450ppm CO2 equivalent", then "450-550ppm", comparing to the James Hansen target of "350 ppm". It is important to ask which units you are using in any comparison. It was a moot point in the analysis of the Stern Report.

page 8
--> Yes, it is important to show that already we are seeing evidence for feedbacks reinforcing Global Warming, even at the current radiative forcings.

--> You mention "350ppm CO2 eq" which is not what Hansen et al. presented.

--> Yes, the list of 7 aims are very good, although you capitulate to Capital on page 9 which I don't think can even begin to address your aims.

page 9
-->   Yes, time lags are often neglected in analysis of the problem as regards necessary adaptation.

-->   point 7 : it is essential that the developed nations take the leading role in cutting emissions, and this is pretty much universally agreed, even by the US who can't agree mandatory cuts.

-->   Noting that you specify nations not corporations in your points.

-->   Yes, it will be good to see an end to the artificial division of Annex I and II as proscribed by the Kyoto Protocol - since China and some others are already over the "development threshold" that is the centre of much contention when it comes to Baer and Athenasiou's Greenhouse Development Rights framework proposal.

-->   I cannot disagree more with your proposal "The main mechanism is a market mechanism - since markets are generally the best means of allocating finite resources without unnecessary waste, while keeping as many people happy as possible." It depends on having a large number of actors coming to market. It depends on a good distribution of resources and good ownership rights distribution. In Fossil Fuel resources, this is not so. Markets can work when everyone can come to the marketplace and compete without needing "capital" or "rights boosters" to enter the market. Clearly the upstream end of the Carbon pipeline is not uniformly distributed, so it cannot de facto have good competitiveness built-in.
 
page 10
-->  You are unlikely to get avoidance of "perverse incentives" to make any Carbon market operate to any efficiency. I think you're flogging a deceased mule here.

-->   Yes, we should learn from the past. Agreed. Stop with the market idea.

-->   "economic theory" actually works against the "principles of equity" in the case that resources are not uniformly distributed.

-->   Yes, we should "recognize [sic] the atmosphere as a global commons" as you say. [I don't like the universal Americanisation of all words, by the way.]

-->   When you say "a global cap, or a series of global caps", this is actually an important distinction as an instant cap does not allow for adaptation and can be shown to be unfair. 

-->   point 1 : BIG TICK to 68% to Fossil Fuels and other industry. 

-->   point 1 : some will argue that agro/forestry should not be included at all in the total of Carbon controllable sources, since some of their emissions are "natural" or an "outcome" of the 68% and the methods to control emissions from biosystems and farming are co-dependent on the Fossil Fuels and industrial sources.

-->   point 2 : there is a confusion that you perpetuate here between embodied Carbon emissions  in production and actual (which could happen anywhere from supply to end consumer).

-->   point 2 : the constituency of corporates will not sign up - how can a nation or group of nations regulate a corporation that straddles boundaries ? Also, the rules of trade it will be argued are that trade should be free and unfettered - so capping at the level of upstream and corporate will be strongly resisted. Far better to offer better conditions and prices for Green Energy and Zero Carbon production, surely ?

-->   The majority of the upstream facilities are in the Global North, but not exclusively. There is a deep connection between corporates and governments, therefore it can be open to complaints of unfairness as corporates do not have fully global representation, even if they are transnational.
 
page 11
-->   As soon as you exchange Carbon Rights for cash you have lost the game, in my view.

-->   "Non market solutions" - you can do all you want with direct regulation so there is no need to invent a Carbon market. A carrot and stick approach could do the trick ; subsidise Green Energy investment and operation, and penalise or tax high Carbon Energy.

--> "overcome specific market failures" : in fact, all attempts at a Carbon market have appeared to fail.

-->   "the cost of measures (no matter who has to pay them)" : actually, it is very important who pays.

-->   "a consistent long-term Carbon price". You might just as well calculate and set one as a function of Climate Damages to GDP.

-->   The reason why Montreal cannot be extended to Carbon is because of the prevalence of Carbon, which leads to fully recycled funding on any scheme you choose to cost Carbon, therefore reducing incentives and the ability to cost Carbon properly.

-->  BIG TICK : Energy labelling.

-->   BIG TICK : Energy efficiency.
 
page 12
-->   There will no end to the debate about which Auction or price level (uniform or not) and what floor/ceiling etc should be used in a Carbon Auction. See page 121. It seems doomed to a cartel operation. You might as well set a tax. For example : you are taxed if you provide high Carbon Energy into the economy.

-->  It's good to see forestry/soiils/agriculture out of the Carbon market you propose. Sensible. But what about the reducing Carbon Sink predictions for the acidified ocean (from raised levels of Carbon Dioxide in the air) ?

--> Carbon Capture and Storage CCS "at generator's expense" - but they will pass the cost on. CCS is a high-cost manoeuvre (it uses a lot of fuel and resources) and a low Carbon gain in the short term before fully in service (when will that be ?)

