Thursday, September 13, 2007

Forest destruction is it a threat or is it a reality?

John Aglionby and Fiona Harvey reported in the Financial Times on September 13, 2007 that “Forest nations press for carbon credits to help cut greenhouse gas” mention “that many governments fear rainforest nations could use the threat of destruction of their forest as a bargaining chip in climate change negotiations”. What threat of destruction? They are destroying them now.

I recently told a prominent-save-the-Amazon person that they should, at 7 am each and every morning, put a matchstick to one hectare of pristine Amazon jungle and transmit this on the web and then perhaps the world could easier understand that it needs urgently to create some huge world forest reserves. These reserves could be managed and cared for by hundreds of thousand forest-guard families and who could all be helped to partially improve their lives receiving a small monthly salary from the whole world, financed perhaps through the levy of a special forestry tax of one cent per litre of petrol.

In 2004 while an Executive Director at the World Bank we were asked at the Board to approve a loan to Brazil for “Environmental Sustainability” and I told my colleagues that what we really should be approving was how much each one of all the world countries would have to chip in to help repay that loan, since obviously keeping our most important lung clean could not only be Brazil’s responsibility.

Does burning 365 hectares per year sound awful? Well the same report indicates that only in Indonesia 1.87m of hectares have been lost every year since 2000. Now having said that… please be careful with the matches though.

Thursday, April 26, 2007

Thanks Financial Times, that was much needed

Our problems on planet earth are just too serious to allow us from not spelling out some uncomfortable truths. In this respect, with the Financial Times’ “Carbon markets create a muddle”, April 26, and the investigations that preceded it, and hopefully those that will follow, it is performing a tremendous service to all of us who believe that the climate change threat is for real and therefore require that the actions to combat it should also be for real. The current carbon market where we sell indulgences for some fairly undefined sins in order to use the proceeds for some even less defined good deeds (after paying the brokers) will just not cut it, much less so if we leave it in the hands of blind believers or of a hypocritical environmental clergy.

Saturday, February 17, 2007

If it is really is so serious should not then the proposals be more serious?

I assume that the scientist are 100% right in their warnings about global warming, among other because the risks of staying in bed and not doing anything about it seems to loom much larger than the risks of getting out of bed to do something.

It is about the what-to-do that I have more problems, as there seems to be a growing divergence between the seriousness of the warnings and the banality of some of the solutions offered. If it really is so serious then should that not warrant more serious responses than aspirins? If it really is so serious then sure we must beware more of those who are peddling green magical potions, just to make a buck.

A carbon-solution neutral agency is what we lack the most because, if it really is so serious then presumably we cannot afford to waste even one dollar on solutions that are not effective.

In the Financial Times, January 19, Philip Stephens, in “Business must bend with the winds of climate change” wrote about how a reputable company such as Marks and Spencer, surely run by capable and creative professionals are now doing their part against global warning… recycling unsold food into energy! The world is coming to an end… unless you drive a hybrid!

I am not that much against it but, if it really is so serious, should we then be going down that route of selling climate-change indulgences trading carbon emission rights?

I am not that much against it but, if it really is so serious, can we afford to excuse the developing world from doing its part just because it cannot afford it? Are we not better off enlisting the help of the developing world, now, in an early phase? If some should have the right to make a buck on protecting the environment perhaps it is the poor developing countries and so that they can then afford to pay a part of the costs, since the responsibilities for the environment should and needs always belong to all humanity, not only to the rich part of it.

Getting hold of some more serious and convincing what-to-do tasks would also help to get our many millions of pure lazybodies to get out of their beds for the environment’s sake.

Wednesday, February 14, 2007

The Amazon

An informal letter I sent to my colleagues at the World Bank in 2004

Dear Friends and Colleagues

Today we approved a US$505 million Programmatic Reform Loan for Environmental Sustainability to Brazil. Frankly, how could it be otherwise, when in fact we should be on our knees thanking a country like Brazil that with so many other problems commits to repaying 100% of principal plus interest of an environmental-sustainability loan that will benefit the whole world and all of us.

Honestly, I do believe the World Bank should occupy a stronger leadership in these matters from the very beginning, advocating for the cooperation of the rest of the world. If silly windmill projects can have access to carbon credits, the Brazilian environmental program should too.

For instance, if 20% of a loan like this were to be repaid by some international-support mechanism, this would not only motivate the Brazilian government to sell environmental protection locally, but it would also be a clear sign that in these matters, Brazil does not stand alone. Of course any external assistance would have to come with the clear understanding that it does not impose additional conditions on the country, as this is the best and perhaps only way to guarantee true sustainability and ownership of such programs.

