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Why 95% of Traders Fail

Obama's Theory Of Institutional Climate Change

Politics / Climate Change Feb 19, 2013 - 04:03 PM GMT

By: Andrew_McKillop

Politics

ACTION BEFORE ITS TOO LATE - WATTS UP WITH THAT?
Wattsupwiththat.com, the most viewed Web site on global warming, climate change and bad weather policy and management, leads this week with an article by Ken Haapala, a director of the Science and Environmental Policy Project (SEPP), founded by the longstanding "climate sceptic", S. Fred Singer. Before his now total and outspoken opposition to the core theses of "anthropogenic global warming due to CO2", and other human origin greenhouse gases, 89-year-old Austrian-born Singer was a scientist renowned for his works on space research, atmospheric chemistry, rocket and satellite technology.


Writing about Obama's State of the Union address and its urgent plea for major action to limit global warming, climate change and bad weather, Ken Haapala said: "President Obama’s State of the Union address confirmed what Fred Singer wrote in the outlook for 2013 and beyond – get ready for the worst in 2013 and thereafter". Worse is coming - and he did not mean bad weather.

Barack Obama told the nation that he’s prepared to “act before it’s too late” and combat climate change through the White House, if Congress is unwilling to act. This marks a major change in climate change policy and action, enabling us to outline a few bases of institutional climate change theory, which has to reconcile three main interest groups. First, public opinion has to remain concerned, even scared about the subject and believe that politicians and the corporate sector are doing things about it. The corporate sector's interest is very simple - it has to make a buck out of mitigating or "fighting" climate change. And politicians need to reinforce and comfort their power atop the greasy pole of power, with this new prop. The "climate sceptic" scientists such as Fred Singer or Ivar Giaevar can rail, politely or not about the use and abuse of scientific data and theory, about wanton exaggeration of climate trends, but this has little relation to institutional climate change.

EXECUTIVE DECISION
Obama threatens executive decisions or decrees, because parliament does not agree. Making this almost certain, the US lawmakers' and institutional track record on "urgent climate legislation", and especially the "marketizing" or trading of emissions permits, is now excruciatingly slow and, for the dwindling but still influential lobby of climate change alarmists, has been at best or most lukewarm. Lawmakers were unable in 2009 to agree on a "landmark" cap-and-trade agreement similar to the now agonizing ETS system in Europe,  even when Democrats controlled both the Senate and the House. Congressional agreement on new laws is totally unlikely this year.

The Obama administration considers it has no option but move forward on its own.

With the passage of the years, our historical theory of institutional, political, corporate and financial climate change can set a start date for this theory back in 1988, the year that the UN accredited but not UN-status International Panel on Climate Change (IPCC) was founded, as a discussion group for concerned scientists, writers and thinkers, and a few politicians and civil servants. Until the mid-1990s the IPCC had very little corporate visibility, but this changed dramatically with the 1997 Kyoto Treaty. By an almost sublime irony today, the home country - Japan - for this founding treaty setting "official climate change management", has now effectively abandoned all commitments to legislating for reduced emissions and forcing the marketizing and financialization of emissions permits. Canada and Russia have done the same thing, but with no fudging of their formal and political abandonment.

Our theory needs to explain the "dwell time" or iterative recycling of founding beliefs, of the claimed but theoretical "climate change community".  Barack Obama in his State of Union address went back to simple theatrical histrionics. He implied that not acting very soon will produce disaster. In the period after the sealing of the Kyoto Treaty in 1997, and the start of European ETS in 2005, outright alarmism was the favoured line of advocacy, for the "climate change community". Today, we are a long way beyond the disastrous 2009 Copenhagen climate "summit" or meeting - which itself was another milestone along the rocky road to the present, for the "climate change community".

This fuzzily defined  group's present stance or line is that there are "many ways" to fight climate change without legislation. The focus and goals of this are however simple: executive non-democratic action, bypassing the lawmaking system by executive order, both carefully chosen and heavily focused.

Politics plays a main role, as shown in the decision making process which led Barack Obama to make his promise or threat to the nation, but the corporate sector is now fully focused. Obama's likely "urgent action" will be restricted to decreeing carbon-pollution limits for new power plants, and more importantly, for existing power plants. Symbolic but heavily diffuse action with widespread but small economic impacts (and low carbon reduction impacts) is also proposed by Obama through decrees setting stricter energy-efficiency standards for buildings, home electrical appliances and other equipment, along with continuing US government "in-house" effort to shrink its own carbon footprint.

DIVIDE AND RULE
Politicians like Obama know their public opinions are heavily divided and uncertain about the scientific basics of the claim that anthropogenic global warming and climate change, or simple bad weather due to human action, is a real threat. Second, many members of the public - and the scientific community - disagree with the methods chosen for limiting both real and possible anthropogenic modification of the atmosphere and environment. It is often argued that, for example, existing enviornmental pollution laws can prevent and reduce air pollution, if CO2 is treated as pollution. Public opinion is divided, the scientific community is divided - but several sections of the corporate community still see earnings potentials in the quest to limit anthropogenic climate change, or at least turn a buck from bad weather.

Juggling these different interest groups  needs application of the Roman Cesar's maxim "divide ut regnes", dividing and maintaining power by breaking up larger power groups into smaller chunks that each have less power than the one further up the pyramid of power.