-->   BIG TICK : Combined Heat and Power CHP - but like CCS demands a lot of infrastructure changes, therefore expense and emissions, which it has not been done in the UK (a retrofit of the infrastructure).

-->   Fossil Fuel subsidies - there has been much on this recently in the international press. It is one essential reason why Kyoto (now) and Kyoto (second incarnation post 2012) cannot function, as the support for Fossil Fuels will continue if the Fossil Fuel technologies are permitted to continue.

-->   BIG TICK : "allocating resources" - property rights are especially important.

page 13
-->    "divert new energy infrastructure investments into renewable and other clean energy development" : this is interesting as it is an admission that many industrialised countries have been suffering from under-investment in energy for some time (due to investment-squeezing privatisation of utilities, obviously). Much plant in the United Kingdom, for example, is expected to be decommissioned before 2025, including nuclear by 2023 (unless the life of some plants get artificially extended, fingers crossed). It would be best to handle new green energy infrastructure development purely by legislation, as it would shift the obligation burden onto those organisations that have the financial capacity to do this - that is - the Big Energy corporates.

-->   Geoengineering - the technofixes really should be left to the actions of absolute last resort, because they cannot absolve the definite and clear need to reduce Carbon emissions. Geoengineering could be ultimately useful in giving a useful and speedy "kickback" for the overshoot on Global Warming we have caused, reining in the swing too far. Geoengineering can provide a measure of Global Cooling to compensate for the fact that we have let unsafe Global Warming go on for too long. Geoengineering cannot replace Carbon Emissions cuts.

page 15
-->   "should not constitute a means of...disguised restriction on international trade" means that in effect, an at-source system of Carbon control is anti-trade.
-->   Also, trade is conceived of as being inter-nation but is now inter-corporation  and their consumers - flouting natural trade relations. Trade is not operating in the way that it should do - between nations with resources and the ROW Rest of the World.

page 16
-->   "Kyoto2 is a global system to auction transferable permits..." : but transferable to whom ? And at what price ? The Auction winner, or small group of winners of most permits could dictate the terms.

-->   "it would apply equally in all countries. There would be no national emissions allocations and no need for 'territorial accounting'..." Just because Kyoto and EU ETS use territorial accounting does not make it wrong to do so.

-->   "it would apply equally in all countries..." So, if a country has a resource it wants to trade, it will need to acquire permits, using wealth accumulated from former Carbon-based trade. But in the case of many national resources, it is the exploitation of those resources by corporations that will have created the wealth with which permits could be acquired. And this wealth may no longer be located in the country. The net result is that, regardless of the deals that a nation makes with a corporation exploiting its resources, countries such as Nigeria will lose out in a Carbon Auction to countries like the United States of America. Even a re-nationalised Nigerian oil company would not have sufficient wealth to compete effectively in the Carbon Auction, as the price of the permits will effectively be set by the highest (wealthiest) bidder or the floor price, both floating above Nigeria's capacity. A corporation trading using Nigerian commodities could win at Carbon Auction, but may well choose to use these permits elsewhere if Nigeria wanted to increase the amount they get from the exploitation deal. It is for arguments like these that international negotiations always settle on 1 person, 1 Carbon quota.

-->   point 3 : some of the producers you group together are also emitters, see page 10. There is a distinct difference between a producer/emitter which will use up their Carbon permits and Fossil Fuel producer/purveyors which can trade them away.

-->   point 4 : there would be no "incentives for the wide scale and systematic reduction of greenhouse gas emissions and the development of alternatives" for producer/emitters. The incentive to de-Carbonise can only really be achieved by regulation - of the form of "you, corporate, are only permitted to trade X of Carbon into the economy". This would be supported by a general fund, agreed, raised on some other principle than an Auction, maybe.

ASIDE 
The simple fact is that a producer-side market is not free and can never be totally liberalised. It is supported by national governments even though extensively privately and transnationally owned. The only thing that can approximate a fully free market is downstream consumption - as supply-side resources are unevenly spread and production warped/concentrated. 

And all this before I even get on to Chapter 1

Chapter 1
Can't criticise, except maybe to suggest that Climate Code Red analysis of the Arctic domino effects on surrounding areas be included (reference : the PIRC 
boys in Machynlleth for the UK cut of Climate Code Red). Also maybe add in the regional effects such as the Amazon stress causing dryout in the USA - and include the evidence and projections on 1.5m to 2.0m sea level rise given at the Geophysical conference in Vienna not so long ago. Also the recent research on sudden sub-decadal change in Climate from New Zealand/Antarctic analysis that shows a rapid flip roughly 12,800 years ago. It would also be good to emphasise again that positive (bad) feedbacks are happening already.
_________________________________________________________________
Make a mini you on Windows Live Messenger!
http://clk.atdmt.com/UKM/go/107571437/direct/01/