Friday, 8 May 2009

Cap-and-Trade Backflip

Kevin Rudd realizes how much an emissions-trading scheme will cost Australia.

From today's Wall Street Journal Asia.

Kevin Rudd likes to talk about showing moral leadership for the world on climate change. But the better example for other governments to follow is the Australian Prime Minister's backtrack on a costly emissions trading scheme.
Mr. Rudd announced on Monday that he will delay implementation of his trademark cap-and-trade proposal until at least 2011. With luck, that will be after the clouds of a global economic slowdown have started to clear and -- more important for Mr. Rudd's Labor Party -- after the next parliamentary election.
The draft Mr. Rudd floated in March would have imposed total carbon permit costs (read: taxes) of 11.5 billion Australian dollars (US$8.5 billion) in the first two years, starting in 2010. This would have increased consumer prices by about 1.1% and shaved 0.1% off annual GDP growth until at least 2050, according to Australia's Treasury. All for negligible green gain, since Australia accounts for only 1.5% of global greenhouse gas emissions. No wonder it's been hard to win support from business groups and individuals who earlier professed enthusiasm for cap-and-trade.
The proposed delay is widely characterized as a "backflip" and has caused Mr. Rudd a lot of embarrassment this week. He may yet push ahead with legislation in some form -- as he certainly promised to do when running in the 2007 election. But it's becoming clear the proposal won't be a shoo-in, despite all the votes Mr. Rudd won when he campaigned on environmentalism.
This is yet another example for politicians elsewhere toying with cap-and-trade. Support for Australia's plan started fading as the costs became clear. The green left hopes no one will notice inconvenient details like money. But voters do.

All must play a part in fighting climate change

By James Baker
Published: May 7 2009 19:54

There is no question among serious thinkers that all major economies must participate in any solution to the threat of climate change. That is essential environmentally – because the challenge is a global one. It is also essential economically and politically – because no country wants to damage its economy or its citizens.
But only the US, as the world’s pre-eminent power, can spearhead the effort. For that reason, it was encouraging to hear Hillary Clinton, secretary of state, say recently that on this subject, “the United States is fully engaged and ready to lead”.
As we move forward, America must maintain a pragmatic stance. I propose a reasonable two-step approach that would make our own efforts to reduce carbon emissions part of a global plan.
First, the president and Congress should hammer out a comprehensive bill that can command a broad consensus in our body politic. It must be crafted to gain approval from both business and environmental groups as well as different regions in the country. It must also be able to withstand the test of time and inevitable shifts in the country’s political mood.
A law passed on the basis of a narrow partisan majority is not the answer. President Barack Obama should reach out to Republicans such as Senators John McCain and Dick Lugar, who appear interested in developing a bipartisan plan.
A cap-and-trade approach might work – but only if done properly. It cannot unduly burden the energy industry or electrical power consumers. For example, it should recognise the importance of coal in our energy mix and provide adequate time for the development of technology to sequester carbon from that fuel. Additionally, it should not be used to raise revenue for purposes unrelated to energy and the threat of climate change. The bill that the House is considering obviously does not meet these tests.
There remains, however, positive potential for a cap-and-trade solution based on proven market principles. In 1990, President George H.W. Bush reached across the aisle and crafted a bipartisan approach based on what then was a new idea. His proposal marked a turning point in US environmental policy. Instead of rigid regulation, he used a market-based system to reduce the pollution that causes acid rain, achieving results more quickly and cheaply than anyone predicted. It was – and remains – an innovative, centrist approach to cutting pollution.
However, any bill that Congress approves must be expressly conditioned upon successful execution by the president of the second step that I advocate: an agreement with the rest of the world. The major defect of Kyoto, and the reason the George H.W. Bush administration rightly refused to agree to it, was that big greenhouse gas emitters such as China, India, Brazil and Indonesia were excluded. They must be party to any eventual agreement.
To demonstrate to those countries the serious role the US is willing to play, it would make sense for the president and Congress to develop a domestic emissions programme but to defer implementation until a global treaty is enacted. The president’s position will be much stronger if the Congress has acted. However, it is crucial that the US does not irrevocably commit itself unless other countries respond in an acceptable and agreed way.
To increase his leverage in negotiating with other countries, the president could be given the ability to bar from our carbon market any major emitting nation that fails to join and implement a global accord. The negative trade aspects of doing that would have to be carefully thought through but the stakes are sufficiently high that it should be considered.
In addition, the president’s negotiators should work to ensure that provisions for forests, land and soil are included in any international agreement. This will not only allow American farmers to contribute (and profit from) a solution, but will also address the concerns of those who argue that deforestation accounts for as much as one-fifth of global climate change.
Last, as we address global climate change, we must continue to research it – and especially its causes – in an open-minded fashion.
The issues of energy, climate change and ultimately their effects on international stability are intertwined, and too important for Washington to either ignore or try to resolve unilaterally.
The writer, a former US secretary of state, is advisory chairman to the investment group that owns Energy Future Holdings, which controls the largest electricity producer in Texas
Copyright The Financial Times Limited 2009

