Monday, December 28, 2009

The wonderful fiasco in Copenhagen

The fiasco in Copenhagen could not have been more wonderful! Now we citizens know that if there is a real serious environmental threat to our planet, be that global warming, global cooling or whatever, we cannot really trust our governments or our currently self appointed civil society representatives to take care of it. The governments because the politician’s primary wish is to be reelected and that is a short term goal that overrides any long term consideration, and the civil society organizations because it would seem that more often than not, they carry a different political agenda

And so what are we citizens to do. As I see we need first to treat the climate change threat as being a challenge to the whole human race and which means that all humans beings, all indigenous to this our planet, have the right and the obligation to share in its solution. In other words, climate change must become a global citizen’s issue.

That has implications, the first having to recognize that even though the average carbon emission varies dramatically between humans in rich and developed countries from those in poor and developing ones, the marginal damage per each new emission is the same whoever produces it.

One of the worst things we saw happening in Copenhagen was how the climate change threat was utilized to argue for global social justice, not that there is anything wrong with global social justice, but that certainly obscures the urgent objective at hand. Any transfer of climate change fighting resources from the rich to the poor, which of course must occur, should be strictly based on these resources have a greater green impact there. It is not a question of having the poor and developing countries to be able to consume their fair share of cars, but more that of creating alternatives to cars, like extensive railroad systems.

Red crushed green!

Thursday, December 17, 2009

Registering my complaint!

In Christmas red and green usually works, but, in Copenhagen, the party crashing red sure spoiled what the green wanted and needed to achieve. Shame on them! Future climate change victims will be informed.

Wednesday, December 16, 2009

Can’t we just ship out all our nuclear waste into outer space?

Just thought that nuclear energy could provide sufficient energy to launch its own excrements to outer space, never to return.

But, hold it there… before you get too enthusiastic about it, let me inform you that I am absolutely no expert on it.

What has NASA to say?

Tuesday, December 15, 2009

Sabotaged Copenhagen!

Who created expectations among the poorer countries of receiving climate change reparations and thereby derailed the urgent discussions from their prime-objectives? Again, someone not caring an iota about the real issue but only about pursuing a class-war? They should be labeled environmental traitors!

Thursday, December 10, 2009

Too many muddled ponds in Copenhagen

Local money for climate change mitigation should go where global climate change mitigation is most effectively produced; local money for climate change adaptation should go where local climate change adaptation is most needed; local money to assist the poor should go where globally it is the most needed; and money for job creations should not be expected to go anywhere else than where local sustainable job creation seems to be most possible.

To put all that money in one sack and then let all the agendas compete for it will not produce good, transparent and sustainable results, and unfortunately it would seem like that in Copenhagen there are too many interested in fishing and being fished in muddled ponds.

Friday, December 4, 2009

To share the responsibilities of the human race is a human right

In the how to respond to the threat of climate change and the global warming there is an ongoing debate on who is to be blamed and who has to pay for it all. I dislike it profoundly.

If climate change and global warming constitutes the real threat to humanity experts tell us they do, then absolutely all the humans have exactly the same obligation and exactly the same right to help out, and this includes the poorest and the weakest, since they do not belong anything less to the human race than the strong and wealthy.

That poorer and development countries might have less resources and might be confronting greater challenges than richer and developed countries and should therefore be helped that is correct, but to infer from that, as some do, that these countries have less responsibilities, is not only an insult to their citizens, but also carry perhaps the implicit message that the challenges posed from the threats are not really that great.

Thursday, September 3, 2009

21st Century Asocialism

The fact is that the pseudo democrat (oil-autocrat) that loves to be called Commander and that governs Venezuela for more than ten years now, sells the gasoline in Venezuela for less than 3 cents of dollar per liter (10 US$ cents per gallon) less than the price of water, without even covering the costs of distribution. With this public policy, our so called socialist continental champion, transfers, if the gas is valued at its real market value, from the poorest of the poor, to the owners of cars, a subsidy equivalent to about 10% of the Venezuelan GDP.

Also, as a direct consequence of these mindboggling low gas prices, plus the fact that preferential foreign exchange rates is given for the import of cars, a small country of 27 million of inhabitants and a yearly GDP per capita of only around US$5.000 in 2006, placed way over one million new cars on the roads during the last three years.

The new cars don’t find where to circulate in order to spew out their carbon emissions and therefore, from a transport, an environmental and a social justice perspective there cannot be any doubt that, in Venezuela , we are in the hands of a truly cruel 21st Century Asocial government.

Thursday, August 27, 2009

Do not look to resolve the green paradox... try to manage it.

Hans-Werner Sinn in the Financial Times August 27, 2009 in “How to resolve the green paradox” August 27, holds that the “owners of oil and gas fields react by pulling forward production” as “green measures... exert a stronger pressure on future prices than on current ones”. Wow! Where can we find these forward looking persons perhaps we could put them in charge of our governments. Unfortunately, “owners of oil and gas fields” are just like all other humans and react in just the same stupid short term way as all of us do.

