Sunday, June 26, 2005

Oil prices, the G8 and the untold story

The front page of the Financial Times weekend edition, like most newspapers, says US shares tumbled on Friday after oil reached $60 a barrel. Analysts say oil may soon reach as much as $70 a barrel (especially because in the fourth quarter of the year demand goes up when people turn their heating systems on). Many predict the price will not to fall until it has peaked at a high enough level to have a significant impact on the economy (which may take some time). Then, the slowdown will cause demand to go down, which will lower prices.
While it is true that oil prices are high mainly because of sustained economic growth in parts of the world, there also another untold truth. Governments have the power to avoid economic impacts by taking immediate action to reduce demand in a cost-effective way and without lowering the living standards of their population.
The FT itself has covered this issue in the past. A few months ago, the International Energy Agency issued a report analysing measures that governments can use to “save oil in a hurry”. The potential oil savings and implementation costs of rapid oil demand restraint measures for transport, could reduce world oil demand by up to a million barrels per day or more.
While that report was written with real energy emergencies in mind, there is a huge potential for starting to reduce demand before we get to an emergency. The European Commission estimates the trading block could reduce primary energy demand by 20% without reducing standards of living.
The article on the FT weekend edition says that the issue of oil prices is going to be on top of the agenda at the G8. But is it really? So how come the G8 negotiators deleted wording in their draft report on climate on the huge potential for reducing "stand-by" losses? These are caused by the increasing tendency for product manufacturers to design appliances and electronic products in a way so that they are always on and cannot be properly or easily switched off. Consumers think those flickering lights amount to nothing, but they do have an impact on their electricity costs and on the national energy bill.
The wording of the G8 document, before it was deleted, suggested that something as simple as eliminating stand-by in electric appliances could avoid the need for around 24 large-sized power plants around the world (some of which will certainly be fueled by oil). Would this be very costly to do? No. Would this reduce our standards of living? No (although it may force us to actually get up to switch the TV on, instead of leaving it on day and night - but that may get us some useful excercise...a good thing in times of rising obesity I think).
Unfortunately, no large newspaper is reporting this story. Too bad. I have been a journalist, and I realise that it is far more interesting to write about the latest controversy about nuclear than something called stand-by, which sounds, yawn, boring. But it's not, and failure to report this and other simple demand reduction options ultimately gives the public (and politicians) the wrong picture on the problem and most cost-effective solutions. Journalists will say: "Well, since governments are not acting, there is no story to write about". But isn't it a story in itself that one of the most simple and cost-effective solutions to both climate change and oil demand surges is being ignored if not deliberately suppressed? And is this lack of coverage in the press because "there is no story" ultimately at risk of causing a self-fulfilling prophecy?

Thursday, June 23, 2005

"Bush has it backwards"

Another strongly-worded editorial, this time from the Minneapolis Star Tribune. Looks like the press on both sides of Atlantic is getting worked up about climate change policy!

Here's an abstract:
"..the president's men are attempting to swing the other G-8 industrialized nations away from supporting Kyoto-style reductions, and toward Bush's every-nation-for-itself approach. As negotiators draft a climate policy for approval at next month's meeting of the G-8 leaders, U.S. representatives have insisted on changes that, true to form, minimize the dangers of the warming atmosphere and leave each nation to decide its own responsibility.

Even the document's benign opening statement -- "Our world is warming" -- has been challenged by Washington. It would be just as sensible to remove all references to the world's being round. This is a shameful stance for a country that remains, by far, the world's biggest consumer of fossil fuels and, consequently, the biggest producer of globe-warming pollution. It can only further diminish America's standing as a cooperating member of the world community, and lend cover to the developing countries seeking to resist global accords that would hinder their exploding industrial growth.

Bush has it backwards. As the other G-8 leaders know, as most of the world knows, and as a growing number of big multinational corporations know, the day of reckoning on global warming cannot be postponed forever. In the meantime, it makes sense to begin a transition to industrial systems that ease the loads of warming gases in the earth's atmosphere -- and, in the process, achieve technological leadership that will be prized in the not-so-distant future."

We could save energy easily, but...

The European Commission is convinced that it can be done. Dramatically reducing our energy consumption to the benefit of economic competitiveness, security and environmental protection, while maintaining our living standards. This week, it has issued its anticipated ambitious plans to slash energy demand by 20%. (for more, also read my previous post on this)

Despite this, the international community is still struggling to find an agreement on climate change. It appears increasingly unlikely this agreement will happen at the upcoming G8, as Tony Blair may have hoped. The Financial Times yesterday said he "may be preparing to soft-pedal on global warming in exchange for Mr Bush's support on aid for Africa... That would not only be short-sighted but horribly ironic, since Africa is one of the principal victims of climate change, across a range of phenomena spanning desertification and disease, migration and ensuing conflict over scarce resources."

"The US will not go the Kyoto route but nor will it fully mobilise its research and ingenuity around this problem until it recognises it as a world-changing phenomenon that can no longer be ignored."