This morning we had a two-hour discussion about the Development Committee agenda. Frankly, however, the issue of how the world can help in crucial global matters, as in the case of the Amazon—where the need of avoiding the very negative externalities of large deforestation have to compete with so many other urgent local needs, as well as with the rising opportunity costs of not exploiting the forests—should be a foremost issue. If it already is there—for instance hidden in a global taxation initiative—I very much welcome it but, if not, we should strive to put it there.

Last year at least 25,000 hectares were deforested in the Amazon. At a low carbon value of US$20 per hectare/year, this would indicate a value of about US$50 million a year if the program were successful at stopping deforestation. Add ten years of stopped deforestation, and the value of this would be—in approximate Kyoto terms—about US$500 million a year for the rest of the world. If this is so, how come we can spend so much time and money on expensive initiatives such as the Extractive Industry Review, and not come up with something more reasonable for the Amazon, than to have the Brazilians pay for it, 100%?


Published in Voice and Noise, BookSurge 2006 and there is also an article that touches upon the same theme and that I published in Spanish in Venezuela early 2004

Earth, the cooperative

Even if there is still confusion over the path the world is taking on environmental pollution, there is consensus at least on the following. The developed countries are doing the most polluting, the developing countries are suffering the most from this contamination, and, in the world today, there does not seem to be enough environmental space to allow the undeveloped world to catch up to the developed world.

The above statements should be enough to fuel a spirit of cooperation within this cooperative we call the Earth, and of which, like it or not, we are all indigenous.

Unfortunately, little or nothing has been done as of this date to correct the imbalance.

Some years ago we saw (or we imagined) small points of light when a series of environmental limitations were imposed through the Kyoto Protocol. There was talk of a market of “compliance with environmental standards bonds” which contemplated the possibility of transferring environmental funds from the developed world to the rest of the world.

A tree captures carbon. And thus hypothetically, a polluter in New York should plant a tree in his/her city in order to avoid a fine. However, to plant a tree in New York would be very costly, so the polluter in New York could also utilize the option of asking a Venezuelan investor to plant this tree in Venezuela instead. The investor and the polluter would then share the net cost savings. This is the essence of the idea.

There are obvious difficulties with this proposal. The assurance that the tree is actually planted in Venezuela, and that it grows and captures carbon and does not later become burning firewood, are just some of the technical challenges that need to be resolved. However, we know that if the demand for these bonds is high enough, we can be certain that the creativity of technicians would be sufficiently stimulated.

There have been some initial successes with these bonds. But to tell the truth, the main buyers have been well-intentioned institutions, and today it is difficult to envision how this market could become self-sufficient in terms of volume, without assistance. Particularly when we see how there has been a relaxing of will or an increase of laziness in terms of applying Kyoto standards—unless …

Today we are conscious of the very high taxes on gasoline and other petroleum derivatives in many parts of the world. In Europe, at a price of 26 dollars per barrel of oil, these taxes amount to more than 400% of the oil’s value. In 1998, when oil was 10 dollars a barrel, taxes amounted to over 700%.

These taxes, categorized as “environmental” since they reduce the demand for oil, have a direct negative impact on an oil-producing country such as Venezuela. However, what really bugs us is that the majority of these taxes are not at all used for environmental purposes and even when they are, adding insult to injury, it is only as a subsidy for other energy sources, furthering the discrimination of oil.

I challenge all of our rich fellow cooperative members in the developed world to set aside at least 10% of taxes collected on oil for the purchase of true Environmental Bonds.

From Voice and Noise, BookSurge 2006, and El Universal, Caracas, December 2002

Better than a hybrid

The world burns oil and coal and fouls up the environment and thereafter hopes to make up for it by planting forests that recapture the emitted carbons. It won’t, but at least it is better than doing nothing, especially if it does it right.

Currently, some of the car makers are being criticized for not doing enough developing environmental friendly hybrid vehicles. But, before they commit large amounts to that effect they should perhaps look at other alternatives… such as an “as-good-as-it-gets forest mining carbon sink”.

The Web site of a car maker announces that their best-selling hybrid vehicle costs around 4.000 dollars more than the comparably equipped standard version. In compensation the hybrid will, by giving 14 miles more per gallon of gas and if driven 20.000 miles per year, save the owner over ten years about 3.000 gallons of gas, and thereby save the environment from having about 7.3 tons of carbon converted into CO2. The technology used in these hybrids is quite creative as it harnesses in a battery some of the energy obtained when braking and thereafter uses it as efficiently as possible.

