20 July 2010

Fantasy Island

Tim Yeo, chair of the UK Parliament's Energy and Climate Change Select Committee, has issued a pamphlet (PDF) that indicates that UK Conservatives are just as out-of-touch on climate policy as was Labor. Writing in The Telegraph yesterday Yeo had this to say about the party's commitment to action:
Party members remember that, within a year of his election as Leader, David Cameron was photographed on a dog sled in the Arctic visiting a Norwegian glacier to see the effects of climate change first hand. This iconic image came to define his efforts to transform the image of the Conservative Party. Since then we have been urging voters to “vote blue, go green”.
A dog sled? That Cameron was actually on a dog sled is embarrassing enough, but to subsequently cite it as evidence of some sort of commitment to action? Oh, my. Yeo's specific statements on policy are no more encouraging:

The Coalition Agreement pledges to increase the target for energy from renewable sources; to create a green investment bank; to reduce carbon emissions from central government by ten per cent within a year; to cancel the third runway at Heathrow; and launch a (as yet undetailed) national tree planting campaign.

But we must go much further.
Meantime, the Coalition government has been busy this week cutting investment in green technologies, perhaps forgetting that targets don't reduce emissions, technology does. Third runway? Planting trees?

Yeo's pamphlet has some other bright ideas -- perhaps indicating what it means to "go further" -- such as personal carbon trading, increasing political will, making every aspect of our lives more energy efficient, ending deforestation and developing a viable system of carbon capture and storage. Easy!

Yeo points out that the UK is second only to Brazil in the international league tables of climate policy effectiveness as judged by the German NGO Germanwatch, due to its foresight in passing the Climate Change Act of 2008. He does not appear aware that the UK is going to fail dramatically to meet the targets for emissions reduction in the Act. No matter, with discussion of dog sleds, personal carbon trading and planting trees, Yeo's analysis has little connection to reality in any case.

UK climate policy continues to serve as a leading case for why climate policies need to be rethought.


  1. Actually, London airports are so congested that planes waste a lot of time, money, and emissions circling over London waiting for their turn to land, so that an extra runway at one of the airports would cut emissions (and save time and money at that).

  2. Again: Obsessing on CO2 is a waste of effort, policy, capital, time, and opportunity.

  3. Richard, is that actually true, measurable? I have spent a lot of my life circling over Heathrow.

    I can see it would cut emissions from existing flights, but ....

    Any way it's irrelevant, I issued a challenge to the Coalition, which none of them will read here: http://noconsensus.wordpress.com/2010/07/15/a-letter-from-london/, thank you for the graphs Roger.

  4. Roger,

    As a political scientist you should be familar with this quote.

    "You can always count on Americans to do the right thing--after they've tried everything else!"?

    There is a political value in doing things destined to fail even if you are reasonably certain they will fail from the start.

    Do we not need to come to consensus as to whether or not an 'elegant' solution exists before we resign ourselves to 'clumsy' solutions?

  5. If BP or Goldman Sachs ever want new, cheaper forms of energy, funding will be available then.

    Guardian economics editor Larry Elliott wrote an excellent book called Fantasy Island suggesting that the only part of the UK economy that had any credibility was banking. It warned (in 2007) that if there was ever a financial crisis then .....



    The fantasy can only be understood by realising that Britain is a deregulated Friedmanite state, effectively run by the banks. Carbon trading (and derivatives) are needed to restore the UK economy. Only the illusion of cutting Co2 is required.

    London's financial centre is the main home to the incipient global carbon market. Prof Heal believes that in a decade, the trade could be worth trillions of dollars.


  6. @Roddy
    True is a big word.

    Congestion at Heathrow is a major cost in time, money, and emissions. Reducing congestion would have a positive effect.

    Of course, there would be two rebounds: (1) If there is less congestion, more people would be inclined to connect through Heathrow; and (2) if the costs of flying are lower, more people would do so. It is hard to imagine, though, that the rebounds would more than offset the initial effect. Simulation models reach the same conclusion.