Meanwhile, the scientific community is getting more and more angry....

Friday, June 10, 2005

Documents suggest oil industry influence over Bush. Global scientists issue joint statement on climate, as do businesses

A lot of news in the last couple of days....
The UK's Guardian says it has documents proving how US President George W. Bush's decision not to sign the United States up to the Kyoto Protocol was partly a result of pressure from ExxonMobil, the world's most powerful oil company, and other industries. The story is based on US State Department papers seen by the Guardian newspaper.
In a related story, the New York Times (registration required)
said internal White House documents reveal how an official who once led the oil industry's fight against limits on greenhouse gases has repeatedly edited government climate reports in ways that play down links between such emissions and global warming. Meanwhile, the leading scientific academies of the world have issued an unprecedented statement calling on the G8 governments to take urgent action to avert a global catastrophe caused by climate change. Story by the UK's Independent
And shortly afterwards, a group of companies issued a statement urging G8 nations for action on climate change. Reuters story.
Planet Ark (Reuters) also has a story on the the first greenhouse gas trading programme in the United States, the Regional Greenhouse Gas Initiative.

Wednesday, June 08, 2005

Car efficiency US vs Europe

A US senator, Maria Cantwell (D-WA) has suggested measures calling on the U.S. Environmental Protection Agency (EPA) to improve its fuel-efficiency standards testing procedures. Critics of the current testing system accuse the EPA of accepting auto manufacturers' idealized claims about their own vehicles' fuel efficiency, and of deceiving consumers. The last time the system was revised was in 1985. More here

But the testing issue is only one aspect of the lack of ambitious fuel economy standards for US cars, which worries environmentalists as well as analysts around the world concerned about oil price effect on the global economy and about the competitiveness of the US car industry. The US consumes a large chunk of the world's oil, with two thirds of consumption caused by transport. Fuel economy standards at least in line with the European ones (which most analysts argue have plenty of scope for improvement) could potentially reduce demand and therefore contribute to a reduction of oil prices.

For example, US car manufacturers are required to achieve average car efficiency levels in 2011 that are already commonplace in Europe. The requirement imposed on US car manufacturers is to achieve 27.5 miles per gallon (mpg) by 2011. This is the equivalent of setting a standard of 224.7 grams of CO2 per kilometer (gCO2/km). The average car entering the European Union market today is already reaching 160 gCO2/km, which is the equivalent of 38.6 mpg! And the EU target for 2008 is to reach 140 gCO2/km, which is the equivalent of 44.1 mpg for petrol and 51.9 mpg for diesel cars.

In addition, Sports Utility Vehicles (SUVs) are practically exempt from regulation, as they are not considered as passenger cars - despite the fact that now millions of Americans regularly drive them on city roads. The US Senate Energy Committee rejected in May the proposal to bring the efficiency of these vehicles in line with the (very modest, as shown above) standards of passenger cars. Regulating the efficiency of these vehicles is proving to be very difficult in Europe as well.

For more on the European car efficiency debate (things are not perfect there either!) see my earlier post


- Our calculations are based on conversion factors provided by the World Resources Institute

Friday, June 03, 2005

New proposal for post-Kyoto targets emerges

A new proposal aimed at bridging the transatlantic divide on on long-term climate policy emerged yesterday at an annual conference on environment, Green Week, that opened Monday in Brussels. The proposal, which supporters hope will win the backing of the United States, is that after 2012 (when the first Kyoto targets expire) global emission targets could be set by industrial sector rather than by country.

One of the proponents was Edward Helme of the Center for Clean Air Policy in Washington DC.

Steve Hardesty of the US representation in Brussels declined to comment on the idea during the debate. However, according to Environment Daily, he later told the publication's reporter that the Bush administration was considering such sector-specific actions. "The admission is a rare signal that the US could be open to more than just the technology partnerships it is pushing as the basis of a future global climate architecture," the publication said in its subscriber-only news service.

The European Commission's climate change unit called the possibility "very flexible and very interesting".

Environment daily also reported that Thomas Brewer, a professor at Georgetown University in the US, was positive about the proposal. It reminded him of breakthroughs achieved by world trade negotiators, he said. "From time to time they made amazing progress when they focused on specific sectors," he said. "We have a lot to learn from...half a century of diplomacy."

  • Environment Daily (subscription only)
  • Wednesday, June 01, 2005

    Climate Change and Security

    This interesting article by the UK's Tom Burke and John Ashton appeared a few days ago on Open Democracy. Worth a read. You can also take part in an online debate about it.

    Quote: "Preserving a stable climate is essential for personal, economic and national security in the 21st century. The maintenance of security in all three modes is the primary task of government. A stable climate, like secure borders, safe streets, a healthy and educated population or efficient transport infrastructure is a public good. It can no more be achieved without public investment than can any other public good. Today there is a climate clock ticking out the future for us all."