On 2015/12/08 06:16 AM, Marv Gandall wrote:
Technological advances which are making renewable energy cost-competitive have
made the global political and economic elites represented at the Paris climate
talks increasingly receptive to phasing out fossil fuels.
Marv, reports I'm getting - e.g. from Bolivia's former UN ambassador
Pablo Solon (below) - are the contrary: elites gathered in Paris at the
Conference of Polluters 21 are not willing to seriously consider
phase-out. Not just in the North, especially in the BRICS, where the
carbon-pricing process moves next:
http://www.counterpunch.org/2015/12/04/climate-change-casino-carbon-trading-reborn-in-new-generation-mega-polluters/
*Art 3ter. New Carbon Markets under the name of Sustainable Development***
*/By Pablo Solón /*
A draft climate agreement and decision with 48 pages and 939 brackets
has been presented to the ministers in Paris on Saturday 5th of
December. Many things can be said about this text. For example, the
words “fossil fuels” don’t appear once. There is no proposal [in
brackets] to limit coal, oil or gas extraction in the coming years, and
no proposal to halt deforestation. Also, as was expected, no text [in
brackets] from any country addresses the issue that current INDCs
(Intended Nationally Determine Contributions) will actually increase the
greenhouse gas emissions gap from a surplus of 12 Gt CO2e in 2020 to
around 25 Gt CO2e by 2030.*/
/*
But if you think that burning the planet is bad, some people are now
even planning to turn this tragedy into a business opportunity. This is
exactly what is happening with article 3ter, which is now in the draft
agreement. This new article, in order to pass without being noticed,
establishes a “Mechanism to Support Sustainable Development”. Who could
be against that? The words “carbon markets” don’t appear in any of the
text of this article, so why worry? Carefully read the article to find
out why.
It begins saying: /[A mechanism to support sustainable development in
[developing country] Parties is hereby established] … and shall aim to:
[Provide for net global emission reductions through the cancellation of
a share of units generated, transferred, used or acquired]. /In other
words, carbon credits from different kinds of projects can be bought and
traded, to offset emissions. Hidden between the lines, the text
continues to say that this Mechanism to Support Sustainable Development
will be based on Article 12 and Article 6 of the Kyoto Protocol.
Article 6 of the Kyoto Protocol has created carbon markets and offsets
by stating /“…any Party included in Annex I may transfer to, or acquire
from, any other such Party emission reduction units resulting from
projects aimed at reducing anthropogenic emissions by sources or
enhancing anthropogenic removals by sinks of greenhouse gases in any
sector of the economy…”. /And Article 12 of the Kyoto Protocol created
the Clean Development Mechanism that handles those carbon credits.
With the new proposal in Art 3ter, the Clean Development Mechanism will
most likely become the Sustainable Development Mechanism, and carbon
markets will not be limited to developed countries (Annex I), but
available to all countries at all different levels: global, regional,
bilateral and national. In other words, all will be free to gamble on
the future of the Earth system.
This is ironic indeed. The Kyoto Protocol is dying. In reality it is a
zombie that has only been ratified by 55 countries, and not the 144
required. But when it comes to carbon markets, its legacy will live on,
and will be reinforced by the Paris agreement.
***
December 4, 2015
Climate Change Casino: Carbon Trading Reborn in New-Generation
Mega-Polluters
<http://www.counterpunch.org/2015/12/04/climate-change-casino-carbon-trading-reborn-in-new-generation-mega-polluters/>
byPatrick Bond <http://www.counterpunch.org/author/patrick-bond/>
Climate change, the biggest threat to the planet, appears to be
amplifying, as the “financialization of nature” through carbon markets
resumes in earnest. The failure of the Kyoto Protocol’s emissions
trading strategy in Europe may soon be forgotten once the emerging
markets ramp up their investments, especially if carbon markets remain a
central feature of a Paris COP21 agreement. If so, several that have
begun the process – China, Brazil, India and South Africa – are likely
to open the door to full-fledged markets, now that (since 2012) they no
longer qualify for generating credits through UN’s offset scheme, the
Clean Development Mechanism (CDM). The Kyoto Protocol had made provision
for low-income countries to receive CDM funds for emissions reductions
in specific projects, but the system was subject to repeated abuse.