Time for a 'plan B' on ethical pension investment

The greenest British high street chains are failing to invest their pension funds in a responsible way. How are we to take them seriously, asks Fred Pearce

Fred Pearce, Thursday 7 May 2009 11.12 BST

Who are the greenest of the big British high street chains? A lot of people would put the Co-op and Marks & Spencer at the top. Certainly the Co-op and M&S would. The environment is a big seller for both of them.
"The Co-operative is one of the world's leading businesses tackling global climate change", says the Co-op. It claims, even more boldly, that "our approach to tackling climate change has been acknowledged as the best in the UK". It is running a campaign with the environment group WWF to oppose tar sands. "Stop the expansion of toxic fuels" is the main headline on the "ethics in action" page of its website.
Meanwhile, in almost every shopping mall in the land, M&S has been filling its front windows with posters about its "Plan A ... our five-year 100-point 'eco' plan" which includes becoming carbon-neutral by 2012. "It's the only way to do business," it says. "There is no Plan B."
Good stuff. I applaud it all. And having in the past tracked down the origins of a range of M&S's products, I can vouch for the efforts they put in to meeting high environmental and social standards.
But there is scant evidence that anybody passed on the good word about these new policies to the pension division of these big companies, which invest the vast pension funds of their tens of thousands of employees.
Last week, the NGO, FairPensions — which campaigns for ethical pension investment with support from Oxfam, WWF, the trade union Unite and others — published its latest survey of Britain's largest pension funds. The top 30 funds are some of the largest institutional investors in the land. They handle the pension savings of 5 million people and have share portfolios worth £350bn. That gives them a loud voice at shareholder meetings and on boards of directors that can determine corporate strategy of dozens of other companies, on everything from investing in tar sands to fair trade.
The good news is that most of the pension funds surveyed agreed that issues like climate change were bound to affect the financial performance of the companies they invest in. The bad news is that only one-third of them had told their fund managers to even consider environmental criteria when investing.
There was "a general disparity between policy and practice," FairPensions noted. "Funds which perform badly on climate change criteria include some sponsored by companies with strong 'green' credentials." It named the Co-operative group pension scheme and M&S's scheme. The latter appeared so embarrassed that it was one of five companies that refused to answer the surveyors' questions.
In the league table compiled by FairPensions, the Co-op scored just 38% and came 14th out of 30; M&S scored 25% and came 18th. Top of the table with 100% were the superannuation scheme for university academics and BT's pension scheme. Bottom were the power company E.On with 7% and five ultra-secretive pension funds about whom the surveyors could find out little – IBM, Unilever, BAe, Lloyds TSB and the Coal Pension Trustees.
Neither M&S nor the Co-op had followed the lead of the BT, BP and the BBC pension funds in signing up to the UN's principles for responsible investments.
How are we to take these companies seriously? The pension funds of the Co-op and M&S have under their control more money than the shops spend each year in buying goods for sale. If they don't subscribe to the front office policies it creates the impression, shall we say, that the front office policies have more to do with marketing than ethics.
And that goes for many others whose glossy reports on corporate responsibility have a black hole where discussion of their pensions investments should be.
Also languishing in the bottom half of FairPension's responsible investing list is Aviva, formerly the Norwich Union. Aviva claims on its website that "our environment policy places climate change at the heart of our strategy to reduce Aviva's impact on the environment". But, according to FairPensions, the world's fifth largest insurance company shows no sign of applying that policy in its pension scheme.
Likewise, Unilever, the conglomerate that makes everything from Surf washing powder to Wall's ice cream. Its website says: "Our commitment to communities and the environment is integral to the way we do business". Maybe so. But its pension fund refused to answer FairPensions' questions and is so secretive that the surveyors could find out next to nothing about whether it made good on those corporate values.
While companies cannot dictate the detailed investment policies of their pension funds, they nominate trustees and clearly have a strong influence on how their contributions are spent. Any company that genuinely regards climate change, for instance, as a vital issue would want to do what it could to ensure its pension funds were invested in a responsible way to reflect that.
Pension funds have had a difficult time lately. But that is not an excuse for ignoring environmental criteria in making investments. Nor for downright secrecy about how they spend our money. Far from it. Environmental constraints are going to loom ever larger in corporate life in future – and companies that are not adapting to that new world will suffer. So will pension funds.
This is not just greenwash, it is also bad investment practice. If "there is no plan B", then why are the pensions funds still acting as if there were?

