Tuesday, 22 December 2009
Green Investments Are Being Clouded by Copenhagen
The Copenhagen climate summit will do little to spur further investment in environmental technologies.
That is hardly surprising given the fundamental flaw at the heart of the process: Negotiations to reduce global carbon dioxide emissions were premised on how much of the gas nations produce, rather than what they consume.
Industrializing countries feared the emissions curbs being demanded of them were a protectionist ruse by the developed world. One country's production cuts, if achieved by reducing local CO2 emissions by relying on imports, is another country's production increase, with no gain for the world's climate.
The nonbinding accord cooked up by the world's biggest industrial nations looks like the lowest common denominator you would expect from countries skeptical of each others' motives and increasingly mistrustful of the science that predicts global warming.
For investors and business leaders, there is no extra clarity on an international regulatory framework that might help them predict the cost of CO2. Such certainty is critical for evaluating the investment merits of environmental projects to meet the emission reductions advised by the United Nations.
McKinsey has forecast such spending might amount to as much as €530 billion ($759.76 billion) a year by 2020 and €810 billion by 2030.
The price of CO2 in the European Union, which has the world's most advanced emissions trading system, is around €14 a metric ton, less than half the level necessary to make many low-emission projects viable. The combination of the severe European recession, coupled with too generous issuance of trading permits, has undermined the perceived advantage of a market-based approach to carbon reduction over tax-based carbon pricing: that it leads to more predictable outcomes.
What is more, EU planning for the CO2 trading regime extends only to 2020, another problem when many CO2-intensive capital projects, like power stations, have far longer lives.
Still, all isn't lost. The good news in Europe is that a floor price for CO2 is being established through new carbon taxes.
The European Commission is seeking a region-wide tax to catch CO2 emitters currently exempt from the emissions trading system, but European states are increasingly putting levies in place unilaterally, among them France, Finland, Ireland, Norway and Sweden.
The U.K.'s Conservative Party, ahead in the polls ahead of next year's general election, also advocates a carbon tax.
Raising money to pay for stretched government budgets may be the motivation rather than reducing global warming, but it may do more to spur green investment in Europe than all the hot air in Copenhagen. — Matthew Curtin
Investors Seek Profit in Climate Debate
By KIMBERLY VLACH
As world leaders squabbled at the United Nations climate summit in Copenhagen, investors continued to hunt for companies that could benefit by expected new rules and regulations stemming from the climate debate.
Even if no big, far-reaching agreements are reached, which seems likely in the near term, there are still a large number of companies that already provide climate-related technologies. Many nations are devoting resources to climate initiatives regardless of Copenhagen, which is one reason these companies are garnering attention.
"Initiatives are going ahead," said Terry Coles, co-fund manager of F&C Asset Management's Global Climate Opportunities Fund which has $80 million under management. (Mr. Coles also helps oversee other F&C funds with more than $1 billion in assets.) "It's no longer about the environment. It's a political issue - it's about national security."
Indeed, much of climate change chatter is intersecting with notions of energy security. Mr. Coles points out that "the U.S. wants to be less dependent on Middle East oil, and China wants to reduce their dependence as well."
More practically, many governments used recent stimulus programs to direct money toward domestic alternative energy initiatives such as wind, solar and biomass. "Governments realize there is a need to change fossil fuel-based energy," said Stuart Connell, co-fund manager of the Natural Resources Fund at J.P. Morgan Asset Management with around $5 billion in assets.
Mr. Connell added that many governments believe coal-fired energy isn't sustainable, given the environmental issues associated with burning coal. That means that while coal is abundant, and abundantly used, in China and the U.S., alternative energy is being rapidly developed, often with government financial backing. Technology focused on efficiency is also growing in importance among climate-centric investors.
"The smartest way to reduce the need for additional coal-fired energy is to use the energy we're already producing more efficiently," said Mr. Coles in London.
Europe's climate plays go deeper than makers of wind turbines and solar panels. Mr. Coles of F&C likes Nexans, a French copper cable manufacturer. Nexans helps transmit energy from producers such as wind farms or oil rigs to the energy grid. The company makes up more than 2% of Mr. Coles' portfolio and he believes the company should strongly benefit from any new climate changes rules.
At the same time, Nexans main business—providing copper cables to various industries — remains highly tied to the global economy. If the economic recovery stalls, Nexans will face a challenging 2010.
Shares in the company, which has a market capitalization of €1.49 billion ($2.14 billion), is up 26% this year.
German electrical component manufacturer SMA Solar Technology AG, with a market value of €818.8 million, is also about 2% of Mr. Coles' fund. It produces inverters that convert solar energy into usable AC current in residential homes. "I want a company that has little competition, and at this stage, there are no significant competitors" to SMA Solar. Mr. Coles said he expects the group to continue increasing its dominant position in home solar power conversion.
The stock has more than doubled in value this year, closing at €91.81 Friday, from €37.50 at the end of 2008.
One of the main risks to alternative energy and climate-related companies is sluggish global growth. If growth doesn't pick up, alternatives begin to look increasingly expensive compared to standard fuels such as oil or coal. And such price disparities often come when people are trying to save money and cut costs. New climate rules could diminish that problem, but those new rules remain elusive.
The risks of solar investing aren't small. LDK Solar Co., a Chinese solar power company that trades on the New York Stock Exchange, skidded more than 12% on Friday because of funding problems. First Solar, an Arizona-based company on the Nasdaq, has seen experienced remarkable volatility. Its share price fell from more than $300 a share in May 2008 to about $135 a share today.
The recession has hit makers of solar panels hard, Mr. Coles noted. "Profit margins are now unattractive, so you need to be selective," he said.
As world leaders squabbled at the United Nations climate summit in Copenhagen, investors continued to hunt for companies that could benefit by expected new rules and regulations stemming from the climate debate.
Even if no big, far-reaching agreements are reached, which seems likely in the near term, there are still a large number of companies that already provide climate-related technologies. Many nations are devoting resources to climate initiatives regardless of Copenhagen, which is one reason these companies are garnering attention.
"Initiatives are going ahead," said Terry Coles, co-fund manager of F&C Asset Management's Global Climate Opportunities Fund which has $80 million under management. (Mr. Coles also helps oversee other F&C funds with more than $1 billion in assets.) "It's no longer about the environment. It's a political issue - it's about national security."
Indeed, much of climate change chatter is intersecting with notions of energy security. Mr. Coles points out that "the U.S. wants to be less dependent on Middle East oil, and China wants to reduce their dependence as well."
More practically, many governments used recent stimulus programs to direct money toward domestic alternative energy initiatives such as wind, solar and biomass. "Governments realize there is a need to change fossil fuel-based energy," said Stuart Connell, co-fund manager of the Natural Resources Fund at J.P. Morgan Asset Management with around $5 billion in assets.
Mr. Connell added that many governments believe coal-fired energy isn't sustainable, given the environmental issues associated with burning coal. That means that while coal is abundant, and abundantly used, in China and the U.S., alternative energy is being rapidly developed, often with government financial backing. Technology focused on efficiency is also growing in importance among climate-centric investors.
"The smartest way to reduce the need for additional coal-fired energy is to use the energy we're already producing more efficiently," said Mr. Coles in London.
