By IAN TALLEY and STEPHEN POWER
WASHINGTON -- The debate in Washington over climate change shifted into higher gear Tuesday as powerful California Democrat Henry Waxman introduced a bill to cut U.S. greenhouse-gas emissions, but without specifying how the costs would be levied on different sectors of the economy.
The more-than-600-page document published by Mr. Waxman, chairman of the House Energy and Commerce Committee, and Rep. Edward Markey (D., Mass.) represents the opening bid by the party's liberal leaders in the House in what promises to be a long struggle with more moderate Senate Democrats and Republicans over how to curb emissions, and whether to do it in the middle of a recession.
The Waxman-Markey proposal represents another big piece in a complex energy strategy that Mr. Obama and his Democratic allies are pushing through legislation, budget priorities and policies being set by regulatory agencies.
Mr. Obama wants to put a price on emissions of carbon dioxide, a major contributor to climate change, in part to spur development in the U.S. of new power-generation technology, more efficient cars and buildings that consume less energy. Mr. Obama has argued this serves two goals: curbing climate change, and creating new "green" jobs. Mr. Obama has directed billions of dollars in new federal spending to renovate the electric grid, the better to carry power generated by windmills. He has called for more federal support for research into energy-saving technology, and has directed the Environmental Protection Agency to consider letting states regulate automobile emissions of gases that contribute to global warming.
But the key to all of Mr. Obama's initiatives is raising the cost of burning fossil fuels, which provide the majority of the U.S. economy's electric and transportation energy -- a politically challenging endeavor even in good economic times.
Those risks were underscored by Republican attacks Tuesday on the Waxman-Markey bill. The proposal would "raise taxes on every American who drives a car, flips on a light switch, or buys a product manufactured in the United States," House Minority Leader John Boehner of Ohio said in a statement.
The Waxman-Markey bill calls for cutting U.S. emissions 20% below 2005 levels by 2020, compared with the roughly 14% reduction that Mr. Obama has called for in that time frame. It would also mandate tougher efficiency standards for buildings and appliances, and require that by 2025, the U.S. derive at least 25% of its electricity from renewable sources.
But the measure -- which its authors described as a "discussion draft" -- avoids specifying how the costs of fighting climate change will be distributed across the economy. For example, the measure would establish a so-called cap-and-trade system, which would limit the overall amount of carbon dioxide companies are allowed to emit and would let companies buy permits giving giving them the right to pollute if they can't cut their emissions by the required amount. But the proposal doesn't spell out the percentage of those permits that would be given away for free, versus being sold at auctions by the government.
Lobbyists for industries that depend heavily on cheap fossil-fuel power, such as cement, steel and coal-fired electric plants, say any U.S. regulation of greenhouse-gas emissions should include a giveaway of some emissions allowances, to give the companies time to work on new technology.
Mr. Obama's aides say that would lead to windfall profits for some companies. His administration has called for auctioning off 100% of the emission allowances and using the bulk of the revenue -- roughly $645 billion between 2012, when the system kicks in, and 2019 -- to fund tax credits for the middle class.
The Waxman-Markey proposal calls for an unspecified amount of emissions permits to be given away for free to certain trade-sensitive U.S. industries, to ease their costs of compliance.
Write to Ian Talley at ian.talley@dowjones.com and Stephen Power at stephen.power@wsj.com
Wednesday, 1 April 2009
Cairn-do attitude
It's safe to assume that no FTSE 100 company has ever before included a slide on "iceberg management" in its results presentation, but welcome to Cairn Energy's latest adventure - oil and gas exploration off the coast of Greenland. If the environmental risks sound frightening, so do the financial ones. Drilling a single test hole in Greenland's water will cost up to $100m. How many holes will be needed? Nobody knows until the drilling starts - that's how oil exploration works.
You might expect Cairn's shareholders to be alarmed by the size of the potential bets. In fact, the reverse is more likely. If necessary, Cairn will probably find willing partners to join its Arctic and sub-Arctic adventure. Big finds in non-Opec territories are what everybody wants and Greenland, according to the early seismic charts, could be very big indeed. Cairn also has a good reputation. It bought Shell's unloved interests in the Rajasthan desert and discovered reserves that will be producing 80,000 barrels by the end of this year.