Government accused of breaking the rules in wind farm inquiry

Published Date: 08 May 2009
By Jenny Haworth, Environment correspondent

THE Scottish Government has been accused of acting illegally in its dealings over a highly controversial wind farm.
Local councils in the Borders believe rules have been broken because government officials have been in discussion with the Ministry of Defence about the wind farm "in secret". The Ministry of Defence opposed plans for the 48-turbine Fallago Rig wind farm in the Lammermuir Hills during a public inquiry to decide whether the application should be approved. It was worried the turbines could interfere with radar signals.However, it has come to light that since the public inquiry finished 15 months ago, the planning consents team at the Scottish Government has been in discussions with the MoD and the applicant.This has led to claims that the Scottish Government was trying to influence the result of the inquiry so that the wind farm could go ahead.The Scottish Government has denied any wrongdoing and there has not yet been a decision on the proposal.In a letter to energy minister Jim Mather, Dave Lochead, chairman of Cranshaws, Ellemford and Longformacus Community Council, said: "We are extremely concerned about the abuse of inquiry procedure by the government to apparently achieve an outcome to suit its policy objectives in this area."He added: "It appears that the government is willing to over-ride the proper planning procedure in support of their wind energy policy objective in the case of the Fallago Rig application."The Scottish Government has insisted it was adhering to the rules in the Town and Council Planning Rules 1997 when it communicated with the MoD.However, Scottish Borders Council senior solicitor Nuala McKinlay said in the letter: "I have taken the opportunity to review the 1997 rules and struggle to find within those rules any legal explanation or justification for events that have taken place since the inquiry closed."And Morag Ferguson, corporate legal adviser at East Lothian Council, criticised the government's behaviour, that had allowed parties to "submit additional information in private without any other party, nor, indeed, members of the public, having an opportunity to hear this new 'evidence'."Mark Rowley, vice-chairman of Cranshaws, Ellemford and Longformacus Community Council, added: "How can we trust ministers to make fair and impartial decisions when they operate in secret? "This is an exceptionally contentious wind farm proposal in an area increasingly blighted with wind farms." A Scottish Government spokesman said: "We have acted entirely within the rules. "Ministers wrote to Defence Estates and North British Windpower Ltd in October 2008 offering them an opportunity to supply further information which was now available, with regard to a possible mitigation of impacts that the Fallago Rig wind farm development may have on the Brizlee Wood radar. We understand that both parties have held discussions in relation to this request, although neither party has yet responded. "Should there be any new evidence that ministers need to consider in relation to the determination of the wind farm application, then, in line with inquiry rules, we will write to the applicant, the planning authority and all parties offering them opportunity to comment."

