U.S. Climate Legislation: Incremental Change Ahead

From Nation Journal's weekly "Congressional Insiders Poll":

Q: What is the likeliest outcome in this Congress of the debate on energy and climate change?

[...]

Democrats (27 votes)Sweeping change 33%
Incremental change 67%
No change 0%

[...]

Republicans (34 votes)Sweeping change 15%
Incremental change 53%
No change 29%
Don't know 3%

Which sounds crap--for example, don't expect Canada to join a regional cap-&-trade system anytime soon because there probably won't be one--until you realize that our government is doing nothing but defund our climate scientists.

Winners And Losers In An International Carbon Regulation Protocol

From the World Bank's Country Stakes in Climate Change Negotiations:

Country stakes in a global protocol on greenhouse gas emissions involve tradeoffs among positive orientation (hypothesized to include the availability of renewable energy sources, sequestration potential, potential impacts from sea-level rise, and weather damage) and negative orientation (assumed to be related to nonrenewable energy sources and employment vulnerability). While it is difficult to generalize about “typical” conditions confronting individual countries (especially as additional dimensions are added), a clear regional clustering of vulnerability warrants attention to regional strategies.

[...]

Research based on these hypothesized relationships shows that countries with positively oriented stakes are concentrated in Latin America and West Africa, while Eastern Europe and Central Asia have a large number of countries with unfavorable stakes. Other regions have mixed conditions, but individual countries within those regions often have persistently favorable or unfavorable stakes.

Unfortunately, countries with unfavorable stakes (using the composite measures obtained in this research) include some of the largest emitters of CO2 (e.g., India and China). Together, the states with unfavorable stakes account for almost one-half of all CO2 emissions from World Bank partner countries. In contrast, countries with favorable stakes account for about 19% of total emissions.

Put bluntly: the countries with the greatest incentive to join an international regulation regime amount to a hill of beans, emissions wise. Which means that any negotiations are going to have to take into account the fact that many large emitters will take a substantial economic "hit" if they join up.

Countries that use alot of coal, for example:

A global emissions reduction protocol will impose a greater carbon shadow price shock on countries with significant hydrocarbon resources that provide locally consumed energy and may also be a primary source of export earnings. The highest source-vulnerability countries are scattered across all world regions, with coal particularly important in Eastern Europe, and oil and gas concentrated in Russia, Norway, the Middle East and other OPEC countries.1

...which may mean that "many countries may resist a global protocol unless they are compensated for disadvantages associated with source vulnerability."

...which means more cries of "we're redistributing Western money to corrupt third-world regimes".

Nevertheless, the paper concludes that successful negotiation of a global protocol will likely require compensation and cross-subsidy mechanisms.

As they say, good luck with that.

The Brits Talk Carbon Trading

An enlightened discussion of U.K. carbon emissions policy by Robert Peston of BBC News. One of his conclusions:

One of the less visible consequences of Government policy on climate change is that it would lead to a massive transfer of wealth from the developed world to the developing world.

He is of course talking about the purchase of "carbon credits" abroad:

The transfer results from the mechanism laid down in the draft Climate Change Bill for achieving a 60 per cent reduction in carbon dioxide emissions by 2050.

It allows the purchase from abroad of “carbon credits” to hit the five-yearly targets for CO2 cuts along the way. What this means is that if the UK invests in projects in China, or India or Africa - for example - which would reduce their emissions, than those reductions in CO2 can be counted in an assessment of whether the UK has met its targets.

As an example, if carbon sequestration became a viable technology, then a British power generator could capture and bury the CO2 produced by a Chinese coal-fired plant and then count that CO2 against is own CO2 “budget” for carbon cuts.

And his other conclusion?

...this would not be dead money, handed over with no prospect of any financial return. If UK businesses were for example financing low-carbon power generation in China, those businesses would expect a share of the profits and dividends generated by the power generation.

And if you're wondering why the Europe is moving so aggressively on Kyoto and climate change policy in general, it is not due to some latent urge towards Socialism. Countries like Spain and Switzerland are already beginning to feel the negative effects of Global warming, the former nation quite severely.

CIBC: Goverments ARE Acting, And Soon Alberta Will Owe EVERYONE Money

From The Globe:

Crude oil consumption in the Organization for Economic Co-operation and Development countries dropped last year for the first time in 20 years as a result of the aggressive actions by many of those nations to reduce greenhouse gas emissions, according to CIBC World Markets Inc.

[...]

Rubin anticipates that the provinces and states will put a cap on carbon dioxide emissions while at the same time establishing an emissions trading system that would allow bigger polluters to buy emissions credits from other firms that are emitting less than they are allowed under the cap.

In CIBC's January World Markets Outlook release, Rubin argued that:

"What investors have to be wary of is not the future direction of oil prices, but what the eventual net backs to oil producers will be in a carbon-regulated environment [...] While we know that oil sands producers will have to be huge purchasers of emission credits, we don't know what the market-clearing price for those credits will be.

"The experience of the over decade-long functioning CO(2) and NOx-emission trading systems in the U.S. reveals that over time the market price for emissions credits rises sharply as emission caps are gradually lowered. Depending upon how stringent the cap, the real investment risk is that much of the economic rents from rising oil prices may be diverted from shareholders of oil producers to owners of much-sought-after emissions.

For this reason, Rubin is now suggesting that investors lower their exposure to oil.

Since the Harper government does not seem willing to join an International emissions trading market, let's assume a Canada wide version. This map shows historical and projected Carbon emissions by region. And here's a hint. Get outta Calgary, move to Montreal, and watch the sky for airplanes dropping oil-patch money over the city.

The best part of it is that, since the U.S. is heading in the same direction (perhaps even more swiftly than Canada), Alberta won't be able to evade their responsibilities by separating, unless they have the whole province towed over to China.