The Rajasthan find was not Cairn's first big discovery, as lauded investor Anthony Bolton reminds us in his latest book, Investing Against the Tide. The first "company maker" field was in Bangladesh. Bolton calls Cairn a company with an asymmetric pay-off - you make a lot of money if things go well, but don't lose much if they don't.
Bolton timed his punts on Cairn to perfection - he caught both big moves. It's not known whether he's backing the Greenland bet since he's not managing money directly for Fidelity these days - but Fidelity itself is on the register.
Nobody knows if Greenland's oil, if it's there, can be produced economically. At the current oil price of $48 a barrel, nobody will be making much money. The assumption is that, eventually, the price will rebound to $75-ish. There's an awful lot of "ifs" in the story, but that's how Cairn plays.
You might expect Cairn's shareholders to be alarmed by the size of the potential bets. In fact, the reverse is more likely. If necessary, Cairn will probably find willing partners to join its Arctic and sub-Arctic adventure. Big finds in non-Opec territories are what everybody wants and Greenland, according to the early seismic charts, could be very big indeed. Cairn also has a good reputation. It bought Shell's unloved interests in the Rajasthan desert and discovered reserves that will be producing 80,000 barrels by the end of this year.
The Rajasthan find was not Cairn's first big discovery, as lauded investor Anthony Bolton reminds us in his latest book, Investing Against the Tide. The first "company maker" field was in Bangladesh. Bolton calls Cairn a company with an asymmetric pay-off - you make a lot of money if things go well, but don't lose much if they don't.
Bolton timed his punts on Cairn to perfection - he caught both big moves. It's not known whether he's backing the Greenland bet since he's not managing money directly for Fidelity these days - but Fidelity itself is on the register.
Nobody knows if Greenland's oil, if it's there, can be produced economically. At the current oil price of $48 a barrel, nobody will be making much money. The assumption is that, eventually, the price will rebound to $75-ish. There's an awful lot of "ifs" in the story, but that's how Cairn plays.
Study of Antarctic dust offers vital info on climate change
Published Date: 31 March 2009
A STUDY of dust trapped deep in Antarctic ice sheets is helping unravel details of past climate change, scientists have said.
Researchers have found that dust blown south from Patagonia and deposited in the ice more than 80,000 years ago offers vital information about glacier activity.It is hoped findings from the past will help scientists predict future environmental changes.The study, carried out by the universities of Edinburgh, Stirling and Lille, shows that the very coldest periods of the last ice age correspond with the dustiest periods in the Antarctic region's past.When glaciers in Patagonia retreated, lakes at the edge of the ice trapped the dust so that fewer particles were blown across the ocean to Antarctica.Professor David Sugden, of the University of Edinburgh, said: "The Patagonian glaciers were acting as an on/off switch for releasing dust into the atmosphere."
Secrets of the Amazon may help Scotland reduce global warming
Published Date: 01 April 2009
By Jenny Haworth
Environment Correspondent
SCOTS scientists are replicating a technique used by Amazonian tribes to create charcoal that boosts crop growth and locks up carbon dioxide.