Europe's climate plays go deeper than makers of wind turbines and solar panels. Mr. Coles of F&C likes Nexans, a French copper cable manufacturer. Nexans helps transmit energy from producers such as wind farms or oil rigs to the energy grid. The company makes up more than 2% of Mr. Coles' portfolio and he believes the company should strongly benefit from any new climate changes rules.
At the same time, Nexans main business—providing copper cables to various industries — remains highly tied to the global economy. If the economic recovery stalls, Nexans will face a challenging 2010.
Shares in the company, which has a market capitalization of €1.49 billion ($2.14 billion), is up 26% this year.
German electrical component manufacturer SMA Solar Technology AG, with a market value of €818.8 million, is also about 2% of Mr. Coles' fund. It produces inverters that convert solar energy into usable AC current in residential homes. "I want a company that has little competition, and at this stage, there are no significant competitors" to SMA Solar. Mr. Coles said he expects the group to continue increasing its dominant position in home solar power conversion.
The stock has more than doubled in value this year, closing at €91.81 Friday, from €37.50 at the end of 2008.
One of the main risks to alternative energy and climate-related companies is sluggish global growth. If growth doesn't pick up, alternatives begin to look increasingly expensive compared to standard fuels such as oil or coal. And such price disparities often come when people are trying to save money and cut costs. New climate rules could diminish that problem, but those new rules remain elusive.
The risks of solar investing aren't small. LDK Solar Co., a Chinese solar power company that trades on the New York Stock Exchange, skidded more than 12% on Friday because of funding problems. First Solar, an Arizona-based company on the Nasdaq, has seen experienced remarkable volatility. Its share price fell from more than $300 a share in May 2008 to about $135 a share today.
The recession has hit makers of solar panels hard, Mr. Coles noted. "Profit margins are now unattractive, so you need to be selective," he said.
Conservatives to push Senate over US climate Bill
Sam Coates
Senior Conservatives are to lobby Republicans in the US Senate to persuade them to back a climate emissions Bill. As the Tory leadership struggled to prevent party sceptics from dominating the environmental argument after the Copenhagen summit, David Cameron pledged to continue the work started in Denmark in trying to find a legally binding climate change agreement.
He said: “We should be thankful for the small things that have been achieved like the 2C limit on temperature rises and the good work on rainforests.
“But it’s disappointing overall because there are no carbon reduction targets, the details on help for poorer countries to tackle global warming is vague and it’s not a legally binding treaty. We need now to step up the work to get that done.”
If his party gains power in May, he could face a critical climate change summit in Bonn four weeks after the election.
Tory environment ministers believe that they can play a role nudging moderate Republicans to support the Bill.
The Bill is stalled until President Obama completes his healthcare reforms. Mr Obama’s failure to produce legislation to reduce carbon emissions before the Copenhagen summit began was a key reason for its failure.
Hopes are rising that laws might be agreed before next year’s talks in Bonn and Mexico after the Copenhagen accord agreed that emissions reductions will be monitored “with provisions for international consultations and analysis”. US Senators threatened to block the Bill if they could not ensure developing countries such as China were abiding by their climate change promises.
Greg Barker, the climate change spokesman, will visit America next month to meet Lindsey Graham, a Republican senator. John McCain, the former presidential candidate, has also invited him to speak.
Tory sources made clear that the Conservatives would have approached Copenhagen in broadly similar ways to Gordon Brown. “There isn’t a clear feeling that we would have done anything different,” said the source. They said that Mr Cameron was prepared to invest considerable personal energy in combating global climate change. “Cameron will come to the issue with a clear idea of what he wants to achieve and how.”
This comes despite a lack of universal enthusiasm for combatting climate change among Conservatives.
A recent Populus poll for The Times suggested that Conservative voters tend to be mildly more sceptical than their political opponents about climate change’s man-made origins.
Some 20 per cent of Tory supporters do not believe that climate change is happening, compared with 12 per cent for Labour and Liberal Democrats and 15 per cent for the public as a whole.
Party sources conceed that the party is framing the debate carefully since climate change is not top of the public’s agenda during the recession. Arguments are often set around energy security rather than climate change at the moment.
Mr Cameron has been careful to stress that where possible the Tories would not adopt a “big state” approach to enforcing climate change policies. While government has a role, the Tories would prefer to encourage policies where people take action for themselves.
Several Conservatives expressed scepticism about last week’s deal. Douglas Carswell, a backbench Tory MP, suggested that Copenhagen had been a failure.
“So. No deal to legally curtail economic growth in Copenhagen. No targets restraining human liberty or enterprise on a world-wide scale. No fix by the supranational quangocracy to take over the nooks and crannies of our lives.
“And still the sun rose this morning. Snow fell in Essex and, no doubt, melted someplace else. Nature today still does what nature has long done; ebbs, flows, changes, adapts. Life carries on. Perhaps the only thing that ‘failed’ in Copenhagen was an attempt by our priesthood of smug, self-serving Western politicians to place themselves at the centre of it all.”
Lord Lawson, an adviser to George Osborne and former Chancellor, said that a global agreement was not necessary.
“The time has come to abandon the Kyoto-style folly that reached its apotheosis in Copenhagen last week, and move to plan B.”
Tim Montgomerie, of grassroots website, Conservative Home, urged sceptics to still to give money to protect poor countries from “extreme weather” even if they don’t believe its origins are man-made. “You don’t have to believe that climate change is man-made to agree that many developing countries could do with help in protecting their people from hurricanes, flooding and other natural disasters,” he said.
Senior Conservatives are to lobby Republicans in the US Senate to persuade them to back a climate emissions Bill. As the Tory leadership struggled to prevent party sceptics from dominating the environmental argument after the Copenhagen summit, David Cameron pledged to continue the work started in Denmark in trying to find a legally binding climate change agreement.
He said: “We should be thankful for the small things that have been achieved like the 2C limit on temperature rises and the good work on rainforests.
“But it’s disappointing overall because there are no carbon reduction targets, the details on help for poorer countries to tackle global warming is vague and it’s not a legally binding treaty. We need now to step up the work to get that done.”
If his party gains power in May, he could face a critical climate change summit in Bonn four weeks after the election.
Tory environment ministers believe that they can play a role nudging moderate Republicans to support the Bill.
The Bill is stalled until President Obama completes his healthcare reforms. Mr Obama’s failure to produce legislation to reduce carbon emissions before the Copenhagen summit began was a key reason for its failure.
Hopes are rising that laws might be agreed before next year’s talks in Bonn and Mexico after the Copenhagen accord agreed that emissions reductions will be monitored “with provisions for international consultations and analysis”. US Senators threatened to block the Bill if they could not ensure developing countries such as China were abiding by their climate change promises.
Greg Barker, the climate change spokesman, will visit America next month to meet Lindsey Graham, a Republican senator. John McCain, the former presidential candidate, has also invited him to speak.
Tory sources made clear that the Conservatives would have approached Copenhagen in broadly similar ways to Gordon Brown. “There isn’t a clear feeling that we would have done anything different,” said the source. They said that Mr Cameron was prepared to invest considerable personal energy in combating global climate change. “Cameron will come to the issue with a clear idea of what he wants to achieve and how.”
This comes despite a lack of universal enthusiasm for combatting climate change among Conservatives.
A recent Populus poll for The Times suggested that Conservative voters tend to be mildly more sceptical than their political opponents about climate change’s man-made origins.