China is already far advanced, with seven metropolitan markets covering
the major cities’ output, and a national market anticipated there in
late 2016.
*The world’s carbon markets*
In Ufa, Russia, in July 2015, the Brazil-Russia-India-China-South Africa
(BRICS) summit accomplished very little aside from codifying new
financial institutions, especially a New Development Bank which is
certain to amplify the BRICS’ greenhouse gas emissions. On climate
change, according to the final declaration, there were only stock
arguments: “We express our readiness to address climate change in a
global context and at the national level and to achieve a comprehensive,
effective and equitable agreement under the United Nations Framework
Convention on Climate Change.”
The UNFCCC still strongly believes in carbon trading, and indeed its
secretary Christiana Figueres came to the UN from the carbon markets.
Assuming a degree of state subsidization and increasingly stringent caps
on greenhouse gas emissions, the Kyoto Protocol posited that
market-centric strategies such as emissions trading schemes and offsets
can allocate costs and benefits appropriately so as to shift the burden
of mitigation and carbon sequestration most efficiently. Current
advocates of emissions trading still insist that this strategy will be
effective once the largest new emitters in the BRICS bloc are integrated
in world carbon markets.
Critics, including the Pope, argue instead that, as the June 2015
Encylical puts it, “The strategy of buying and selling carbon credits
can lead to a new form of speculation which would not help reduce the
emission of polluting gases worldwide. This system seems to provide a
quick and easy solution under the guise of a certain commitment to the
environment, but in no way does it allow for the radical change which
present circumstances require. Rather it may simply be a ploy which
permits maintaining the excessive consumption of some countries and
sectors.”
At the Paris summit of the UNFCCC, the COP21 is anticipated to remove
the critical “Common but Differentiated Responsibility” clause that
traditionally separated national units of analysis by per capita wealth.
The COP21 appears to already have been forestalled in late 2014 by the
climate agreement between Xi Jinping and Barack Obama, representing the
two largest absolute GHG emitters: China and the US. That deal ensures
world catastrophe, for in it China only begins to reduce emissions in
2030 and the US commitment (easily reversed by post-Obama presidents) is
merely to reduce emissions by 15% from 1990 levels by 2025. Likewise in
June 2015, the G7 leaders agreed to decarbonise their economies but only
by 2100, raising the prospects of runaway climate change. The BRICS
bloc’s role in forging inadequate global climate policy of this sort
dates to the 2009 Copenhagen Accord at the COP15 when a side-deal
between Obama and four of the five BRICS’ leaders derailed the much more
ambitious UNFCCC.
The failure of the carbon markets to date, especially the 2008-14 price
crash, which at one point reached 90% from peak to trough, does not
prevent another major effort by states to subsidize the bankers’
solution to climate crisis. The indicators of this strategy’s durability
already include commodification of nearly everything that can be seen as
a carbon sink, especially forests but also agricultural land and even
the ocean’s capacity to sequester carbon dioxide (CO2) for
photosynthesis via algae. The financialization of nature is proceeding
rapidly, bringing with it all manner of contradictions.
Due to internecine competition-in-laxity between climate negotiators
influenced by national fossil fuel industries, the UN summits appear
unable to either cap or regulate GHG pollution at its source, or
jump-start the emissions trade in which so much hope is placed. European
and United Nations turnover plummeted from a peak of US$140 billion in
2008 to US$130 billion in 2011, US$84 billion in 2012, and US$53 billion
in 2013 even as new carbon markets began popping up.[1]1 But after
dipping to below US$50 billion in 2014, volume on the global market is
predicted by industry experts to recover to US$77 billion (worth 8
gigatonnes of CO2 equivalents) in 2015 thanks to higher European prices
and increased US coverage of emissions, extending to transport fuels and
natural gas.[2]2
However, geographically extreme uneven development characterizes the
markets in part because of the different regulatory regimes. Since 2013
there have been new markets introduced in California, Kazakhstan,
Mexico, Quebec, Korea and China, while Australia’s 2012 scheme was
discontinued in 2014 due to the conservative government’s opposition.