They believe "biochar", made from waste plant products, could help tackle climate change by locking away carbon and preventing it escaping into the atmosphere. Instead of being burned, the substance would be spread on fields and remain in the soil for thousands of years.The charcoal has been shown to improve the quality of soil, which could then be sold to farmers and gardeners to reduce the use of fertiliser. The UK Biochar Research Centre launched today at Edinburgh University, will lead the way in the development of the charcoal.Dr Simon Shackley, of the university's School of GeoSciences, told The Scotsman he believed the potential of the process was "enormous".He added: "Biochar offers an achievable, affordable method of storing carbon for hundreds, if not thousands, of years – we have to adopt technologies such as this to reduce carbon emissions in the long term."He said scientists discovered the charcoal when they noticed dark patches of earth in the Amazon that were highly fertile.And he said he believed people living in the rainforest hundreds of years ago had produced the substance by accident when they burned trees and plants after clearing areas of the forest."This created these very dark soils, which were incredibly fertile," Dr Shackley said."From the archaeological evidence, I think they probably discovered it by accident. "They were clearing forest and when they burned large amounts of wood some of it would probably become charcoal."Scientists at Edinburgh University are now exploring the potential of the substance.Dr Shackley believes research could offer a "win-win" opportunity to help farmers improve crop yields, simultaneously storing away carbon that could otherwise add to global warming.Material can be produced from plant matter such as dead trees, food waste, leaves, and crop residues such as rice husks, which would otherwise produce carbon dioxide and methane as they decayed.The waste decomposes under intense heat, in a low-oxygen environment, without burning. This results in dark grey grains of carbon that can be spread on fields.However it is unclear why the charcoal benefits crop yields as this does not introduce any nutrients directly to the soil, but Dr Shackley believes it improved the structure of the soil, and pores in the charcoal could help retain moisture."It seems that when you use chemical fertiliser the char retains some of it, so instead of getting lost by leaching it gets locked up in the charcoal," he said."It is also very good for water retention."His team is now working with an East Lothian farmer to discover more about the impact of biochar on crop growth.They are also building a plant to make biochar and determine which materials are best used to create it.Dr Shackley believes in the future a biochar production industry could spring up in Scotland."Scotland has an 80 per cent carbon reduction target so it will be a useful contributor to that," he said.In developing countries he thinks this could help create a market for carbon, providing income for poor communities. However, he emphasised the importance of ensuring that large areas of rainforest were not cleared just to create the substance.
Protests at 'cradle of the crunch'
Traffic disruption expected as activists vow to set up 'climate camp' in London
By Jerome Taylor
Wednesday, 1 April 2009
Some will dress as clowns, others will wear masks, some will even be carrying their own environmentally friendly compost lavatories. But all are intent on bringing chaos to London.
After days of speculation and intensive planning, central London is bracing itself for 48 hours of protests and chaos as thousands of demonstrators from a plethora of different causes descend upon the city for the start of the G20 meeting of world leaders.
Anti-capitalists, social justice groups, environmental activists, anarchists and anti-war protesters have all vowed to hold a series of demonstrations across London as 20 of the world's most powerful leaders meet to try to find a way out of the global economic crisis.
As major world players such as Barack Obama and Dmitry Medvedev are ferried around town in armoured limousines with police escorts, demonstrators have vowed to make their voices heard through a series of carefully orchestrated stunts designed to capture the most publicity.
The City of London, which is widely seen by many protesters as the place where the credit crunch began, will be the focus of two mass demonstrations today. Tomorrow protesters will turn their attention to the ExCel Centre in Docklands, east London, where the summit is being held.
A coalition of environmental activists have vowed to defy police barricades and set up a "Climate Camp" outside the London carbon-trading exchange, ECX, off Bishopsgate at 12.30pm today. If they succeed, numerous roads in the City will almost certainly be closed. Previous climate camps have been held in fields outside Heathrow airport and Kingsnorth power station in Kent.
Anti-capitalist protesters and those angry at the Government's recent bailouts of the banks are holding a series of marches from four Tube stations which will converge on the Bank of England today at noon. The G20 Meltdown coalition group, which is organising the marches, has vowed to hold a "Banquet at the Bank", at which effigies of those in the financial centre will be burnt.
One of the most expensive policing operations in the capital's history will see more than 2,500 police officers on hand to make sure that the demonstrators remain peaceful. All leave has been cancelled and officers will be coordinated by up to 3,000 CCTV cameras monitored from a specialist operations room in Lambeth. Commuters have been warned to expect delays and many City employees have been either told not to go into work or to dress down to avoid any confrontations. Transport for London is not intending to shut any Tube stations but police will have the power to close roads and stations if things get out of hand. Many bus routes are likely to be heavily affected.
Numerous environmental and anarchist groups are expected to resort to small acts of direct action away from the main protests which may lead to further travel delays. There are also likely to be road closures in and around central London today and tomorrow.
Yesterday environmental activists in Whitechapel were fine-tuning their plans to install the climate change camp in the City. James Holland, a 36-year-old activist, said he hoped the police would not try to stop the camp from being set up. "I think it would make the police's job a lot easier if they just let us set up the camp," he said. "At least that way we would all be in one place. Trying to stop us would be a colossal waste of time because we'll just go somewhere else if they don't let you go outside the carbon exchange."
In a squat off Commercial Road in east London, a collective of European anarchists were also planning their marches. "The next two days will be a lot of fun," said an Italian activist. "A lot of fun."