If we assume no new-technology surprises, for instance battery problems down the line, this environmental conscientious investment proposal seems reasonable for the individual US motorist in the US at current $2.20 per gallon of gas, and indeed splendid one in Europe with their over $7 per gallon… although there it clearly has more to do with saving the taxes on gas, than with the cost of the gas saved. Nonetheless in terms of the environment, the results are not that impressive and the world could do much better in terms of the social and environmental impact.

For instance there is Tanzania, an extremely poor country, with a per capita income of about 300 dollars per year, with not enough prospects to get it out of its predicaments and where much of its land is slowly but surely turning into desert, at a pace of more than 300.000 ha per year. Although there are some major mining companies operating in Tanzania and that we hope are doing their extraction in the right way, their environment is also suffering at the hands of about one million unofficial freelance miners that roam the country trying desperately to make a living.

By putting together the reasons for the hybrids and the needs of Tanzania one could then think of setting up cooperatives for these miners and turn them into reforesters, and having the whole project financed by buyers of cars. Is it feasible and sustainable? Absolutely!

If our car buyer, instead of buying a hybrid, saved four thousand dollars by buying a standard car and then would pay just 2.000 dollars to a cooperative, this amount could, after reasonable promotional and administration costs, cover the initial reforestation of about 5 ha and the carbon thereby captured would be at least 200 tons, 27 times more than the hybrid-car savings. Yes we all know that a ton of carbon saved by not converting a stable sink like petrol that has been there for millions of years is much better than a ton saved in an unstable forest that can burn or rot, but never 27 times better.

As the reforested area captures its carbon throughout the years it could also be maintained with the income obtained from selling emission-savings certificates based on the Kyoto protocol. If forest captures 4 ton CO2 per year and ha, and the value of an emission saving certificate per ton were to be $10, then there would be a yearly income for the cooperative of 40 dollars per ha during 10 years.

We do not wish to demean the efforts of any car company that invests in the research of more energy efficient cars but that does not necessarily mean it needs to sell their hybrid cars before they’re as-good-as-they can get. At this moment of scarce resources and urgent environmental needs perhaps we would all be better of if the car industry offered their consumers, in lieu of hybrid cars, the possibility to drive away in standard cars that carry on their windows bright emblems, certifying each one of them as proud financiers of 5 ha of reforestation in Tanzania, all observable live through the Web site of The First Forest Mining Cooperative of Tanzania.

Published in OGEL Vol 3 Issue 2 June 2005

Our quixotic windmills

It has been a hard year for the promoters of wind energy. Though the economic viability of the windmills has improved considerably as oil has become more expensive, they have had to fight many battles on the environmental front which must have been somewhat surprising for these valiant champions of the green. Besides the aesthetics, where people still cannot make up their mind whether they are impressive or horrendous, over the last year we have read a lot about the problems of their causing death of birds and bats. But if they thought that was it, they had better prepare themselves since there is an ongoing study that seeks to measure the impact of the windmills when and if there would be enough of them to produce 5% of the world’s electrical needs. That would signify, worldwide, hundreds of thousands of them.

From the initial results that have been privately circulated, the study has identified some new threats never even thought of before but that could become insurmountable hurdles. The first is whether the friction produced by the wind will in itself increase global warming. Second, as the windmills are located in windy areas and therefore not equally distributed over the world, there is the possibility that the world could turn some degrees over its axle, a bit like the effect of the recent mega earthquake that produced the tsunami. The final threat identified is that the windmills, by acting like some big sails, could accelerate the rotation of our planet. Luckily this final concern has already been eliminated as the calculations showed that this effect was to be neutralized by less wind impacting mountains and other places. Nonetheless, by just posing the argument it has also opened problems of a legal nature. For example, neighboring countries might complain that the windmills are literarily taking the wind out of their sails. The final problem identified but that lies outside the scope of the current study is related to what will happen to the ecology of previously windy area when the winds are gone.

As this year we celebrate Cervantes’ Don Quixote we cannot but reflect on how the modern windmills are fighting a quixotic war on their own.

P.S. Early one morning in 2004 I met with some World Bank staff who wanted to tell me about the details of an alternative-energy project—windmills. Coming from an oil-producing country, in jest I improvised the above have-you-heard-the news-about-windmills story, and to my delight, some fell for it. Later for April Fool’s Day I sent it out to some of my knowledgeable friends. To my surprise instead of laughter, many of the answers were of a yes-this-needs-to-be-better-researched nature. Could it really be that my joke contains some truths?