Some 20 per cent of Tory supporters do not believe that climate change is happening, compared with 12 per cent for Labour and Liberal Democrats and 15 per cent for the public as a whole.
Party sources conceed that the party is framing the debate carefully since climate change is not top of the public’s agenda during the recession. Arguments are often set around energy security rather than climate change at the moment.
Mr Cameron has been careful to stress that where possible the Tories would not adopt a “big state” approach to enforcing climate change policies. While government has a role, the Tories would prefer to encourage policies where people take action for themselves.
Several Conservatives expressed scepticism about last week’s deal. Douglas Carswell, a backbench Tory MP, suggested that Copenhagen had been a failure.
“So. No deal to legally curtail economic growth in Copenhagen. No targets restraining human liberty or enterprise on a world-wide scale. No fix by the supranational quangocracy to take over the nooks and crannies of our lives.
“And still the sun rose this morning. Snow fell in Essex and, no doubt, melted someplace else. Nature today still does what nature has long done; ebbs, flows, changes, adapts. Life carries on. Perhaps the only thing that ‘failed’ in Copenhagen was an attempt by our priesthood of smug, self-serving Western politicians to place themselves at the centre of it all.”
Lord Lawson, an adviser to George Osborne and former Chancellor, said that a global agreement was not necessary.
“The time has come to abandon the Kyoto-style folly that reached its apotheosis in Copenhagen last week, and move to plan B.”
Tim Montgomerie, of grassroots website, Conservative Home, urged sceptics to still to give money to protect poor countries from “extreme weather” even if they don’t believe its origins are man-made. “You don’t have to believe that climate change is man-made to agree that many developing countries could do with help in protecting their people from hurricanes, flooding and other natural disasters,” he said.
We're all eco-warriors now after world leaders failed us at Copenhagen
Our political leaders failed to do the right thing: now it's up to us to push them into action or get on with it without them
James Garvey
guardian.co.uk, Monday 21 December 2009 12.40 GMT
What did the UN climate change talks in Copenhagen achieve? Our governments failed to agree a deal which might have avoided a global catastrophe. They did nothing but take yet another "important first step". We've had nearly two decades of those.
It's likely that Copenhagen is a long-term disaster for the planet and its people, but it might have another, more immediate consequence for you right now. Your moral obligations might have just changed dramatically. In situations like the one we're in now, the demand for action shifts from our leaders to us. They missed what might have been our last chance to take to take concerted, worldwide action on climate change, so the rest of us have to do something about it. Their failure means that we're all eco-warriors now.
When things go smoothly, you do your civic duty by casting a vote, paying your taxes, and generally keeping out of trouble. It's enough to leave it to the ones in power to think things through and make certain choices for you. In rare circumstances, though, our obligations enlarge, and it's up to us to do the right thing when no one else will.
When the state perpetuates injustice and human suffering, when there's real urgency, when other avenues of protest have done no good at all, your civic duty becomes something very substantial. You have to bring change into the world, and a vote is not enough. Anything less ties you to an ongoing wrong. Civil disobedience and other direct efforts to bring about change are the only options you have.
It's no longer any good just hoping that the men in suits will come up with a decent solution. They messed it up. It's not enough to click a link and send a message to your representative or even go on a march. None of it is enough when the people you petition fail again and again to do the right thing. Perhaps it's now up to us to make trouble for them, to leave our governments no choice but to act, to get in the way, make business as usual impossible, and force real action against climate change. Think of all the usual examples, large and small, of human beings at their finest: the end of slavery in America, the civil rights movement, suffrage, India, the velvet revolution, the poll tax protests and on and on. When human beings see that something is wrong we almost always change for the better. Sometimes we need our noses rubbed in it, but we do the right thing in the end. The developed and developing worlds are doing something wrong – we're all causing suffering to people alive right now and to great numbers of those who will come after us. If civil disobedience was warranted to stop past injustices, isn't it warranted right now to stop what is probably the greatest amount of harm any group of human beings ever inflicted on any other?
The green movement has always suffered from the lack of a clear target. How do you protest against something that's all around us, a fossil-fuel burning world we all inhabit and depend upon? Do you chain yourself to yourself and insist on a carbon tax on the things you value most? With the failure at Copenhagen we have for the first time a clearly delineated and easily accessible object for our protests: our governments.
What about the so-called deal-breakers at Copenhagen? It's being said that what really stood in the way of a binding conclusion is China and America failing to see eye to eye. The philosopher Peter Singer argues that sanctions were warranted against South Africa because it harmed its own people. The world's biggest polluters harm not just their own people, but people all over the world. How much greater are sanctions warranted in their case, compared with South Africa?
But maybe this isn't the right way to think, and anyway we've all had enough doom and gloom. It might be wrong not because it's over the top, but because it depends on a conception of politics that no longer fits the world as it is now. Perhaps global treaties and talks and sanctions are not part of the solution to climate change. Those are the bones of something that died near the start of this awful millennium.
Maybe the solution never was a deal at Copenhagen – who really thinks that climate change has just one big answer? What we need are a billion different solutions, perhaps billions of little revolutions in thinking and acting all over the world. The good news is that such things do not depend on a handful of negotiators sitting around a table. What matters are people like you and me who see the world for what it is and do something about it. There's room for a little hope still, the hope that even though our leaders fail to do the right thing, the rest of us will either push them into action or get on with it without them.
James Garvey is secretary of the Royal Institute of Philosophy and author of The Ethics of Climate Change
James Garvey
guardian.co.uk, Monday 21 December 2009 12.40 GMT
What did the UN climate change talks in Copenhagen achieve? Our governments failed to agree a deal which might have avoided a global catastrophe. They did nothing but take yet another "important first step". We've had nearly two decades of those.
It's likely that Copenhagen is a long-term disaster for the planet and its people, but it might have another, more immediate consequence for you right now. Your moral obligations might have just changed dramatically. In situations like the one we're in now, the demand for action shifts from our leaders to us. They missed what might have been our last chance to take to take concerted, worldwide action on climate change, so the rest of us have to do something about it. Their failure means that we're all eco-warriors now.
When things go smoothly, you do your civic duty by casting a vote, paying your taxes, and generally keeping out of trouble. It's enough to leave it to the ones in power to think things through and make certain choices for you. In rare circumstances, though, our obligations enlarge, and it's up to us to do the right thing when no one else will.
When the state perpetuates injustice and human suffering, when there's real urgency, when other avenues of protest have done no good at all, your civic duty becomes something very substantial. You have to bring change into the world, and a vote is not enough. Anything less ties you to an ongoing wrong. Civil disobedience and other direct efforts to bring about change are the only options you have.
It's no longer any good just hoping that the men in suits will come up with a decent solution. They messed it up. It's not enough to click a link and send a message to your representative or even go on a march. None of it is enough when the people you petition fail again and again to do the right thing. Perhaps it's now up to us to make trouble for them, to leave our governments no choice but to act, to get in the way, make business as usual impossible, and force real action against climate change. Think of all the usual examples, large and small, of human beings at their finest: the end of slavery in America, the civil rights movement, suffrage, India, the velvet revolution, the poll tax protests and on and on. When human beings see that something is wrong we almost always change for the better. Sometimes we need our noses rubbed in it, but we do the right thing in the end. The developed and developing worlds are doing something wrong – we're all causing suffering to people alive right now and to great numbers of those who will come after us. If civil disobedience was warranted to stop past injustices, isn't it warranted right now to stop what is probably the greatest amount of harm any group of human beings ever inflicted on any other?