Our institutional theory and its historical unwinding will be bolstered by it explaining Obama's present executive order initiative. At one and the same time, Obama has all needed statistics to say that over the past two decades, the US has consistently cut its carbon emissions. Today's emissions are as low as those of 1992, more than 20 years ago - what happened to the US economy in those 20 years "is another subject". He also explain that the US still accounts for about 19 percent of world carbon emissions -- very close to its share of world GNP. This implies, and the instituional theory explains, that a moral obligation to "mitigate climate change" has been created, but this also is politicized: the US could or might have a "moral obligation" to cut emissions - but so do other countries, notably China.

Obama's administration, under cover of mostly anonymous reports, statements and interviews will provide the back up communication on global temperature increases, rising sea levels, wild fires, destructive droughts, flash floods, increasing numbers of hurricanes, and of course bad weather. Obama will therefore move beyond existing specific legislation, notably of the  Environmental Protection Agency (EPA) which has recently taken what it called "a critical first step" in further reducing emissions from thermal power plants in the US, proposing a new regulation for a limit from new power plants of 1 000 pounds (440 kilograms) of CO2 per 1000 kWh (megawatt-hour) produced.

CORPORATE INTEREST
Obama's proposed decress are of course a major green light for solar energy and windpower, and efficient natural-gas plants can already meet the proposed new standard, but coal-fired plants cannot. This creates the "new market" of installing inevitably expensive carbon capture and sequestration (CCS) systems to comply, but many coal-fired plants will simply be shut down. As Obama has already found by way of his re-election campaign and debates with Mitt Romney, public opinion support for the coal industry and coal miners is minimal, signalling an early end to the US coal industry, as we knew it.

This readout is backed by the Obama administration's math on the subject of "getting significant reductions of CO2", and high up the list we find action to limit emissions from the more than 500 existing coal-fired power plants, which emit about 2.2 billion tons of carbon dioxide a year, more than from any other US source of CO2. The unequally divided political and corporate communities are clearly shown by rearguard action by the coal industry and its congressional protectors, who say carbon limits would drive up electricity prices, hinder the US economy and make the electric grid less reliable, but these arguments have little reach. Coal power advocacy is often brushed aside by mass media, which as another major interest group or "The Fourth Estate", is in favour of "fighting" climate change.

The power production and distribution secot is globally in favour of massive new spending, with little surprise, although as shown by Germany's Energiewende the European corporate energy and power sector has heavily modified its earlier corporate policy or stance on the subject. In the US, the Natural Resources Defense Council has proposed setting individual state budgets for carbon emissions, with coal plants getting a higher allotment -- 1 500 pounds of CO2 per 1000 kWh -- than natural gas. The EPA could set state-by-state limits, with different State legislators, on allowable carbon emissions and let local governments figure out how to get achieve them -- modeled on framweorks already used for ozone and a few other pollutants. In this way, the EPA and other administrations would create permanent Federal-corporate negotiating frameworks similar to those existing with carmakers for drafting car fuel-efficiency standards.

Heavily drawing on German political advocacy and experience drawn from its Energiewende, Obama 's State of the Union address unveiled his intention of creating an energy-efficiency “Race to the Top” reconciling State (or Lander in Germany) political interests and corporate interests. This action would provide Federal financial support to states implementing the most effective energy-efficiency policies -- with goals as high as those set in Germany, of cutting in half the energy needs of homes and businesses by or before 2033. The new political thrust of climate change mitigation in the US uses dollars-and-cents reasoning light years away from the image of ice cliffs crashing into the Arctic sea. Interest groups allied to Obama's administration now say that each month’s delay in not passing energy saving legislation costs consumers and businesses $300 million in the savings they would have made, and emits 4.4 million metric tons of "avoidable carbon" into the atmosphere

CLEAN ENERGY FUTURE
The theory of energy economics needs serious rewriting and revision, and reform, to fit with the more extreme versions of Obama's new initiatives and their implied political, corporate and public opinion uptake. Cheap and abundant energy was an essential base of historical economic processes as critical as the Industrial Revolution. Shifting totally from "dirty" to "clean" energy is an easy mental leap, but for the economy and society it is what Energiewende means in German: energy transformation.

In his State of the Union speech, Obama brought up a couple of other ideas -- diverting some oil and gas-drilling revenue to bolster research on alternative fuel technologies -- and to institutionalize, that is make permanent, the tax subsidies for wind and solar power. This would immediately create major legislative issues because it cannot be done by decree, meaning the White House may look for other ways to use executive orders to further aid clean energy -- including action to force the Department of Defense, the nation’s largest energy user, toward faster uptake and use of cleaner energy sources.

Our political and economic theory of institutional climate change mitigation will surely need to underline that since the 1988 founding of the IPCC, this has interest bundle or area has morphed ever further towards energy transformation. However, in the same period, massive or even fantastic changes have occurred to our perception of fossil energy resource bases and their recoverability. Taking only coal, the ultimate "dirty fuel" but the historical base of both the Industrial Revolution and China's economic success of today, world reserves of "deep coal" to 3000 metres depth could exceed 200 trillion tons, albeit some 99% of this is non-recoverable as physical and dirty coal. World physical coal consumption presently runs at about 6 billion tons a year.

Above all this energy exists as a potential resource, like world shale gas potentials, ocean thermal and geothermal energy, and other stupendously massive potential resourcs.

The clean energy quest, now institutionalized and linked with the climate change mitigation quest, can surely stand alone and apart from the unsure, probably non-critical process of slight decennal variations in global average temperatures. Among a surprisingly long list of possible causes, these variations may be due to human presence on the planet, but preventing these anthropogenic climate changes would need such massive change of our human presence we are unable to describe or contemplate it. As we see from Obama's new political approach to climate change, however, the history and politics of institutional climate change have now moved far from the scientific domain.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2013 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

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