Q&A: Everything you were afraid to ask about the G20
Why G20?
G stands for Group, and 20 is supposed to be the number of countries taking part. Actually, there are 22 – but don't ask. Together, they represent around 90 per cent of global gross national product, 80 per cent of world trade, and two-thirds of the world's population.
Where can I see Barack Obama?
On television is your best bet. He and Michelle spent last night at the US ambassador's official residence in Regent's Park, and he will travel to his various engagements in Cadillac One, so you can try waiting on his route in the hope that he will wave. The couple have a private audience with the Queen this afternoon, followed by a reception for all the G20 leaders. Then they go to 10 Downing Street for a working dinner, which starts at 8.30pm. Jamie Oliver will be their cook.
What about the wives and husbands?
While the leaders dine and talk politics, their wives will be having a more relaxed dinner next door at No 11. And it will be wives, because although G20 includes two female heads of government – Germany's Chancellor Angela Merkel, and Argentina's President Cristina Fernandez de Kirchner – neither husband is tagging along. A number of famous British women will join them at dinner. Sitting on either side of Michelle Obama will be the author J K Rowling and the double Olympic gold-medallist Dame Kelly Holmes.
Which wife will steal the show?
Carla Bruni Sarkozy will not be there, which pretty much leaves the field open to Michelle Obama. Her only competitor in the glamour stakes is the opera singer Sonsoles Espinos, wife of the Spanish Prime Minister Jose Luis Rodriguez Zapatero.
G20 in numbers
275 The exact number of minutes the formal talks will last.
1,000 The number of translators and security guards accompanying the 500 delegates.
3,000 The number of CCTV cameras in London that police will access to monitor security.
By Jerome Taylor
Wednesday, 1 April 2009
Some will dress as clowns, others will wear masks, some will even be carrying their own environmentally friendly compost lavatories. But all are intent on bringing chaos to London.
After days of speculation and intensive planning, central London is bracing itself for 48 hours of protests and chaos as thousands of demonstrators from a plethora of different causes descend upon the city for the start of the G20 meeting of world leaders.
Anti-capitalists, social justice groups, environmental activists, anarchists and anti-war protesters have all vowed to hold a series of demonstrations across London as 20 of the world's most powerful leaders meet to try to find a way out of the global economic crisis.
As major world players such as Barack Obama and Dmitry Medvedev are ferried around town in armoured limousines with police escorts, demonstrators have vowed to make their voices heard through a series of carefully orchestrated stunts designed to capture the most publicity.
The City of London, which is widely seen by many protesters as the place where the credit crunch began, will be the focus of two mass demonstrations today. Tomorrow protesters will turn their attention to the ExCel Centre in Docklands, east London, where the summit is being held.
A coalition of environmental activists have vowed to defy police barricades and set up a "Climate Camp" outside the London carbon-trading exchange, ECX, off Bishopsgate at 12.30pm today. If they succeed, numerous roads in the City will almost certainly be closed. Previous climate camps have been held in fields outside Heathrow airport and Kingsnorth power station in Kent.
Anti-capitalist protesters and those angry at the Government's recent bailouts of the banks are holding a series of marches from four Tube stations which will converge on the Bank of England today at noon. The G20 Meltdown coalition group, which is organising the marches, has vowed to hold a "Banquet at the Bank", at which effigies of those in the financial centre will be burnt.
One of the most expensive policing operations in the capital's history will see more than 2,500 police officers on hand to make sure that the demonstrators remain peaceful. All leave has been cancelled and officers will be coordinated by up to 3,000 CCTV cameras monitored from a specialist operations room in Lambeth. Commuters have been warned to expect delays and many City employees have been either told not to go into work or to dress down to avoid any confrontations. Transport for London is not intending to shut any Tube stations but police will have the power to close roads and stations if things get out of hand. Many bus routes are likely to be heavily affected.
Numerous environmental and anarchist groups are expected to resort to small acts of direct action away from the main protests which may lead to further travel delays. There are also likely to be road closures in and around central London today and tomorrow.
