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U.N. Meets To Address Global Warming
Market Comment, 09/26/2007
More than 80 world
leaders September 24, 2007 are meeting at the United Nations (U.N.) to
discuss how to deal with the problem global warming. It is hoped that
this meeting will serve as “curtain raiser” for more formal talks to be
held this December in Indonesia. The U.N. Secretary-General commented
that climate change must be confronted within a global framework and the
national interests should be set aside. Moreover, he argued that a
solution to the global warming problem could best be realized if it were
bolstered industrialized countries on, especially as it relates to
emissions reductions. Following the opening remarks by the U.N.
Secretary-General and other officials, the day will include concurrent
sessions on addressing the challenges of climate change on all fronts:
adaptation, mitigation, technology and financing responses to climate
change for the period after the expiration of the Kyoto Protocol in
2012.
High ranking officials
at the Intergovernmental Panel on Climate Change (IPCC) consensus that
humans are a major contributing factors to rising temperatures and are
evidenced (including but not limited to) melting glaciers and shrinking
Artic ice as well as other weather anomalies. There is, however, a very
small minority of scientists placing forth the theory that global
warming is result of the Earth edging closer to the Sun
( ...what if “they” are correct? ...we’re
cooked).
President Bush did not
attend the working sessions during the day but was present for the
closing dinner. As if to make the U.S. “separatism” policy more
evident, the U.S. will conduct a closed-door dinner where Condoleezza
Rice will represent the U.S. and George Bush will merely be in
attendance ( ...is there is a message
here !!!).
President Bush will
conduct his own gathering latter this week in Washington having the same
“stated” goal. And although the objectives may be the same, the
political solutions are very different. The President will recommend a
fundamentally different approach on “how” to address the global
warming. The U.S. envisions a plan to persuade the Nations producing
90% of the world emissions to reach a consensus allowing each Country to
set its own policies rather than impose limits by binding international
treaty. The parallel conference in Washington raises questions whether
the Bush Administration could put the U.S. at further odds with certain
key members of the international community on climate change– China
appears content to follow the U.S. and is going along for the ride. In
reality, whether President Bush can
finish his term as part of a global program limiting the emission of
greenhouses gases is arguable.
The U.S. philosophy is
that each Nation should have the sovereign capacity to decide its own
policies and not impose international binding limits
( ...sounds a bit self serving but then
again he is a lame duck President and leaving office will a liaise-faire
posture is “so” America).
Under Kyoto, developing countries were not bound by emission limits,
which was one of the primary reasons the U.S. and China ultimately
opposed it – apparently the U.S. and China were troubled by the
mandatory caps in the future (
...do you think growing industrial economies might find “caps” an
inhibiting growth ???). Critics of China and the U.S. argue that both countries have no
incentive to adopt an “aggressive” approach, especially on a
“voluntary” basis.
Suggestions and
conclusions by the U.N. are not binding on member nations, however,
sources close to the situation are confident it will highlight the
serious nature of the problem – setting the stage for substantive
negotiations this December in Indonesia. Members of the U.N. feel that
these meeting in New York will facilitate the production of various
initiatives / policies to reduce carbon emission by 2009. The 2009
target date, 3 year before Kyoto expires in 2012, is designed to enable
sufficient time for Countries to enact legislation that can provide for
a seamless transition when Kyoto ends.
The U.N. session was
convened in reaction to ever growing evidence and forecasts by the IPCC
that climate change is no longer a matter of debate in debate – instead
an issue matter of “fact.” The IPCC studies demonstrate a discernable
change in climate and associated impacts, for instance, changes in
temperature and rainfall, higher sea levels, increased frequency of
droughts, floods and other extreme weather “events.”
The U.S. (and presumably
China) separating from the world community could ultimately influence
the effectiveness of the global warming conference in December. The wild
card in the deck remains China and there ever reason to believe that
they would be happy if the U.S. took the first bullet (i.e. serve as the
deal breaker) – and they may be other countries, unofficially content to
hide behind the U.S. coattails.
To us, one of the most telling signs of
an evasive move by any politicians is by asking the question: I want
answers? ( ...the statement
alludes to “uniformed” nature of the problem by the individual(s) –
especially one Presidential hopeful...isn’t the role of political
leaders to understand our problems and provide the solutions –
“a-priori”). Presumably our
leaders should understand the problems and be able to articulate the
answers -- rather than clamor for the “answers.”
We feel that the following hold the most
promise of dealing with global warming (in order of effectiveness):
§
“conservation,”
§
“trading emission credits”
and
§
“carbon sequestration”
We anticipate that defining, certifying
emission credits and selling those “credit” will become a booming market
-- and hence, a rewarding investment opportunity. Our view is based on
the fact that it is comparatively easy to generate an emission credit
and monetize it. Credits can be “created” by such basic efforts as
enhancing energy conservation. As we draw closer the to end of the Kyoto
Protocol, Wall Street is likely to devise financial instruments to trade
such credits much as is now done with any commodity.
Carbon Sequestration
Conversely, while the IPCC believes that
“carbon sequestration,” the favorite of electric utilities, could have
a meaningful impact in limiting global warming, it will come at a price
– and that price will obviously be considerable greater than the cost of
conventional coal-fired generation. Interestingly enough, IPCC estimates
that sequestration will be about 30% less expensive than other
alternatives, such as Wind, Solar, Photovoltaics, Fuel Cells, and the
like. Many of the coal plants in service today are not located situated
in close proximity to carbon sequestration repositories –thereby adding
to the final cost consumer will pay for electricity. Ideally, carbon
sequestration requires unique “rock layer” and in the absence of these
crevasse in the earth, the carbon dioxide would have to pumped or
transported to appropriate sites (some of which are below water).
Carbon sequestration is a technology
which can still be characterized as in its “development stages” (i.e.
not widely in commercial use). The logistics and economies of scale are
not in the near future – indeed, honing the technology may extend past
the expiration of Kyoto (which is, currently, the most reliable
drop-dead date available). Environmentalists have yet to voice an
opinion on carbon sequestration but we fear transportation of carbon
waste may be unacceptable to this constituency. Nevertheless, in the
short run sequestration appears to be the technology of choice. In
short, politicians have to reach a consensus soon – if there is to be
any realist timeframe and targets established for reduction in the
carbon dioxide generated by the electric utility Industry before various
regions of the U.S. start experiencing power shortages.
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