  7. The alternative is to charge bigger fees for landing at Heathrow at peak times and/or carbon taxes...

  8. @David
    In principle, yes. In practice, price elasticities are too low and fees & taxes are only a fraction of total trip cost.

  9. The UK indistry is split on the issue of ambitious carbon reductions. While the steel and manufacturing sector are against them, some big "service sector" and food companies (Vodafone, Lloyds, Tesco, Nestle) are in favour. They argue that higher carbon prices will enable Europe to compete in a low carbon world. "Weak carbon prices have seriously undermined domestic investments in low carbon technologies, as well as the development of emissions trading internationally." (Financial Times, letters to the editor, 21 July).

    While it is evident that the banking sector would gain from emissions trading, it seems less clear what the motive of the others is. Heavy investment in renewables? Huge stocks of carbon permits losing value?

    Here is the list of signatories:
    Jean-Paul Agon/ CEO, L’Oreal -- Martin Baggs/ CEO, Thames Water -- Paolo Barilla/ Vice-Chairman, Barilla -- Paul Bulcke/ CEO, Nestlé -- Neil Carson/ CEO, Johnson Matthey -- Ian Cheshire/ Group CEO, Kingfisher -- Andy Clarke/ President and CEO, Asda Stores -- Keith Clarke/ CEO, WS Atkins -- Reinhard Clemens/ Member of the Board of Management, Deutsche Telekom, and CEO, T-Systems International -- Vittorio Colao/ CEO, Vodafone -- Bertrand van Ee/ CEO, DHV Group -- José Manuel Entrecanales Domecq/ Chairman, Acciona -- Joachim Faber/ Member of the Board of Management, Allianz -- Annika Falkengren/ President and CEO, SEB -- Alain Grisay/ CEO, F&C -- Christine Hodgson/ CEO, Capgemini Technology Services, North West Europe -- Sam Laidlaw/ CEO, Centrica -- Ron Mathison/ Managing Director, James Finlay -- Charlie Mayfield/ Chairman, John Lewis Partnership -- Lucy Neville-Rolfe/ Corporate and Legal Affairs Director and Member of the Board of Directors, Tesco -- Harrie L.J. Noy/ CEO, Arcadis -- Michael Otto/ Chairman of the Supervisory Board, Otto Group -- Rudy Provoost/ Member Board of Management, Royal Philips Electronics, and CEO, Philips Lighting -- Sir Michael Rake/ Chairman, BT Group -- Ioannis Spanolios/ General Manager, SKAI Group of Companies -- Niels Stolberg/ President and CEO, Beluga Shipping -- Truett Tate/ Group Executive Director, Wholesale, Lloyds Banking Group.

  10. If you want CO2 reductions long term, encouraging the waste of oil on air travel is good because it means less oil is available to mine coal.

    The oil is all going to be burnt in any case.

    So airliners flying in circles is a good thing.

  11. @Richard,

    Did you model passenger preference for point to point rather then hub and spoke travel?

    It seems to me that Boeing has gambled a very large sum of money on building a mid-sized airliner with sufficient range support global point to point travel.

    Of course Air Bus also gambled a very large sum of money on an airliner of massive size to support Hub and Spoke travel.

  12. @Harrywr2
    Our model assumes hub and spoke forever.

  13. http://conservativehome.blogs.com/centreright/2010/07/the-10-most-absurd-statements-in-tim-yeos-new-book.html

  14. Reiner Grundmann

    "While it is evident that the banking sector would gain from emissions trading, it seems less clear what the motive of the others is. "

    I have studied this in some detail and I am still not totally clear in the sense that it hasn't been explicitly spelled out. However the answer is almost certainly the massive profits that can be made from carbon credits, given away free to existing business. Many British companies are proud to tell the media how much Co2 they are saving without explicitly saying how many carbon credits they will be able to sell in the future. Here are some articles (abridged).