Yesterday environmental activists in Whitechapel were fine-tuning their plans to install the climate change camp in the City. James Holland, a 36-year-old activist, said he hoped the police would not try to stop the camp from being set up. "I think it would make the police's job a lot easier if they just let us set up the camp," he said. "At least that way we would all be in one place. Trying to stop us would be a colossal waste of time because we'll just go somewhere else if they don't let you go outside the carbon exchange."
In a squat off Commercial Road in east London, a collective of European anarchists were also planning their marches. "The next two days will be a lot of fun," said an Italian activist. "A lot of fun."
Q&A: Everything you were afraid to ask about the G20
Why G20?
G stands for Group, and 20 is supposed to be the number of countries taking part. Actually, there are 22 – but don't ask. Together, they represent around 90 per cent of global gross national product, 80 per cent of world trade, and two-thirds of the world's population.
Where can I see Barack Obama?
On television is your best bet. He and Michelle spent last night at the US ambassador's official residence in Regent's Park, and he will travel to his various engagements in Cadillac One, so you can try waiting on his route in the hope that he will wave. The couple have a private audience with the Queen this afternoon, followed by a reception for all the G20 leaders. Then they go to 10 Downing Street for a working dinner, which starts at 8.30pm. Jamie Oliver will be their cook.
What about the wives and husbands?
While the leaders dine and talk politics, their wives will be having a more relaxed dinner next door at No 11. And it will be wives, because although G20 includes two female heads of government – Germany's Chancellor Angela Merkel, and Argentina's President Cristina Fernandez de Kirchner – neither husband is tagging along. A number of famous British women will join them at dinner. Sitting on either side of Michelle Obama will be the author J K Rowling and the double Olympic gold-medallist Dame Kelly Holmes.
Which wife will steal the show?
Carla Bruni Sarkozy will not be there, which pretty much leaves the field open to Michelle Obama. Her only competitor in the glamour stakes is the opera singer Sonsoles Espinos, wife of the Spanish Prime Minister Jose Luis Rodriguez Zapatero.
G20 in numbers
275 The exact number of minutes the formal talks will last.
1,000 The number of translators and security guards accompanying the 500 delegates.
3,000 The number of CCTV cameras in London that police will access to monitor security.
Green new deal could ease triple crunch in finance, environment and resources
As the G20 summit approaches, government must understand that leadership means putting the UK on course to climate safety
Andrew Simms
guardian.co.uk, Tuesday 31 March 2009 12.14 BST
The UK economy faces a triple crunch: a recession triggered by a major credit crisis, the looming reality of runaway climate change and critical resource depletion. As a result we face serious challenges to our livelihoods and increasing threats to our fuel and food security.
Whatever the mistakes that allowed this situation to arise, there is growing international consensus that the best way out is via a green new deal policy package. Parts of the UK economy are in freefall with unemployment rising rapidly. At the same time, with less than 100 months to go before the world enters a new, more dangerous phase of global warming, there is an urgent need for the rapid environmental transformation of the economy.
A green new deal demands a comprehensive array of new checks and balances on the financial sector and a range of new economic instruments ranging from new bonds to business incentives and taxes. At its heart is an environmental stimulus package designed to begin the rapid environmental transformation of UK businesses, while simultaneously softening the worst impact of the recession, creating countless jobs in the environmental and renewable energy sector – often referred to as green-collar jobs – and laying the foundations for a truly green recovery.
Possibly for the first time in history, the green new deal could propel environmental measures to the heart of economic policy and decision making. The way that the UK government handles this challenge will reveal its aptitude for crisis management.
It's possible to test that aptitude by looking at what has been done to date, and comparing it with a range of other policy measures. The simple, telling question is: what is the government doing that is new and additional to stimulate the economy by spending on the environment?
The answer indicates that the government is missing a huge opportunity – the chance to boost the economy, ensure energy security and act on climate change by directing new and additional resources into the environmental transformation of the economy.
For example, new and additional green spending included in the green stimulus package of the government's pre-budget report is astonishingly small compared with other recent spending commitments, at just 0.6% of the UK's £20bn recovery plan. This key element makes up just 0.0083% of UK GDP, yet in the wake of the banking crisis nearly 20% of UK GDP has been provided to support the financial sector.
Those new measures are likely to save just 0.128 million tonnes of carbon dioxide (MtCO2) per year from the atmosphere.