The green movement has always suffered from the lack of a clear target. How do you protest against something that's all around us, a fossil-fuel burning world we all inhabit and depend upon? Do you chain yourself to yourself and insist on a carbon tax on the things you value most? With the failure at Copenhagen we have for the first time a clearly delineated and easily accessible object for our protests: our governments.
What about the so-called deal-breakers at Copenhagen? It's being said that what really stood in the way of a binding conclusion is China and America failing to see eye to eye. The philosopher Peter Singer argues that sanctions were warranted against South Africa because it harmed its own people. The world's biggest polluters harm not just their own people, but people all over the world. How much greater are sanctions warranted in their case, compared with South Africa?
But maybe this isn't the right way to think, and anyway we've all had enough doom and gloom. It might be wrong not because it's over the top, but because it depends on a conception of politics that no longer fits the world as it is now. Perhaps global treaties and talks and sanctions are not part of the solution to climate change. Those are the bones of something that died near the start of this awful millennium.
Maybe the solution never was a deal at Copenhagen – who really thinks that climate change has just one big answer? What we need are a billion different solutions, perhaps billions of little revolutions in thinking and acting all over the world. The good news is that such things do not depend on a handful of negotiators sitting around a table. What matters are people like you and me who see the world for what it is and do something about it. There's room for a little hope still, the hope that even though our leaders fail to do the right thing, the rest of us will either push them into action or get on with it without them.
James Garvey is secretary of the Royal Institute of Philosophy and author of The Ethics of Climate Change
If you want to know who's to blame for Copenhagen, look to the US Senate
Obama's attempt to put China in the frame for failure had its origins in the absence of American campaign finance reform
George Monbiot
guardian.co.uk, Monday 21 December 2009 20.00 GMT
The last time global negotiations collapsed like this was in Doha, in 2001. After the trade talks fell apart, the World Trade Organisation assured delegates that there was nothing to fear: they would move to Mexico, where a deal would be done. The negotiations ran into the sand of the Mexican resort of Cancún, never to re-emerge. After eight years of dithering, nothing has been agreed.
When the climate talks in Copenhagen ended in failure last week, Yvo de Boer, the man in charge of the process, urged us not to worry: everything will be sorted out "in Mexico one year from now". Is Mexico the diplomatic equivalent of the Pacific garbage patch: the place where failed negotiations go to die?
De Boer might pretend that this is just a temporary hitch, but he knows what happens when talks lose momentum. A year ago I asked him what he feared most. This is what he said. "The worst-case scenario for me is that climate becomes a second WTO … Copenhagen, for me, is a very clear deadline that I think we need to meet, and I am afraid that if we don't then the process will begin to slip, and like in the trade negotiations, one deadline after the other will not be met, and we sort of become the little orchestra on the Titanic."
We can live without a new trade agreement; we can't live without a new climate agreement. One of the failings of the people who have tried to mobilise support for a climate treaty is that we have made the issue too complicated. So here is the simplest summary I can produce of why this matters.
Human beings can live in a wider range of conditions than almost any other species. But the climate of the past few thousand years has been amazingly kind to us. It has enabled us to spread into almost all regions of the world and to grow into the favourable ecological circumstances it has created. We enjoy the optimum conditions for supporting seven billion people.
A shift in global temperature reduces the range of places which can sustain human life. During the last ice age, humans were confined to low latitudes. The difference in the average global temperature between now and then was 4C. Global warming will have the opposite effect, driving people into higher latitudes, principally as water supplies diminish.
Food production at high latitudes must rise as quickly as it falls elsewhere, but this is unlikely to happen. According to the body that summarises the findings of climate science, the Intergovernmental Panel on Climate Change, the potential for global food production "is very likely to decrease above about 3C". The panel uses the phrase "very likely" to mean a probability of above 90%. Unless a strong climate deal is struck very soon, the probable outcome is a rise of 3C or more by the end of the century.
Even in higher latitudes the habitable land area will decrease as the sea level rises. The likely rise this century – probably less than a metre – is threatening only to some populations, but the process does not stop in 2100. During the previous interglacial period, about 125,000 years ago, the average global temperature was about 1.3C higher than it is today, as a result of changes in the earth's orbit around the sun.
A new paper in the scientific journal Nature shows that sea levels during that period were between 6.6 and 9.4 metres higher than today's. Once the temperature had risen, the expansion of sea water and the melting of ice caps in Greenland and Antarctica was unstoppable. I wonder whether the government of Denmark, whose atrocious management of the conference contributed to its failure, would have tried harder if its people knew that in a few hundred years they won't have a country any more.
As people are displaced from their homes by drought and rising sea levels, and as food production declines, the planet will be unable to support the current population. The collapse in human numbers is unlikely to be either smooth or painless: while the average global temperature will rise gradually, the events associated with it will come in fits and starts – in the form of sudden droughts and storm surges.
This is why the least developed countries, which will be hit hardest, made the strongest demands in Copenhagen. One hundred and two poor nations called for the maximum global temperature rise to be limited not to 2C but to 1.5C. The chief negotiator for the G77 bloc complained that Africa was being asked "to sign a suicide pact, an incineration pact, in order to maintain the economic dominance of a few countries".
The immediate reason for the failure of the talks can be summarised in two words: Barack Obama.
The man elected to put aside childish things proved to be as susceptible to immediate self-interest as any other politician. Just as George Bush did in the approach to the Iraq war, Obama went behind the backs of the UN and most of its member states and assembled a coalition of the willing to strike a deal that outraged the rest of the world. This was then presented to poorer nations without negotiation: either they signed it or they lost the adaptation funds required to help them survive the first few decades of climate breakdown.
The British and US governments have blamed the Chinese government for the failure of the talks. It's true that the Chinese worked hard to mess them up, but Obama also put Beijing in an impossible position. He demanded concessions while offering nothing. He must have known the importance of not losing face in Chinese politics: his unilateral diplomacy amounted to a demand for self-abasement. My guess is that this was a calculated manoeuvre guaranteed to produce instransigence, whereupon China could be blamed for the outcome the US wanted.
Why would he do this? You have only to see the relief in Democratic circles to get your answer. Pushing a strong climate programme through the Senate, many of whose members are wholly-owned subsidiaries of the energy industry, would have been the political battle of his life. Yet again, the absence of effective campaign finance reform in the US makes global progress almost impossible.
So what happens now? That depends on the other non-player at Copenhagen: you. For the past few years good, liberal, compassionate people – the kind who read the Guardian – have shaken their heads and tutted and wondered why someone doesn't do something. Yet the number taking action has been pathetic. Demonstrations which should have brought millions on to the streets have struggled to mobilise a few thousand. As a result the political cost of the failure at Copenhagen is zero. Where are you.
Is this music not to your taste, sir, or madam? Perhaps you would like our little orchestra to play something louder, to drown out that horrible grinding noise.
George Monbiot
guardian.co.uk, Monday 21 December 2009 20.00 GMT
The last time global negotiations collapsed like this was in Doha, in 2001. After the trade talks fell apart, the World Trade Organisation assured delegates that there was nothing to fear: they would move to Mexico, where a deal would be done. The negotiations ran into the sand of the Mexican resort of Cancún, never to re-emerge. After eight years of dithering, nothing has been agreed.
