As if by magic, Nigel Lawson has his thesis immediately proven by John Vidal, Environment Editor at the extremely pro-AGW “The Guardian” with this piece:
Billions of pounds are being wasted in paying industries in developing countries to reduce climate change emissions, according to two analyses of the UN’s carbon offsetting programme.
Leading academics and watchdog groups allege that the UN’s main offset fund is being routinely abused by chemical, wind, gas and hydro companies who are claiming emission reduction credits for projects that should not qualify. The result is that no genuine pollution cuts are being made, undermining assurances by the UK government and others that carbon markets are dramatically reducing greenhouse gases, the researchers say.
No, really?
A working paper from two senior Stanford University academics examined more than 3,000 projects applying for or already granted up to $10bn of credits from the UN’s CDM funds over the next four years, and concluded that the majority should not be considered for assistance. “They would be built anyway,” says David Victor, law professor at the Californian university. “It looks like between one and two thirds of all the total CDM offsets do not represent actual emission cuts.”
Governments consider that CDM is vital to reducing global emissions under the terms of the Kyoto treaty. To earn credits under the mechanism, emission reductions must be in addition to those that would have taken place without the project. But critics argue this “additionality” is impossible to prove and open to abuse. The Stanford paper, by Victor and his colleague Michael Wara, found that nearly every new hydro, wind and natural gas-fired plant expected to be built in China in the next four years is applying for CDM credits, even though it is Chinese policy to encourage these industries.
“Traders are finding ways of gaining credits that they would never have had before. You will never know accurately, but rich countries are clearly overpaying by a massive amount,” said Victor.
Of course, those billions come from Western taxpayers like you and me. Unsurprisingly, developers of such projects as wind energy farms and hydroelectric schemes applying for emissions credits that can be sold, which in theory would help fund building, but they’ve already been funded by conventional means anyway, so the money goes straight into the developers’ pockets.
Happy now?
So Lawson’s observation that one of the key characteristics of bubbles is roguery has already been demonstrated by the UN’s own scheme being ransacked by businessman wanting to double their profits through the CDM.
How long before the general public realises that its been had?
This is the first of a series of articles on the impending demise of the Great Green Engine into the buffers of economic reality. Nigel Lawson (now Lord Lawson of Blaby), former Chancellor of the Exchequer under Margaret Thatcher, calls time on the Green Bubble:
At the heart of the credit crunch now afflicting the global economy is the bursting of a great housing bubble throughout much of the developed world. Bubbles are, of course, as old as capitalism itself. Many of us in England recall learning at school of the great South Sea bubble of the early 18th century. But they seem to be coming more frequently nowadays. The housing bubble has burst only a decade or so after the Internet and tech-stock bubble. So we may not need to wait all that long to see the next one. And the most likely candidate is a green bubble, fueled by climate-change alarmism and government subsidies.
The twin elements of a bubble are euphoria and roguery, with the proportions varying from case to case. The coming green bubble, which is already attracting large amounts of venture capital and government money, displays both.
In the purely financial world, the business opportunity is in carbon trading, of which there are two forms. The first is the batch of global mechanisms set up under the Kyoto agreement and administered by the U.N., of which the Clean Development Mechanism (CDM) is the most important. If a country with a Kyoto target finds it too difficult or costly to reduce its CO2 emissions, it can instead buy “certified emission reductions” from developing countries (which have no such targets). “Certified” means the U.N. has to be satisfied that the reduction would not have occurred anyway and that it has not been offset by increased emissions elsewhere (if, say, it has been achieved by a factory closing down). But the system is impossible to police, and media investigations have revealed that many CDM projects are distinctly dubious.
Of course, when money gets tight, taxpayers get really miffed when huge amounts of tax receipts end up in the trousers of the rich executives of energy companies for trading in these ridiculous illiquid assets. That’s why there will be no successor to Kyoto - because its already been demonstrated that cap-and-trade is a financial black hole which will swallow up any and all tax revenues used to “prime the pump” of this green shibboleth.
In the wider business world the burgeoning opportunity is seen as investment in renewable energy, for which massive government subsidies are available. The front runners tend to be biofuels for transport and wind power for electricity generation. The E.U. is still committed to increasing the use of biofuels, but it has belatedly been recognized that large-scale production of crops for fuel rather than for food is a major cause of the surge in food prices that is causing severe hardship in much of the developing world. Moreover, approximately as much carbon-based energy is used in the production of most biofuels as is saved by their use.
Wind power is little better. Hopelessly uneconomic on any substantial scale, since it requires a conventional power back-up for when the wind stops blowing, forests of wind turbines are rightly regarded in most countries as an environmental monstrosity.
But the main reasons why this is a bubble are more fundamental. Emissions trading has a future only if the Kyoto agreement, which runs out in 2012, is succeeded by an even more far-reaching and rigorous global accord. It is now clear this is not going to happen. And in today’s harsher economic climate, governments are more likely to look for ways to scale back subsidies for renewable energy than to boost them. Nor are voters likely to be willing to pay the larger energy bills that “green” policies demand.
No, of course not. When the budgets start to get tight, fewer people are going to be concerned about future generations if they can see themselves get poorer while the rest of the world, especially India and China, get wealthier.
There may well be a green business opportunity. But my advice to would-be investors is this: make sure you get out before the bubble bursts.
And it is a bubble. Its collapse will happen when the first major European politician gets his or her mandate from an election to refuse to sign up to the sucessor to the Kyoto Protocol, whatever the European Commission says. Then those emissions credits will be worthless - and some people will be ruined.
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