Science briefing: New steer on electric cars

By Clive Cookson
Published: May 8 2009 02:48

The drive to grow biofuels for transport has focused on converting crops to ethanol which can be used in internal combustion engines. However, that is the wrong approach, according to a study published on Friday in the journal Science: it is much more efficient to convert biomass to electricity for battery-powered vehicles.
The authors, from the Carnegie Institution at Stanford and the University of California, Merced, calculated that generating electricity, by burning biomass in an efficient power station, delivered 80 per cent more mileage per acre of crops than conversion to ethanol for liquid fuel. It also doubled the greenhouse gas offsets to mitigate climate change.
“It’s a relatively obvious question once you ask it, but nobody had really asked it before,” says Chris Field of the Carnegie Institution.
Bioelectricity was a clear winner over bioethanol, whether the energy came from corn or switchgrass (a new cellulose-based crop).
A car powered by bioelectricity could travel almost 14,000 miles on the net energy from an acre of switchgrass, while a car powered by bioethanol from the same crop would go only 9,000 miles.
“The internal combustion engine just isn’t very efficient, especially when compared with electric vehicles,” says Elliott Campbell, another author. “Even the best ethanol-producing technologies with hybrid vehicles aren’t enough to overcome this.”
Bee shortage not a global crisis Recent declines in honey bee numbers in north America and Europe have prompted widespread concern about an impending crisis, with too few bees to pollinate the crops that depend on them to set fruit. But on a global view, the “pollination crisis” is a myth, an international study has found.
Marcelo Aizen, of Universidad Nacional del Comahue in Argentina, and Lawrence Harder, of Calgary University in Canada, say the world’s stock of honey bees, which has risen by 45 per cent over the past 50 years, continues to increase.
“The honey bee decline observed in the US and in European countries including Britain, which has been attributed in part to parasitic mites and more recently to colony collapse disorder, could be misguiding us to think that this is a global phenomenon,” said Prof Aizen. “We found that is not the case.”
The analysis, which appears in the journal Current Biology, is based on the latest data from the UN Food and Agriculture Organisation. The figures show that the global growth in bee keeping has been driven mainly by demand for honey rather than the need to pollinate crops. Global honey production has doubled since 1961.
Heavy going for bumblebeesZoologists at Britain’s Oxford University have discovered how the honey bee’s heavyweight cousin, the bumblebee, manages to fly. Bumblebees rely on brute force rather than aerodynamic efficiency to stay aloft.
While scientists have become expert at using computers to model insect flight, the Oxford researchers took a more direct approach. “We decided to go back to the insect itself and use smoke, a wind tunnel and high-speed cameras to observe in detail how real bumblebee wings work in free flight,” said Richard Bomphrey.
“We found that bumblebee flight is surprisingly inefficient,” he added. “Aerodynamically speaking it’s as if the insect is ‘split in half’ as not only do its left and right wings flap independently but the airflow around them never joins up to help it slip through the air more easily.”
His Oxford colleague Adrian Thomas called the bumblebee “a tanker-truck”. “Its job is to transport nectar and pollen back to the hive,” he said. “Efficiency is unlikely to be important for that way of life.” The research is published in the journal Experiments in Fluids.
Copyright The Financial Times Limited 2009

Seoul to turn waste food into energy

By Christian Oliver in Seoul
Published: May 7 2009 18:32

South Koreans are not cleaning their plates of fermented cabbage and spicy octopus, so the government is calling in foreigners for help.
Residents of South Korea, Asia’s fourth largest economy, produce more than 13,000 tonnes of food waste a day, a figure that has been rising about 3 per cent a year. The figure is set to grow under new health regulations that will punish restaurateurs for taking uneaten food back to the kitchen rather than discarding it. The spicy waste is banned from landfills because of the methane it produces as it decays, while dumping at sea, the current disposal method of choice, is to be prohibited from 2013.