When the climate talks in Copenhagen ended in failure last week, Yvo de Boer, the man in charge of the process, urged us not to worry: everything will be sorted out "in Mexico one year from now". Is Mexico the diplomatic equivalent of the Pacific garbage patch: the place where failed negotiations go to die?
De Boer might pretend that this is just a temporary hitch, but he knows what happens when talks lose momentum. A year ago I asked him what he feared most. This is what he said. "The worst-case scenario for me is that climate becomes a second WTO … Copenhagen, for me, is a very clear deadline that I think we need to meet, and I am afraid that if we don't then the process will begin to slip, and like in the trade negotiations, one deadline after the other will not be met, and we sort of become the little orchestra on the Titanic."
We can live without a new trade agreement; we can't live without a new climate agreement. One of the failings of the people who have tried to mobilise support for a climate treaty is that we have made the issue too complicated. So here is the simplest summary I can produce of why this matters.
Human beings can live in a wider range of conditions than almost any other species. But the climate of the past few thousand years has been amazingly kind to us. It has enabled us to spread into almost all regions of the world and to grow into the favourable ecological circumstances it has created. We enjoy the optimum conditions for supporting seven billion people.
A shift in global temperature reduces the range of places which can sustain human life. During the last ice age, humans were confined to low latitudes. The difference in the average global temperature between now and then was 4C. Global warming will have the opposite effect, driving people into higher latitudes, principally as water supplies diminish.
Food production at high latitudes must rise as quickly as it falls elsewhere, but this is unlikely to happen. According to the body that summarises the findings of climate science, the Intergovernmental Panel on Climate Change, the potential for global food production "is very likely to decrease above about 3C". The panel uses the phrase "very likely" to mean a probability of above 90%. Unless a strong climate deal is struck very soon, the probable outcome is a rise of 3C or more by the end of the century.
Even in higher latitudes the habitable land area will decrease as the sea level rises. The likely rise this century – probably less than a metre – is threatening only to some populations, but the process does not stop in 2100. During the previous interglacial period, about 125,000 years ago, the average global temperature was about 1.3C higher than it is today, as a result of changes in the earth's orbit around the sun.
A new paper in the scientific journal Nature shows that sea levels during that period were between 6.6 and 9.4 metres higher than today's. Once the temperature had risen, the expansion of sea water and the melting of ice caps in Greenland and Antarctica was unstoppable. I wonder whether the government of Denmark, whose atrocious management of the conference contributed to its failure, would have tried harder if its people knew that in a few hundred years they won't have a country any more.
As people are displaced from their homes by drought and rising sea levels, and as food production declines, the planet will be unable to support the current population. The collapse in human numbers is unlikely to be either smooth or painless: while the average global temperature will rise gradually, the events associated with it will come in fits and starts – in the form of sudden droughts and storm surges.
This is why the least developed countries, which will be hit hardest, made the strongest demands in Copenhagen. One hundred and two poor nations called for the maximum global temperature rise to be limited not to 2C but to 1.5C. The chief negotiator for the G77 bloc complained that Africa was being asked "to sign a suicide pact, an incineration pact, in order to maintain the economic dominance of a few countries".
The immediate reason for the failure of the talks can be summarised in two words: Barack Obama.
The man elected to put aside childish things proved to be as susceptible to immediate self-interest as any other politician. Just as George Bush did in the approach to the Iraq war, Obama went behind the backs of the UN and most of its member states and assembled a coalition of the willing to strike a deal that outraged the rest of the world. This was then presented to poorer nations without negotiation: either they signed it or they lost the adaptation funds required to help them survive the first few decades of climate breakdown.
The British and US governments have blamed the Chinese government for the failure of the talks. It's true that the Chinese worked hard to mess them up, but Obama also put Beijing in an impossible position. He demanded concessions while offering nothing. He must have known the importance of not losing face in Chinese politics: his unilateral diplomacy amounted to a demand for self-abasement. My guess is that this was a calculated manoeuvre guaranteed to produce instransigence, whereupon China could be blamed for the outcome the US wanted.
Why would he do this? You have only to see the relief in Democratic circles to get your answer. Pushing a strong climate programme through the Senate, many of whose members are wholly-owned subsidiaries of the energy industry, would have been the political battle of his life. Yet again, the absence of effective campaign finance reform in the US makes global progress almost impossible.
So what happens now? That depends on the other non-player at Copenhagen: you. For the past few years good, liberal, compassionate people – the kind who read the Guardian – have shaken their heads and tutted and wondered why someone doesn't do something. Yet the number taking action has been pathetic. Demonstrations which should have brought millions on to the streets have struggled to mobilise a few thousand. As a result the political cost of the failure at Copenhagen is zero. Where are you.
Is this music not to your taste, sir, or madam? Perhaps you would like our little orchestra to play something louder, to drown out that horrible grinding noise.
European solutions to climate change
Away from the theatrics of Copenhagen, the EU quietly leads the way in putting emissions-tackling market structures in place
Éloi Laurent and Jacques Le Cacheux
guardian.co.uk, Monday 21 December 2009 18.00 GMT
The US and China have stolen the show in Copenhagen, with a very unhappy ending. This is quite understandable: they produce nearly half of global greenhouse gas emissions. But in the midst of this trans-Pacific rift, the EU perspective has received too little attention, as Europeans have sidelined themselves by being unable to speak loudly in one voice. This is regrettable, for two sets of reasons that point respectively to praise and constructive criticism of the EU climate policy.
The EU, often maligned on the world stage as a power so soft it is hard to feel it, deserves a high mark on the climate front. The road to Copenhagen was indeed largely paved by the EU, acting within the UN in its most important capacity, that of global normative power. Europe was the first region in the world to write down in its laws the basis of the scientific consensus on climate change tenaciously built over the past 20 years by the Intergovernmental Panel on Climate Change. The EU acknowledged the need to limit the increase in earth's temperature to 2C, which is now a global reference included in the Copenhagen agreement.
Furthermore, without the European commitment taken in 2007 to unilaterally deliver a 20% cut on 1990 emissions by 2020, and possibly 30% if other countries aim for comparable targets, emerging and developing countries would have hardly been seen at all around the Copenhagen table.
Finally, the EU leads the way in terms of economic instruments mobilised for mitigation, whether one considers standards and norms, cap-and-trade or carbon taxes. In this respect, the EU has managed to construct the core element of the potential global co-operative effort to curb emissions that will have to be worked out in 2010: the EU's emission trading system (ETS), ie the European carbon market.
This market now accounts for two-thirds of all carbon traded worldwide, which means that any meaningful agreement between developed and developing countries will have to rely on the EU ETS. This also means that the global price for carbon will be determined in Europe. And this is where praising the EU for its climate commitment should also lead to asking the EU for a better climate policy.
In a study just published, we show that the price signal coming from the EU ETS is actually hard to catch: it is unstable and too low. Since its creation, the cost of a tonne of CO2 in Europe has twice collapsed, first by 65% between April and May 2006, then by 75% between July 2008 and February 2009. Today's price, around €14, has not yet recovered from the effect of the global recession. It also does a poor job as a benchmark for national carbon taxation, as the French example shows. The French government finally opted for a level of €17 per ton of CO2 for its carbon tax, half of the €32 recommended by experts, following the principle that households should not be asked to pay more than firms in the EU ETS.