The price per tonne of carbon also differs markedly, with early 2015
rates still at best only a third of the 2006 European Union peak:
California around US$12, Korea around US$9, Europe around US$7.3, China
at US$3-7 in different cities, the US northeast Regional Greenhouse Gas
Initiative’s voluntary scheme at US$5, New Zealand at US$4 and
Kazakhstan at US$2. The market for CDMs collapsed nearly entirely to
US$0.20/tonne.
These low prices indicate several problems.
* First, extremely large system gluts continue: 2 billion tonnes in the
EU, for example, in spite of a new “Market Stability Reserve”
backstopping plan that aimed to draw out 800 million tonnes.
* Second, the new markets suffer from such unfamiliarity with trading in
such an ethereal product, emissions, that volume has slowed to a tiny
fraction of what had been anticipated (such as in China and Korea).
* Third, fraud continues to be identified in various carbon markets.
This is, increasingly, a debilitating problem in the timber and
forest-related schemes that were meant to sequester large volumes of carbon.
* Fourth, resistance continues to rise to carbon trading and offsets in
Latin America, Africa and Asia, where movements against reducing
emissions from deforestation and forest degradation (REDD) are linking up.
An overriding danger has arisen that may cancel the deterrents to carbon
trading: the international financial system has overextended itself yet
again, perhaps most spectacularly with derivatives and other speculative
instruments. It needs new outlets for funds. The rise of non-bank
lenders doing “shadow banking,” for example, was by 2013 estimated to
account for a quarter of assets in the world financial system, US$71
trillion, a rise of three times from a decade earlier, with China’s
shadow assets increasing by 42% in 2012 alone. The Economist last year
acknowledged that “potentially explosive” emerging-market shadow banking
is huge, fast-growing in certain forms and little understood. As for the
straight credit market, the main result of Quantitative Easing policies
was renewed bubbling, with US$57 trillion in debt added to the global
aggregate from 2007-14, of which US$25 trillion was state debt. By
mid-2014 the total world debt of US$200 trillion had reached 286 percent
of global GDP, an increase from 269% in late 2007.
Global financial regulation appears impossible given the prevailing
balance of forces, witnessed in failures at the 2002 Monterrey and 2015
Addis Ababa Financing for Development initiatives and various G20
summits after 2008. As a result, the BRICS are especially important
sites to track ebbs and flows of financial capital in relation to
climate-related investments. In reality, in relation to both world
financial markets and climate policy, the BRICS are not anti-imperialist
but instead subimperialist.
The first-round routing of CDM funding went disproportionately to China,
India, Brazil and South Africa from 2005 until 2012, but by then, the
price of CDM credits had sunk so low there was little point in any case.
Moreover, the other Kyoto offsetting mechanism, Joint Implementation,
has over 90% of offsets issued by Russia and Ukraine with very limited
transparency.
Similar problems of system integrity plague the carbon markets that have
opened in China. At the Chinese Academy of Marxism, for example, Yu
Bin’s essay on ‘Two forms of the New Imperialism,’ argues that along
with intellectual property, the commodification of emissions is vital to
understanding the way capital has emerged under conditions of global
crisis. The US$4 trillion lost in the Chinese stock market speculative
bubbling in June-July 2015 was one indication that there are no special
protections offered by what is termed ‘socialism with Chinese
characteristics’. The country’s financial opacity and favouritism
present profound problems for carbon trading. As Reuters reported on
July 1 2015,
‘China said last week it would need to invest 41 trillion yuan ($6.6
trillion) to meet its U.N. pledges. Some of that investment will be
raised through the national carbon market, expected to cover around 3
billion tonnes of carbon emissions – about 30 percent of the annual
total – by 2020. But liquidity on China’s seven pilots schemes has
remained low, with just 28 million permits traded over two years, only
about 2 percent of the permits handed out annually. Prices in five of
the markets have fallen sharply, with the Shanghai market ending its
compliance year on Tuesday at 15.5 yuan (US$2.6), down 38 percent from
its launch. Permits in the biggest pilot exchange in Guangdong have
dropped 73 percent to 16 yuan.’