Just over £100m of genuine new spending was allocated, making up a fraction – less than 13% – of the annual bonus package given to staff at the failed Royal Bank of Scotland (RBS), estimated at £775m. £100m represents just 0.0083% of UK GDP. Estimates for necessary new annual spending on environmental economic stimulus and transformation range from £11bn, according to Lord Stern, to £50bn, according to the Green New Deal Group.
Even worse, several of the government's measures are in conflict with the environmental stimulus. By comparison with the new and additional spending of the pre-budget report's green stimulus, £2.3bn – around 22 times – has been put aside to assist the car industry. If spent on energy-efficiency measures this would save about 3MtCO2 annually.
As the G20 summit approaches, the government needs to understand that true international leadership means putting the UK on course to climate safety. That will deliver inspiration to other countries, make the necessary changes and help ensure the UK's own climate and energy security.
The overwhelming benefits of this course makes the government's reluctance to act hard to understand. How often in politics does a triple win opportunity emerge? If they don't take it, they really are not fit to govern.
Andrew Simms is policy director of Nef (the New Economics Foundation) the award-winning UK thinktank, and head of Nef's Climate Change Programme
Andrew Simms
guardian.co.uk, Tuesday 31 March 2009 12.14 BST
The UK economy faces a triple crunch: a recession triggered by a major credit crisis, the looming reality of runaway climate change and critical resource depletion. As a result we face serious challenges to our livelihoods and increasing threats to our fuel and food security.
Whatever the mistakes that allowed this situation to arise, there is growing international consensus that the best way out is via a green new deal policy package. Parts of the UK economy are in freefall with unemployment rising rapidly. At the same time, with less than 100 months to go before the world enters a new, more dangerous phase of global warming, there is an urgent need for the rapid environmental transformation of the economy.
A green new deal demands a comprehensive array of new checks and balances on the financial sector and a range of new economic instruments ranging from new bonds to business incentives and taxes. At its heart is an environmental stimulus package designed to begin the rapid environmental transformation of UK businesses, while simultaneously softening the worst impact of the recession, creating countless jobs in the environmental and renewable energy sector – often referred to as green-collar jobs – and laying the foundations for a truly green recovery.
Possibly for the first time in history, the green new deal could propel environmental measures to the heart of economic policy and decision making. The way that the UK government handles this challenge will reveal its aptitude for crisis management.
It's possible to test that aptitude by looking at what has been done to date, and comparing it with a range of other policy measures. The simple, telling question is: what is the government doing that is new and additional to stimulate the economy by spending on the environment?
The answer indicates that the government is missing a huge opportunity – the chance to boost the economy, ensure energy security and act on climate change by directing new and additional resources into the environmental transformation of the economy.
For example, new and additional green spending included in the green stimulus package of the government's pre-budget report is astonishingly small compared with other recent spending commitments, at just 0.6% of the UK's £20bn recovery plan. This key element makes up just 0.0083% of UK GDP, yet in the wake of the banking crisis nearly 20% of UK GDP has been provided to support the financial sector.
Those new measures are likely to save just 0.128 million tonnes of carbon dioxide (MtCO2) per year from the atmosphere.
Just over £100m of genuine new spending was allocated, making up a fraction – less than 13% – of the annual bonus package given to staff at the failed Royal Bank of Scotland (RBS), estimated at £775m. £100m represents just 0.0083% of UK GDP. Estimates for necessary new annual spending on environmental economic stimulus and transformation range from £11bn, according to Lord Stern, to £50bn, according to the Green New Deal Group.
Even worse, several of the government's measures are in conflict with the environmental stimulus. By comparison with the new and additional spending of the pre-budget report's green stimulus, £2.3bn – around 22 times – has been put aside to assist the car industry. If spent on energy-efficiency measures this would save about 3MtCO2 annually.
As the G20 summit approaches, the government needs to understand that true international leadership means putting the UK on course to climate safety. That will deliver inspiration to other countries, make the necessary changes and help ensure the UK's own climate and energy security.
The overwhelming benefits of this course makes the government's reluctance to act hard to understand. How often in politics does a triple win opportunity emerge? If they don't take it, they really are not fit to govern.
Andrew Simms is policy director of Nef (the New Economics Foundation) the award-winning UK thinktank, and head of Nef's Climate Change Programme
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