Yet, the inefficiency of the EU ETS can be easily fixed to make the EU the centre of the decarbonated world. One of the scenarios we propose aims to "taxify" the EU ETS. "Taxify" here means both strengthening the obligations on carbon emissions and making them more predictable, thereby making the EU ETS's effects comparable to a tax. Coupled with a reform of the clean development mechanism, the reform of the EU ETS could prove to be the EU's most important contribution to fighting climate change in the coming decades.
Before it even began, Copenhagen was at once already a success, because no country could pretend to ignore any longer the scientific consensus on climate change, and already a failure, because it was clear that no binding treaty or full protocol would emerge from it. The meagre agreement painfully reached in Copenhagen screams for European leadership: as we enter the nuts and bolts era in climate change policy, we will need fewer and fewer grand declarations and more and more small steps towards efficient economic instruments.
• Éloi Laurent and Jacques Le Cacheux are economists from OFCE (Sciences-po Centre for Economic Research) and the authors of the policy brief An ever less carbonated Union? Towards a better European taxation against climate change
Éloi Laurent and Jacques Le Cacheux
guardian.co.uk, Monday 21 December 2009 18.00 GMT
The US and China have stolen the show in Copenhagen, with a very unhappy ending. This is quite understandable: they produce nearly half of global greenhouse gas emissions. But in the midst of this trans-Pacific rift, the EU perspective has received too little attention, as Europeans have sidelined themselves by being unable to speak loudly in one voice. This is regrettable, for two sets of reasons that point respectively to praise and constructive criticism of the EU climate policy.
The EU, often maligned on the world stage as a power so soft it is hard to feel it, deserves a high mark on the climate front. The road to Copenhagen was indeed largely paved by the EU, acting within the UN in its most important capacity, that of global normative power. Europe was the first region in the world to write down in its laws the basis of the scientific consensus on climate change tenaciously built over the past 20 years by the Intergovernmental Panel on Climate Change. The EU acknowledged the need to limit the increase in earth's temperature to 2C, which is now a global reference included in the Copenhagen agreement.
Furthermore, without the European commitment taken in 2007 to unilaterally deliver a 20% cut on 1990 emissions by 2020, and possibly 30% if other countries aim for comparable targets, emerging and developing countries would have hardly been seen at all around the Copenhagen table.
Finally, the EU leads the way in terms of economic instruments mobilised for mitigation, whether one considers standards and norms, cap-and-trade or carbon taxes. In this respect, the EU has managed to construct the core element of the potential global co-operative effort to curb emissions that will have to be worked out in 2010: the EU's emission trading system (ETS), ie the European carbon market.
This market now accounts for two-thirds of all carbon traded worldwide, which means that any meaningful agreement between developed and developing countries will have to rely on the EU ETS. This also means that the global price for carbon will be determined in Europe. And this is where praising the EU for its climate commitment should also lead to asking the EU for a better climate policy.
In a study just published, we show that the price signal coming from the EU ETS is actually hard to catch: it is unstable and too low. Since its creation, the cost of a tonne of CO2 in Europe has twice collapsed, first by 65% between April and May 2006, then by 75% between July 2008 and February 2009. Today's price, around €14, has not yet recovered from the effect of the global recession. It also does a poor job as a benchmark for national carbon taxation, as the French example shows. The French government finally opted for a level of €17 per ton of CO2 for its carbon tax, half of the €32 recommended by experts, following the principle that households should not be asked to pay more than firms in the EU ETS.
Yet, the inefficiency of the EU ETS can be easily fixed to make the EU the centre of the decarbonated world. One of the scenarios we propose aims to "taxify" the EU ETS. "Taxify" here means both strengthening the obligations on carbon emissions and making them more predictable, thereby making the EU ETS's effects comparable to a tax. Coupled with a reform of the clean development mechanism, the reform of the EU ETS could prove to be the EU's most important contribution to fighting climate change in the coming decades.
Before it even began, Copenhagen was at once already a success, because no country could pretend to ignore any longer the scientific consensus on climate change, and already a failure, because it was clear that no binding treaty or full protocol would emerge from it. The meagre agreement painfully reached in Copenhagen screams for European leadership: as we enter the nuts and bolts era in climate change policy, we will need fewer and fewer grand declarations and more and more small steps towards efficient economic instruments.
• Éloi Laurent and Jacques Le Cacheux are economists from OFCE (Sciences-po Centre for Economic Research) and the authors of the policy brief An ever less carbonated Union? Towards a better European taxation against climate change
Copenhagen treaty was 'held to ransom', says Gordon Brown
Gordon Brown calls for reform of UN climate talks after Copenhagen talks end in weak agreement
David Adam, environment correspondent
guardian.co.uk, Monday 21 December 2009 17.56 GMT
Gordon Brown today said a new global treaty on climate change had been "held to ransom" by some countries opposed to a deal in Copenhagen, and called for reform of the way such negotiations take place, including an international body to handle environmental stewardship.
The prime minister said the weak agreement reached in Copenhagen at the weekend after all-night deliberations was a "first step towards a new alliance to overcome the enormous challenges of climate change". He called on all countries to show greater ambition as part of a campaign over the coming months to turn the agreement into a legally binding treaty.
"The talks in Copenhagen were not easy and as they reached conclusion I did fear the process would collapse and we would have no deal at all," he said. "We must learn lessons from Copenhagen and the tough negotiations that took place. Never again should we face the deadlock that threatened to pull down these talks. Never again should we let a global deal to move towards a greener future be held to ransom by only a handful of countries."
Brown added: "One of the frustrations for me was the lack of a global body with the sole responsibility for environmental stewardship. I believe that in 2010 we will need to look at reforming our international institutions to meet the common challenges we face as an international community."
Brown said it was important for the UK and developing countries such as the Maldives and Bangladesh that support a legally binding deal to form an "alliance" to persuade sceptical nations including China to sign up. British officials said they misjudged the attitude of the Chinese government, which took a harder line than expected in Copenhagen and vetoed efforts to introduce carbon targets and a deadline to make the deal legally binding. Ed Miliband, energy and climate change secretary, said in yesterday's Guardian that China had led a group of countries that "hijacked" the negotiations.
China's premier, Wen Jiabao, insisted his government had played an "important and constructive" role.
Other nations, including Venezuela and Bolivia, tried to block the agreement being passed by the wider conference.
Miliband told a meeting in London today that the world could still agree on an ambitious and legally binding treaty by the end of the year. "It is important to convince China that it has nothing to fear from a legal treaty."
But he echoed Brown's criticisms of the process, and said the world needed to reassess the way the UN climate talks work. "The majority of countries want a legal treaty but unfortunately the UN doesn't work on a majority."
Ministers should have got involved earlier, he said. The Copenhagen talks spent so long arguing about process that it left little time to negotiate the substance of an agreement. Aides suggested Britain could push for a streamlined negotiation process over the next twelve months, with groups of countries asked to put forward a representative, rather than debate everything between all 193 states.
The Copenhagen deal requires countries to submit pledges to reduce greenhouse gas emissions by the end of January. Brown said that if all countries, including China and the US, showed greater ambition, then the promised cuts could leave the world within "striking distance" of limiting global warming to 2C.
