Tuesday, 10 March 2015

From the 'fossil-fuel age' to an international carbon tax

Martin Wolf of the FT has written extensively on climate change:
Futures Forum: "Green growth is a worthwhile goal" - comment on climate change and sustainability from the FT
Futures Forum: "I believe humanity is making risky bets in the climate casino ... But it is always possible that humanity will wake up and make the needed investments in rapid change, driven by the magic of the market and technological innovation."
Futures Forum: Climate change sceptics 'are losing their grip'
Futures Forum: Climate change................ "Clean growth is a safe bet in the climate casino"

Martin Wolf is highly esteemed - and highly influential:

Martin Wolf, another frequent Bilderberg participant, is considered to be perhaps the most influential financial journalist in the world, being the chief economics commentator and associate editor at the Financial Times. He is consistently rated among the 100 most influential “thinkers” in the world, with “a devoted following among top economists, politicians, and financiers.” Wolf himself once explained: “I’m writing for the people who are doing these things, who are running these things.”
Lawrence Summers, another top economist, former Treasury official and occasional Bilderberg participant, has referred to Wolf as “the world’s preeminent financial journalist,” and the economist Kenneth Rogoff called him “the premier financial and economics writer in the world.” Mohamed El-Erian, former CEO of the world’s largest bond trader, PIMCO, stated that Wolf was “by far, the most influential economic columnist out there,” and the current governor of the central bank of India, Raghuram Rajan, commented: “You cannot measure influence, but you can feel influence… And I think [Wolf] has it.”
Wolf himself acknowledged, “I don’t know if there’s any significant central banker I don’t know.” As the New Republic explained in a profile, Wolf’s audience and readership “are some of the top earners, spenders, and decision-makers in the world,” noting that he was “staggeringly well-connected within the elite circles he is writing for.”
No doubt, Wolf’s consistent presence at Bilderberg meetings, and at the World Economic Forum, has helped to secure that access and maintain those connections. Thus, when Wolf writes about issues related to financial markets, his commentary holds far more weight than when outside or more critical voices speak up. This is all the more notable when Wolf defines and criticizes what he perceives as the primary problems of financial markets, and the financial system as a whole – which he did in 2011, writing that “an out-of-control financial sector is eating out the modern market economy from inside, just as the larva of the spider wasp eats out the host in which it has been laid.” (Wincott Annual memorial lecture, Oct. 24, 2011).

Global Power Project: Bilderberg Group and Its Link to World Financial Markets « Andrew Gavin Marshall

In his latest article in the Financial Times, he proposes a carbon tax - but this has been rejected with great vitriol in Australia and elsewhere:
Futures Forum: "Climate science has been dragged into the American-style culture wars that are turning British intellectual life into a battlefield."

March 3, 2015 2:50 pm

The riches and perils of the fossil-fuel age

New feature

If nations could agree a carbon tax, it would help create a more efficient, less polluting future
Ingram Pinn illustration
ur ancestors lived in eras we call the Stone Age, the Bronze Age and the Iron Age. Ours is the “fossil-fuel age”. The energy we have extracted from the earth’s reserves of fossilised sunlight has spread (unequally shared) abundance across humanity. Will this continue? Can we manage its impact on our environment? The answers will shape the future of our complex global civilisation.
As always, BP’s Energy Outlook provides a glimpse into a possible future. No doubt, its forecasts will be wrong. But it tells us what well-informed people at the heart of the oil and gas industry consider “the likely path of global energy markets to 2035”. It puts forward five important propositions about a plausible energy future.
First, global economic output is forecast to rise by 115 per cent by 2035. Asian emerging economies — principally China and India — are expected to generate more than 60 per cent of that increase.
The primary driver of the rise in global output is expected to be a 75 per cent jump in global average real output per head, as the prosperity of emerging economies catches up with that of high-income countries. Population growth plays a distinctly subsidiary role. It is not the number of people, but rather their prosperity, that drives demand for commercial energy.
Second, as a result of rapidly rising energy efficiency, energy consumption is forecast to grow by only 37 per cent. This is far less than the rise in output of real goods and services.
Third, emissions of carbon dioxide are forecast to grow by 25 per cent, a growth rate of about 1 per cent a year. In terms of the link between output and emissions, this is a huge achievement. But — given the need to cut emissions outright, in order to have a good chance of limiting the global average temperature rise to below 2C — it is wholly inadequate. Thus, in 2035, emissions of CO2 are forecast to be 18bn tonnes above levels suggested by the International Energy Agency’s “450 Scenario”. This seeks to limit atmospheric greenhouse gas concentration to the equivalent of about 450 parts per million of CO2. If such targets are to be met, something far more radical needs to occur. (See charts.)
Fourth, improvements in energy efficiency are a far more important driver of the relatively low growth in emissions than shifts in the fuel mix. This is despite a substantial rise in use of renewables. So, between 2013 and 2035, output of renewable energy is forecast to grow by 320 per cent. Even so, its share in primary energy production is forecast to grow only from 2.6 per cent to 6.7 per cent. The combined share of renewables, hydroelectricity and nuclear power grows only from 9 per cent to 19 per cent. This, then, is expected to remain a fossil-fuel age.
Fifth, the revolution in the production of shale gas and tight oil is expected to continue, with their share in primary energy production rising to about 10 per cent. An important result is large shifts in patterns of trade. So the US is forecast to shift from being a net importer of 12m barrels a day of oil in 2005 to being a net exporter by 2035. Meanwhile, China is forecast to shift to being a net importer of more than 13m b/d by 2035 (from self-sufficiency in the early 2000s); and India to being a net importer of about 7m b/d. Such shifts have huge geopolitical implications.
Energy and emissions
It would be wrong to describe these forecasts as simply “business as usual”. They actually imply a faster rise in energy efficiency than between 2000 and 2013. But they are not radical. The world would continue to rely overwhelmingly on fossil fuels and it would emit ever greater quantities of greenhouse gases. Could we do better?
I start from the presumption that humanity will aspire to and often manage to achieve the prosperity now taken for granted in rich countries. So we need an accelerated technological revolution. At the Oslo Energy Forum last month, I heard Amory Lovins of the Rocky Mountain Institute describe just such a revolution. He argued, for example, that US gross domestic product in 2050 could be 2.5 times what it is today, even if the country stopped using oil, coal and nuclear energy altogether and cut its use of natural gas by one-third. This would mean carbon emissions of just one-fifth of their present level. Moreover, he argued, the revolution could well be driven by market forces alone, given the growing economic superiority of the new technologies. There might, he suggests, be no need to to take direct policy action against rising emissions of carbon dioxide.
The sense of the BP report (not surprisingly, perhaps, given that BP is a fossil-fuel producer) is that such a radical and rapid market-driven revolution is unlikely. The purported obstacles are many: costs, technological limits, slow turnover of the capital stock, inability to implement policy globally and natural inertia. In brief, I fear BP is right about the obstacles. But Mr Lovins might be right about the opportunities, though only if policy makers give them a big push.
If governments could agree to implement a tax on carbon, they would give a big impulse towards an energy future that is more efficient and less polluting. Governments should invest strongly in fundamental science and new technologies. Finally, governments can help the spread of new technologies abroad and help finance their uptake at home. With this push, normal market forces should pull the world economy towards a more sustainable future.
Mass poverty is not an option. But neither is taking ever-bigger gambles with the climate. The right course has to lie in between. To put ourselves on that course, we need to wean ourselves off the excesses of the fossil-fuel age. It is a daunting challenge. But it has to be met, for our children’s sake.
This article will be open to comments on Wednesday at 10am London time
The riches and perils of the fossil-fuel age - FT.com

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