Howard's End: The Global Warming Industry
Some in the New Zealand business community are wondering why the government appears adamant it will push ahead to ratify the Kyoto protocol on global warming. It is about money, pure and simple, because it can be extremely profitable to sell hot air when mandated by a government. Maree Howard writes.
If the Kyoto climate change initiative was ever motivated by a desire to affect global climate change, that motivation changed dramatically in the mid-1990's when mechanisms for almost incomprehensible cash flows were beginning to take shape: joint implementation, clean development mechanisms and certified emissions reduction.
The term "emissions trading" has been used extensively in press reports but few people appear to grasp the magnitude of a global trading regime, or the power that an administrative agency would hold over industry and governments' alike.
This is how the trading regime might work.
First, a UN authority will impose a limit, or "cap" on the quantity of Co2 emissions (measured in metric tonnes) that could be released into the atmosphere by each nation.
The domestic government of that nation would then set a cap for each target industry, say for example, the electricity generating industry.
The cap would be calculated by each government to achieve the emissions target established by the Kyoto Protocol.
Next, each electricity generator would be analysed to determine the quantity of Co2 emissions it released in relation to its electricity output. The government would arbitrarily assign a cap to each generator that must be met by a certain time under pain of financial penalty - or worse.
Government would then establish a bureaucracy to measure Co2 reductions and issue Certified Emission Reduction Certificates, or CERs.
Suppose, for example, a coal fired power station produced 50MW of power and produced 100 metric tonnes of carbon emissions each year.
The government declares that this plant must reduce its emissions by 90 metric tonnes per year. By switching to natural gas, which requires substantial capital outlay, this same plant might produce the same 50MW of power, but reduce its emissions to 75 metric tonnes of carbon, thus meeting its cap and qualifying for 15 additional CERs.
In another country, another coal-fired power station produces 50MW of power and also produces 100 metric tonnes of emissions each year. But, instead of investing the capital to convert to natural gas, the second plant may choose to buy 10 CERs from the first company and continue producing 100 metric tonnes of carbon each year.
The seller and buyer negotiate a price, thereby creating a "market" for hot air - denominated in metric tonnes of carbon emissions.
Non-emitting electricity generators would be eligible to sell CERs at the same rate as other generators. A wind farm, for example, which produced 50 MW of electricity would have 90 CERs to sell.
By investing heavily in natural gas, wind and solar systems, all of which are low, or non-carbon-emitting energy sources, large energy corporations like Shell or BP, will expect governments to provide enormous stocks of CERs which they can then sell on the open market.
The global warming industry created by the Kyoto Protocol would administer the program world-wide which would generate massive cash flows from which domestic governments could extract taxes, commissions and administration fees.
The increased electricity costs would simply be passed on to the consumer and would not affect the corporate profits of the large companies. For the smaller companies operating in the global economy, however, it might be an entirely different story.
Some of the largest corporations in the world are heavily investing in the Kyoto Protocol as the legal authority for government to assign economic value to hot air. This is a global money-game manufactured on the pretext of protecting the environment.
No one believes that the Kyoto targets can be met. It is no longer about science. It is about politics and money, or the promise of it. That is what drives the Kyoto Protocol and the global warming industry it has spawned. Look for a CER stockmarket - and, perhaps, suddenly richer political Parties.