He said: "We will need to harness the best of low carbon technology for the world to continue to grow, while keeping to our pledge made this weekend to limit the increase in global temperatures to 2C."
In a separate report, aid charity Oxfam called for an "overhaul" of the UN negotiating process.
Antonio Hill, Oxfam's climate change adviser, said: "The Copenhagen accord is hugely disappointing but it also reveals how the traditional approach to international negotiations, based on brinkmanship and national self-interest, is both unfit for pursuing our common destiny and downright dangerous."
He added: "There is too much at stake for this politics-as-usual approach. We must act quickly to address the shortfalls of these negotiations so that we can make up for lost time and tackle climate change with the decisiveness and urgency needed. This cannot happen again."
Archbishop Desmond Tutu, a global ambassador for the charity, said: "The failure of the political process in Copenhagen to achieve a fair, adequate and binding deal on climate change is profoundly distressing. A higher purpose was at stake but our political leaders have proven themselves unable to rise to the challenge. We must look to the future. Our leaders must regroup, learn and make good their failure for the sake of humanity's future."
David Adam, environment correspondent
guardian.co.uk, Monday 21 December 2009 17.56 GMT
Gordon Brown today said a new global treaty on climate change had been "held to ransom" by some countries opposed to a deal in Copenhagen, and called for reform of the way such negotiations take place, including an international body to handle environmental stewardship.
The prime minister said the weak agreement reached in Copenhagen at the weekend after all-night deliberations was a "first step towards a new alliance to overcome the enormous challenges of climate change". He called on all countries to show greater ambition as part of a campaign over the coming months to turn the agreement into a legally binding treaty.
"The talks in Copenhagen were not easy and as they reached conclusion I did fear the process would collapse and we would have no deal at all," he said. "We must learn lessons from Copenhagen and the tough negotiations that took place. Never again should we face the deadlock that threatened to pull down these talks. Never again should we let a global deal to move towards a greener future be held to ransom by only a handful of countries."
Brown added: "One of the frustrations for me was the lack of a global body with the sole responsibility for environmental stewardship. I believe that in 2010 we will need to look at reforming our international institutions to meet the common challenges we face as an international community."
Brown said it was important for the UK and developing countries such as the Maldives and Bangladesh that support a legally binding deal to form an "alliance" to persuade sceptical nations including China to sign up. British officials said they misjudged the attitude of the Chinese government, which took a harder line than expected in Copenhagen and vetoed efforts to introduce carbon targets and a deadline to make the deal legally binding. Ed Miliband, energy and climate change secretary, said in yesterday's Guardian that China had led a group of countries that "hijacked" the negotiations.
China's premier, Wen Jiabao, insisted his government had played an "important and constructive" role.
Other nations, including Venezuela and Bolivia, tried to block the agreement being passed by the wider conference.
Miliband told a meeting in London today that the world could still agree on an ambitious and legally binding treaty by the end of the year. "It is important to convince China that it has nothing to fear from a legal treaty."
But he echoed Brown's criticisms of the process, and said the world needed to reassess the way the UN climate talks work. "The majority of countries want a legal treaty but unfortunately the UN doesn't work on a majority."
Ministers should have got involved earlier, he said. The Copenhagen talks spent so long arguing about process that it left little time to negotiate the substance of an agreement. Aides suggested Britain could push for a streamlined negotiation process over the next twelve months, with groups of countries asked to put forward a representative, rather than debate everything between all 193 states.
The Copenhagen deal requires countries to submit pledges to reduce greenhouse gas emissions by the end of January. Brown said that if all countries, including China and the US, showed greater ambition, then the promised cuts could leave the world within "striking distance" of limiting global warming to 2C.
He said: "We will need to harness the best of low carbon technology for the world to continue to grow, while keeping to our pledge made this weekend to limit the increase in global temperatures to 2C."
In a separate report, aid charity Oxfam called for an "overhaul" of the UN negotiating process.
Antonio Hill, Oxfam's climate change adviser, said: "The Copenhagen accord is hugely disappointing but it also reveals how the traditional approach to international negotiations, based on brinkmanship and national self-interest, is both unfit for pursuing our common destiny and downright dangerous."
He added: "There is too much at stake for this politics-as-usual approach. We must act quickly to address the shortfalls of these negotiations so that we can make up for lost time and tackle climate change with the decisiveness and urgency needed. This cannot happen again."
Archbishop Desmond Tutu, a global ambassador for the charity, said: "The failure of the political process in Copenhagen to achieve a fair, adequate and binding deal on climate change is profoundly distressing. A higher purpose was at stake but our political leaders have proven themselves unable to rise to the challenge. We must look to the future. Our leaders must regroup, learn and make good their failure for the sake of humanity's future."
Carbon-Permit Slide Reflects Copenhagen Disappointment
By KEITH JOHNSON
The failure of the United Nations climate summit in Copenhagen to produce a strong, binding agreement to cut carbon-dioxide emissions sowed gloom in European carbon markets Monday, with prices for carbon-emissions permits falling more than 8%.
There were also political echoes to the Copenhagen summit's acrimonious conclusion. Some senior officials, including British Prime Minister Gordon Brown and British climate-change secretary Ed Miliband, criticized the current U.N. framework for addressing climate change, which requires consensus among more than 190 countries.
"Never again should we face the deadlock that threatened to pull down those talks," Mr. Brown said Monday. "Never again should we let a global deal to move towards a greener future be held to ransom by only a handful of countries."
The slumping price for carbon reflected disappointment among traders and businesses that the nonbinding Copenhagen Accord didn't stipulate how much big countries such as the U.S. or China have to reduce their emissions of greenhouse gases. The deal also left unresolved most of the big issues of how to curb emissions linked to climate change. On Tuesday, China's Xinhua news agency quoted Foreign Ministry spokeswoman Jiang Yu, taking issue with British complaints about the summit and China's role.
Ms. Jiang said China urged developed countries to "fulfill their obligations to developing countries in an earnest way, and stay away from activities that hinder the international community's cooperation in coping with climate change."
Because the U.S., China and other major economies didn't agree to binding emissions cuts, European countries didn't increase their own pledges to reduce greenhouse-gas emissions. European officials, who had considered curbing emissions by 30% from 1990 levels, instead maintained their target of a 20% reduction from 1990 levels by 2020.
That helped push prices for carbon permits to €12.41 ($17.73) per metric ton Monday, down from €13.58 Friday. Carbon-permit prices have fallen 14% since the beginning of the Copenhagen conference, a reflection of how expectations steadily fell as countries bickered over how much they would cut emissions and who would pay for it.
The European Union's emissions-trading plan caps the amount of greenhouse gases that power companies and the like can emit. They can purchase carbon permits on the market in order to comply with emissions limits.
Investors in low-carbon or no-carbon energy technology, such as solar panels, wind turbines and nuclear power, say the prices for carbon permits must be much higher than current levels -- in some cases, as much as €60 a ton -- to make their systems cost-competitive with coal, oil or natural gas.
The two-week Copenhagen conference appeared set to end with no agreement at all, until last-minute bargaining among leaders from the U.S., China, Brazil, India and South Africa produced a final statement. A handful of countries, including Sudan, Venezuela and Bolivia, declined to endorse the 11th-hour deal.
Many analysts said the problems evidenced in Copenhagen could spell the decline of the U.N. approach to tackling climate change, which has been in operation since 1992 and has prioritized global accord. Instead, they expect the rise of international climate negotiations among smaller groups of countries.