Does Professor Hans-Werner Sinn really want to know how to” induce resource owners to leave more carbon underground”? I´ll tell him. Use the oil-curse route. Pay them humongous prices for their barrels of oil and see that all those funds go to a petro-autocrat like hugo chávez, and that will mess it up so much that it renders them incapable of extracting it.

No, sadly, the horrible truth we need to face is that the world loves too much its carbon driven economy to abandon it and so our best chance of saving us from the suicidal path we are on lies in new discoveries.... discoveries of what? I have not the faintest idea but let´s try to buy us some time to discover it, perhaps with some carbon taxes, but meanwhile let us not waste very scarce resources on what can only be described as green placebos.

By the way (again) is it not ironic that those from the land of Martin Luther and which most fought against the indulgences offered by the catholic church are now the ones most eagerly promoting the emission indulgences sold by the green church.

Tuesday, July 7, 2009

The dangers of picking the second best solutions

With respect to the challenges to the humanity that the threat of climate change poses it is absolutely clear that if true we are going to face an extraordinary scarcity of resources and, as a consequence, anyone truly concerned with climate change must give first priority to ascertain that our limited resources are used as efficiently as possible.

If a subsidy is given to a second best solution then that subsidy is first not as efficient as it could be but worse still, it may by capturing some benefits impair on the viability of the best solution.

Let me try to explain it as easy as possible

Suppose we have an environmental project that carries with it a total of 10 green points of possible environmental improvement and that, one approach, the best, could catch 7 of these points for 7 dollars of investment while, the second approach, the second best, can only catch 5 points and requires a 6 dollar investment.

If then for any reason, such as undue lobbying, it is decided to go ahead with the second best approach then 6 dollars would have been invested in order to capture 5 points, not too bad.

But let us suppose both approaches were only able to capture the same type of seven points and three points could not technically be captured by any approach, then we are left with only 2 points to catch at a 7 dollar cost… meaning that these 2 green points will never be captured.

Should that be of concern to us? You bet! Besides the differences in environmental efficiency of what is out there is mindboggling. Solar voltaic panels and hybrid cars should perhaps even be prohibited as they represent truly expensive green placebos.

Sunday, May 3, 2009

What’s wrong with you!

If a share your concern that we are indeed confronting a severe climate change crisis, then why can’t I be allowed to be concern that we spend our scarce resources made so much scarcer with the recent crisis as careful as possible? … and why am I instead supposed to have to support you wholeheartedly throwing money at solar panels and wind energy long before their time is ripe?

Tuesday, March 3, 2009

Pushing for a green recovery requires also reducing the conflicting market signals.

Joseph Stiglitz and Nicholas Stern write “Providing a strong, stable carbon price is the single policy action that is likely to have the biggest effect in improving economic efficiency and tackling climate change”, The Financial Times “Obama’s chance to lead the green recovery”, March 3.

Although I come from an oil country, since it is always harder to bailout from a financial crisis than from a climate change crisis, I agree.

But these green market signals would be more effective were we capable of reducing some of the competing signals, for instance those present in one of the most important drivers of world capital namely the minimum capital requirements for the banks as defined by Basel.

Currently for a bank to make a 100 dollar loan to a corporation the banks currently need to have an equity that ranges from a minimum of 1.6 dollars to 12 dollars, a whooping 7.5 times the minimum, which depends on the risk assessments produced by the credit rating agencies.

Since bank equity is scarce, and expensive, especially now, this means that besides what the market would normally be charging for assuming a high perceived risk, the regulators have imposed an additional de-facto tax on risk. This would be great if “default risk of a corporation” was all that mattered. But what about the default risk of our planet? What if most investments in projects destined to fight the risk of climate change presented more risk than projects that increased the risk of climate change?

What if the securitized finance of car purchase financing gets an AAA rating while the project to install a solar panel only achieves a rate below BB-? Is it logical then that the financing of a solar panel needs 7.5 times more bank equity? I don’t think so!

Sunday, January 11, 2009

You the green NGO’s, you are all barking up the wrong tree.

The environmental groups are barking up the wrong tree when trying to influence institutions such as the World Bank to pursue investments that can counter the threat of climate change.

Not that the World Bank is not important, as a standard setter, but, out there, in the real world, if we are talking about mobilizing financial resources there are other institutions much more important, like the Basel Committee, the global bank regulator.

The Basel Committee decided that the one and only role for our banks was not to default and to such effect it set up a system of minimum capital requirements for banks based on credit risks, and empowered the credit rating agencies as the risk surveyors of the world.

Not a good idea! The credit rating agencies rated securities backed with lousily awarded mortgages as AAA, which signifies a zero risk, and then more than two trillions of world capitals, something like 20 World Banks, invested in those securities, only since 2004.

And here we are now facing a deep global financial crisis that is going to bring more misery to millions if not billions of people around the globe.

Can you imagine if those minimum capital requirements for banks had been based on the risk of climate change? Without any doubt we could still be immersed in a crisis, though surely not as severe, but our planet would surely have been placed on a more sustainable path.

And so I ask. What are you doing in Washington? Do you not know your way to Basel?