To cope with the looming mountain of discarded food, local authorities are issuing tenders to foreign companies to build plants to convert the waste into biogas. New Zealand’s Greenlane is working with Swedish Biogas to build a pilot plant in Seoul to produce biogas for use in vehicles in what they say will be the biggest such project in the world. Erik Danielsson, founder and principal shareholder of rival Scandinavian Biogas, says his company has orders in hand worth SKr750m ($95m, €71m, £64m) and is in talks with 16 cities for plants.
The government’s “green new deal” is providing Seoul with a number of opportunities to combat foreign perceptions of the country as a difficult and sometimes hostile place to do business as it taps technologies developed overseas. In addition to the biogas plants, Scandinavian and German companies have signed preliminary deals to build solar panels, wind turbines and lithium ion batteries.
South Korea’s existing 13 biogas plants process only 2,210 tonnes of food and livestock excrement a day, about 15 per cent of the waste generated. The environment ministry says it has provided Won28.6bn ($23m, €17m, £15m) for six additional plants this year.
Mr Danielsson said a plant that Scandinavian Biogas is building in the southern port of Ulsan would hit full capacity in September, processing 180 tonnes of food waste a day, up from a current 40 tonnes. Its capacity will subsequently be expanding to 240 tonnes.
Although South Korea will earn carbon credits for its biogas push, the plants are not expected to make much of a dent in energy import bills. State power provider Kepco announced last month it would build Korea’s biggest biogas plant, with capacity of 1,500 KW. By comparison, a single unit at one of its nuclear power stations produces nearly 700 times more energy.
Additional reporting by Kang Buseong
Copyright The Financial Times Limited 2009

‘Green’ review attacks Severn power plans

By Fiona Harvey, Environment Correspondent
Published: May 8 2009 01:47

Plans for a tidal power scheme in the Severn estuary came under attack on Thursday from green groups claiming the shortlist of projects drawn up by the government was “seriously flawed”.
The accusation is based on a review of the shortlisted projects drawn up by Atkins, the engineering company, and commissioned by green groups headed by the Royal Society for the Protection of Birds.

A tidal power scheme taking advantage of the Severn’s extraordinary tidal range has been mooted since at least the 1920s. As the government has sought to find ways to fulfil its target of generating 35-40 per cent of the UK’s electricity from renewable sources by 2020, the idea has come back into favour.
Earlier this year, the government published a shortlist of five projects and started a consultation process to assess their impacts and feasibility. But the Atkins review found that the shortlist was based on out-of-date calculations, some from a study carried out 30 years ago, and criteria that the consultants said was skewed against more innovative and potentially more environmentally friendly projects.
Atkins found the shortlisting process “seriously underestimated” the amount of electricity that could be produced by more innovative and potentially less environmentally harmful projects, and underestimated the cost of some of the bigger schemes on the shortlist, such as a barrage from Cardiff to Weston.
Martin Harper, head of sustainable development at the RSPB, said: “The government doesn’t need to rush to judgement on this. If they do, there is a serious risk they will pick the wrong project. As this review shows, that could mean unnecessary damage to the environment, an oversized bill for the taxpayer and all for less electricity than is possible.”
The Department of Energy and Climate Change said all of the technically feasible schemes had been included on the shortlist, which it said had been reviewed by a panel of independent experts.
Any less developed technologies, such as tidal reefs and fences of the sort favoured by green groups, had not been ruled out, the government said, as £500,000 was to be devoted to studying them. However, they could not be shortlisted as they might be decades away from commercial deployment.
In a rebuke to the RSPB, the department added: “It’s not possible to rule out the options on the proposed Severn tidal shortlist, and simultaneously call for serious and urgent action on climate change.”
Copyright The Financial Times Limited 2009