    Carbon credits bring Lakshmi Mittal £1bn bonanza

    LAKSHMI MITTAL, Britain’s richest man, stands to benefit from a £1 billion windfall from a European scheme to curb global warming. His company ArcelorMittal, the steel business where he is chairman and chief executive, will make the gain on “carbon credits” given to it under the European emissions trading scheme (ETS).
    The scheme grants companies permits to emit CO2 up to a specified “cap”. Beyond this they must buy extra permits. An investigation has revealed that ArcelorMittal has been given far more carbon permits than it needs. It has the largest allocation of any organisation in Europe


    Industries hoarding greenhouse gas emission permits

    Companies across Europe are hoarding permits to produce greenhouse gas emissions worth hundreds of millions of pounds, the Guardian can reveal.
    The surplus credits have been amassed from over-allocation of permits to pollute from the European emissions trading scheme, and by buying cheap credits from carbon-cutting projects in developing countries and holding on to their more expensive official EU allowances.

    The saved permits can be used to meet future targets to cut the greenhouse gas emissions blamed for global warming and climate change without actually reducing pollution, or sold for a profit in the future.
    Campaigners for tougher emissions reductions said the saved-up allowances discredited the argument of some industries that much deeper cuts in future would be "fatal" because they could no longer afford to compete against rivals outside the EU.


    Falling carbon price could result in higher bills, energy firms warn

    E.ON and Centrica warned that they would not invest the tens of billions of pounds to build expensive new nuclear reactors and clean coal plants at today's carbon price, which is supposed to penalise dirty coal and gas plants.


  15. Here is an even better story from this blog

    If Eskom ultimately wins CDM approval -- and potentially millions of dollars -- for avoiding greenhouse gas emissions by using more efficient technology, it won't be the first company to do so. But the move is provoking fury from environmentalists who have fought the plant. They insist Eskom should not be allowed to receive both World Bank aid and carbon credits to build a plant that will emit 25 million tons of carbon dioxide into the atmosphere annually.

    "If there were a World Cup for chutzpah, Eskom would be the bettors' choice to win," said Jennifer Haverkamp, managing director for international climate policy at the Environmental Defense Fund.

    "First they go after scarce international public funds, now CDM credits. The Medupi Plant is becoming a poster child for how far we are from the road to a sustainable, climate-stable path for development."

    But it is not just Eskom that is high up on the leagues tables for chutzpah; EDF is right up there as well. EDF is one of the main advocacy groups calling for passage of the American Power Act, the so-called Kerry-Lieberman bill in the Senate, which along with Waxman-Markey which passed the House, would create the ability for US companies to get emissions offset credits for doing things exactly like investing in the Eskom plant.


    Here are the owners of the tank divisions on the public lawn.

    International Emissions Trading Association (IETA)

    Its members include :-

    BP, Conoco Philips, Shell, E.ON (coal power stations owner), EDF (one of the largest participants in the global coal market), Gazprom (Russian oil and gas), Goldman Sachs, Barclays, JP Morgan Chase, Morgan Stanley.


    Here is a pre corporate George Monbiot explaining what a scam carbon trading is.

    There are still two years to go, but so far the new agreement is even worse than the Kyoto Protocol. It contains no targets and no dates. A new set of guidelines also agreed at Bali extend and strengthen the worst of Al Gore’s trading scams, the clean development mechanism. Benn and the other dupes are cheering and waving their hats as the train leaves the station at last, having failed to notice that it is travelling in the wrong direction.


  16. eric144 said... 16

    "EDF is right up there as well. EDF is one of the main advocacy groups calling for passage of the American Power Act"

    The proposed EDF-Constellation Energy nuclear plant at Calvert Cliffs, Maryland is on the short list for DOE Nuclear Loan Guarantees.