Regardless of the reality of carbon trading contradictions, if policy
continues to favour corporate strategies, an even greater speculative
bubble in carbon finance can be anticipated in the next few years, as
more BRICS establish carbon markets and offsets as strategies to deal
with their prolific emissions. In South Africa, neither the 2011
National Climate Change Response White Paper nor a 2013 Treasury carbon
tax proposal endorsed carbon trading. In part because of the oligopoly
purchasing conditions anticipated as a result of two vast emitters far
ahead of the others: the state electricity company Eskom and the former
parastatal Sasol which squeezes coal and natural gas to make liquid
petroleum at the world’s single largest emissions point source, at
Secunda near Johannesburg. But by April 2014, carbon trading was back on
the official policy agenda, thanks to the British High Commissioner
whose consultants colluded with the Johannesburg Stock Exchange to issue
celebratory statements about “market readiness.”
With all of South Africa’s carbon-intensive infrastructure under
construction, the official Copenhagen voluntary promise by President
Jacob Zuma – cutting GHG emissions to a “trajectory that peaks at 34%
below a business as usual trajectory in 2020” – appear to be impossible
to uphold, just four years after it was made. The state signalled its
reluctance to impose limits on pollution in February 2015, when
Environment Minister Edna Molewa gave Eskom, Sasol and other major
polluters official permission to continue their current trajectories for
another five years, ignoring Clean Air Act regulations on emissions of
co-pollutants such as sulphur dioxide and nitrogen dioxide.
Other BRICS countries have similar power configurations, and in Russia’s
case it led to a formal withdrawal from the Kyoto Protocol’s second
commitment period (2012-2020) in spite of huge “hot air” benefits the
country would have earned in carbon markets – for not emitting at 1990
levels – as a result of the industrial economy’s deindustrialization due
to its exposure to world capitalism during the early 1990s. That
economic crash cut Russian emissions far below 1990 Soviet Union levels
during the first (2005-2012) commitment period. But given the 2008-13
crash of carbon markets, Moscow’s calculation shifted away from the
Kyoto Protocol, so as to promote its own oil and gas industries without
limitation.
The attraction of carbon trading in the new markets, no matter its
failure in the old, is logical when seen within a triple context: a
longer-term capitalist crisis which has raised financial sector power
within an ever-more frenetic and geographically ambitious system; the
financial markets’ sophistication in establishing new routes for capital
across space, through time, and into non-market spheres; and the
mainstream ideological orientation to solving every market-related
problem with a market solution, which even advocates of a
Post-Washington Consensus and Keynesian economic policies share.
Interestingly, even Paul Krugman had second thoughts, for after reading
formerly pro-trading environmental economist William Nordhaus’ Climate
Casino, he remarked, “The message I took from this book was that direct
action to regulate emissions from electricity generation would be a
surprisingly good substitute for carbon pricing.” This U-turn is the
hard-nosed realism needed in understanding how financial markets
continue to over-extend geographically as investment portfolios
diversify into distant, risky areas and sectors. Global and national
financial governance prove inadequate, leading to bloated and then
busted asset values ranging from subprime housing mortgages to
illegitimate emissions credits.
No better examples can be found of the irrationality of capitalism’s
spatio-temporal-ecological fix to climate crisis than a remark by Tory
climate minister Greg Barker in 2010: “We want the City of London, with
its unique expertise in innovative financial products, to lead the world
and become the global hub for green growth finance. We need to put the
sub-prime disaster behind us.” As BRICS are already demonstrating,
though, new disasters await, for both overaccumulated capitalism in
general and for what will be, for the next few years at least,
under-accumulating carbon markets.
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