"The end game in Copenhagen was symbolic of the conference's broader procedural failings," says Michael Levi, director of energy security and climate change at the Council on Foreign Relations in New York.
Write to Keith Johnson at keith.johnson@wsj.com
The failure of the United Nations climate summit in Copenhagen to produce a strong, binding agreement to cut carbon-dioxide emissions sowed gloom in European carbon markets Monday, with prices for carbon-emissions permits falling more than 8%.
There were also political echoes to the Copenhagen summit's acrimonious conclusion. Some senior officials, including British Prime Minister Gordon Brown and British climate-change secretary Ed Miliband, criticized the current U.N. framework for addressing climate change, which requires consensus among more than 190 countries.
"Never again should we face the deadlock that threatened to pull down those talks," Mr. Brown said Monday. "Never again should we let a global deal to move towards a greener future be held to ransom by only a handful of countries."
The slumping price for carbon reflected disappointment among traders and businesses that the nonbinding Copenhagen Accord didn't stipulate how much big countries such as the U.S. or China have to reduce their emissions of greenhouse gases. The deal also left unresolved most of the big issues of how to curb emissions linked to climate change. On Tuesday, China's Xinhua news agency quoted Foreign Ministry spokeswoman Jiang Yu, taking issue with British complaints about the summit and China's role.
Ms. Jiang said China urged developed countries to "fulfill their obligations to developing countries in an earnest way, and stay away from activities that hinder the international community's cooperation in coping with climate change."
Because the U.S., China and other major economies didn't agree to binding emissions cuts, European countries didn't increase their own pledges to reduce greenhouse-gas emissions. European officials, who had considered curbing emissions by 30% from 1990 levels, instead maintained their target of a 20% reduction from 1990 levels by 2020.
That helped push prices for carbon permits to €12.41 ($17.73) per metric ton Monday, down from €13.58 Friday. Carbon-permit prices have fallen 14% since the beginning of the Copenhagen conference, a reflection of how expectations steadily fell as countries bickered over how much they would cut emissions and who would pay for it.
The European Union's emissions-trading plan caps the amount of greenhouse gases that power companies and the like can emit. They can purchase carbon permits on the market in order to comply with emissions limits.
Investors in low-carbon or no-carbon energy technology, such as solar panels, wind turbines and nuclear power, say the prices for carbon permits must be much higher than current levels -- in some cases, as much as €60 a ton -- to make their systems cost-competitive with coal, oil or natural gas.
The two-week Copenhagen conference appeared set to end with no agreement at all, until last-minute bargaining among leaders from the U.S., China, Brazil, India and South Africa produced a final statement. A handful of countries, including Sudan, Venezuela and Bolivia, declined to endorse the 11th-hour deal.
Many analysts said the problems evidenced in Copenhagen could spell the decline of the U.N. approach to tackling climate change, which has been in operation since 1992 and has prioritized global accord. Instead, they expect the rise of international climate negotiations among smaller groups of countries.
"The end game in Copenhagen was symbolic of the conference's broader procedural failings," says Michael Levi, director of energy security and climate change at the Council on Foreign Relations in New York.
Write to Keith Johnson at keith.johnson@wsj.com
Excess of carbon allowances casts further cloud over Europe
Carl Mortished
A surplus of permits to emit 100 million tonnes of greenhouse gases is hanging over Europe’s carbon market, which slid yesterday as energy traders reacted to the failure of the Copenhagen climate change conference.
The price of European Union allowances (EUAs) — rights to emit a tonne of carbon dioxide — fell by as much as 9 per cent on Europe’s emissions trading system (ETS). The slide came after a week in which carbon prices had been pummelled as short-term investors began to unload their positions with news emerging of the deadlock in the climate change talks.
“People are shorting the market to trigger further sales,” Emmanuel Fages, a carbon analyst at Société Générale, the investment bank, said. The price of EUAs for December 2010 delivery ended at €12.45 per tonne, as much as €2 lower than the price two weeks ago, reflecting growing doubts over the commitment of governments to tightening carbon regulation.
The UN talks in Copenhagen ended over the weekend without a binding agreement to reduce emissions. Had an accord been reached with the United States and key developing nations, it had been expected that the European Commission would have raised its target of emission reductions from 20 per cent to 30 per cent.
Under Europe’s ETS, higher targets would be expected to reduce the number of permits that could be issued under future phases of the carbon-trading scheme, so raising the price of EUAs. In turn, more expensive EUAs would create an incentive for industry to reduce emissions.
The Copenhagen failure is reviving fears of a growing mountain of surplus carbon permits. European industrial companies may be holding as much as 100 million tonnes of allowances, according to Société Générale.
The recession has left energyintensive companies with more EUAs than they need to meet their 2009 emission targets. Because unused allowances can be rolled over for use in future phases of the ETS, companies may have been hoarding, anticipating that Copenhagen might lead to tighter carbon regulation. The lack of a deal could change their strategies.
“They might dispose of their holdings. If this happens, the pressure will come on the price during the first quarter of 2010,” Mr Fages said.
The Climate Change Bill being debated in the US Congress could lead eventually to two markets trading in carbon permits. An American cap-and-trade system for reducing carbon would be larger, with volumes of between five billion and six billion tonnes, compared with two billion tonnes in Europe.
A surplus of permits to emit 100 million tonnes of greenhouse gases is hanging over Europe’s carbon market, which slid yesterday as energy traders reacted to the failure of the Copenhagen climate change conference.
The price of European Union allowances (EUAs) — rights to emit a tonne of carbon dioxide — fell by as much as 9 per cent on Europe’s emissions trading system (ETS). The slide came after a week in which carbon prices had been pummelled as short-term investors began to unload their positions with news emerging of the deadlock in the climate change talks.
“People are shorting the market to trigger further sales,” Emmanuel Fages, a carbon analyst at Société Générale, the investment bank, said. The price of EUAs for December 2010 delivery ended at €12.45 per tonne, as much as €2 lower than the price two weeks ago, reflecting growing doubts over the commitment of governments to tightening carbon regulation.
The UN talks in Copenhagen ended over the weekend without a binding agreement to reduce emissions. Had an accord been reached with the United States and key developing nations, it had been expected that the European Commission would have raised its target of emission reductions from 20 per cent to 30 per cent.
Under Europe’s ETS, higher targets would be expected to reduce the number of permits that could be issued under future phases of the carbon-trading scheme, so raising the price of EUAs. In turn, more expensive EUAs would create an incentive for industry to reduce emissions.
The Copenhagen failure is reviving fears of a growing mountain of surplus carbon permits. European industrial companies may be holding as much as 100 million tonnes of allowances, according to Société Générale.
The recession has left energyintensive companies with more EUAs than they need to meet their 2009 emission targets. Because unused allowances can be rolled over for use in future phases of the ETS, companies may have been hoarding, anticipating that Copenhagen might lead to tighter carbon regulation. The lack of a deal could change their strategies.
“They might dispose of their holdings. If this happens, the pressure will come on the price during the first quarter of 2010,” Mr Fages said.
The Climate Change Bill being debated in the US Congress could lead eventually to two markets trading in carbon permits. An American cap-and-trade system for reducing carbon would be larger, with volumes of between five billion and six billion tonnes, compared with two billion tonnes in Europe.
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