    Since the Nuclear Loan Guarantee portion of the Kerry-Liberman Bill managed to get tacked onto a Defense Supplemental Appropriations Bill I doubt EDF cares about the rest.

  17. Harrywr2

    That is one project. The fact is that EDF is a global company with a major interest in fossil fuel power generation. They are a member of IETA and support carbon trading / global warming because Enron created the profitable mechanism (carbon trading) to do that in 1997 in conjunction with Clinton / Gore.

    That is the complete opposite of what the partial liberal media is reporting. The fossil fuel companies are behind global warming alarmism, not funding the pathetically small opposition to it.

    The information which I have gathered (from the mainstream corporate media) is often regarded with the blankness that is supposed to have afflicted the Aztecs when they didn't see the Spanish ships offshore (because they didn't have the culture meme for large sailing ship).

    I assume that is exaggerated or completely apocryphal, but the left/right split affects individuals like claims for a penalty in a soccer game. One half of the ground is utterly convinced it was, and the other it wasn't . They are literally incapable of seeing reality.

    I remember playing 5 a side football once, and noticing my brain checking what team I was playing for, before deciding if it was a penalty !!

  18. eric144,

    I'll offer a somewhat less conspiratorial analysis.

    My brother-in-law works for a power plant manufacturer. The bottom dropped out of the power plant construction market in the US and Europe maybe 20 years ago.

    China et al have been building power plants, but they will sign a contract for a couple of plants, the construction management team will be mostly US-European, then on subsequent plants the Chinese will insist on higher Chinese content, until eventually the Chinese are doing cookie cutter construction all on their own. Not a sustainable business model.

    EDF, Babcock and Wilcox, GE, Westinghouse and all the other power plant manufacturer's don't care what kind of power plant anyone builds, as long as they are building it and they get a sizable cut of the pie.

    Carbon trading provides financial incentives to close older, less efficient power plants early.

    In the US we don't need carbon trading to dump older, less efficient plants as we have NOx and SO2 standards that means billions will either have to be spent on upgrading older plants or billions on new plants.

    If the electric utility industry was writing our 'climate policy' they would want an exemption to the new tighter NOx and SO2 standards until such time as they could get a nuke plant built, and of course, loan guarantees so they can borrow at 5% rather then 10%.

  19. Harry
    I think you're ignoring natural gas plants in that synopsis.

  20. Harrywr2

    The reason for, or validity of carbon trading isn't the issue, the issue is its benefit to fossil fuel companies and banks. It means that they will make a lot more money than they would have without it. It's why they support global climate deals and global warming in general.

    IETA has 172 corporate members, which seem to be either fossil companies. banks or carbon offset companies.



    A shared vision is pretty conspiratorial

    Vision:- IETA is dedicated to:

    the objectives of the United Nations Framework Convention on Climate Change and ultimately climate protection;
    the establishment of effective market-based trading systems for greenhouse gas emissions by businesses that are demonstrably fair, open, efficient, accountable and consistent across national boundaries; and
    maintaining societal equity and environmental integrity while establishing these systems.


    Here is an excoriating analysis from a major envirnmental group (actually Friends of the Earth)


    The International Emissions Trading Association (IETA) describes itself as a “non profit business organisation” created to “establish a… framework for trading in greenhouse gas emission reductions”. Formed in 1999, it has 168 member companies, including big energy (BP, Shell, Vattenfall); banks (BNP Parisbas, Goldman Sachs); lawyers (Clifford Chance, Norton Rose,); and carbon trading companies (including EcoSecurities). It works in partnership with bodies like the World Bank to develop “an active, global greenhouse gas market.”

    A lobbying powerhouse in climate talks

    In just over ten years, IETA has become a lobbying powerhouse at the UN climate change talks. At two of the most important recent UN meetings on climate change – held in Bali and Poznan – IETA had the largest accredited non-governmental delegation (lobby groups are accredited as non-governmental organisations, or NGOs), dwarfing the presence of established NGOs such as Greenpeace.