Tom Heller's case for Europe to take over UN climate policy reins

Tom Heller, Stanford Professor and head of George Soros-backed Climate Policy Initiative, spoke at last night's Climate One session at the Commonwealth Club. Prof Heller made some very interesting comments, amid jokes, arising from his never-ending virtuous circle of whistle-stop as a "soft diplomat" on international climate policy.

Heller had just returned from Europe, where he noted that the EU Emissions Trading System was suffering from the bargain basement price of carbon, which no one, especially those who designed the scheme in the early 2000s could ever have predicted.

In December, allowances tanked at €7/tonne, this week's Economist notes, and the price hasn't traded much above that since. If that weren't bad enough, the article cites Matthew Gray of Jefferies, an investment bank, who reckons that "by 2020 the ETS will have an accumulated surplus of 845m permits, against a planned cap that year of 1.8 billion permits."

Australia's carbon tax at A$23/tonne now seems fantastically overpriced and sustaining California's carbon allowances at more than $15/tonne appears over-optimistic.

Decreased demand due is only one reason the price is so low. Heller pointed out the blindingly obvious elephant in the room was the EU triple suite of policy targets: 20% renewables and 20% energy efficiency savings and 20% emissions reductions by 2020. Demand for renewables coupled with energy efficiency savings would of course reduce emissions and deflate demand.

If Europe's economy was motoring along, the economics would be different. But no one could have anticipated the depth and lengths of the global economic downturn together with Europe's debt crisis.

But Heller also added that there was little appetite for allowances because investors didn't believe in the targets. Something jarred with me at this suggestion. I thought it might be that only a limited amount of carbon allowances can be traded beyond EU's compliance periods. But that was scrapped after the phase 1.

California's scheme does allow for unlimited trading between compliance periods.

But it does also impose holdings limits. For 2013 vintages, holding limits will be 6m tonnes - enough to "prevent participants from acquiring market power".

Non-utility covered entities may purchase no more than 15 percent of allowances sold at any auction; other entities are limited to four percent of allowances sold at auction.

The EU's holding limits formula is way more complex.

But carbon allowances differ from other financial products in that they are compliance instruments intended for use within a particular programme. Even the EU ETS only extends to 2020… perhaps it too will get dropped like Kyoto. I felt that Heller was suggesting that these carbon compliance instruments should be more attractive to long term investors. But I'm not sure that markets view compliance instruments in the same way as physical commodities like oil and sugar or 20/30-year bonds. The development of the green bonds market has been slow in coming, notes Environmental Finance, with $16 billion of environmental bonds issued to date, mostly by the World Bank and the European Investment Bank (EIB). Carbon allowances by design cannot send long-term market signals.

He said though that overall, the EU ETS was reducing emissions despite its flaws and unintended consequences. But he offered a doomsday scenario for global emissions. He said we were on track for 650ppm - 750ppm, and the best we could hope to achieve was a stabilisation at 550ppm, resulting in a 3C-5C rise in global temperatures. In response to an audience question about personal action, he quoted Mike Lee: "Just do it". Live or do something else, he added. 

In later comments, one of the intriguing comments Heller made was that the EU should have been given the task of managing international climate negotiations, rather than the UN. 

Marc Stuart, who founded EcoSecurities, one of the world's largest and first carbon trading companies. It was sold to  JP Morgan for almost $200m in 2010. Stuart said that even though market mechanisms were having little impact on reducing global emissions, the UN policy framework had achieved a qualitative if not quantative effect. "It would be naive to think that these markets would have happened otherwise," he said.

Heller posed the rhetorical question whether the framework conceived in 1997 to formulate international climate policy goals was working in today's world and the future we were now faced with. Like all good attorneys since Atticus Finch, he already knows the answer…

Honda size matters: does the engine or engineering count more in mpg?

My comments about the mpg rating of Honda's FIT in the US and its European equivalent in a recent op-ed piece for the San Francisco Chronicle provoked some interesting responses.

The comparison I used was taken from an earlier posting on this blog:

In the US, the EPA's mileage rating is between 28 to 35mpg for a Honda FIT. But the UK equivalent does around 52mpg.

This is far from the most extreme example. Compared with most US passenger vehicles, the Toyota Prius is a shining example at 48-51mpg, but its EU counterpart runs at around 70mpg. But this site lists the MiniCooper as the UK's most fuel efficient car at 72mpg whereas the US equivalent is around 35mpg.

Perhaps there was too much shorthand in the SF Chronicle piece.

@mrwhirly

The whole climate change issue is filled with information that is spun up to support one side or the other, this article is a good example, it states that the Honda Fit gets 55mpg in Europe compared to the same model sold in the U.S. with 33mpg., it may look the same but these vehicles are are very different, first off the Euro model would never pass the Smog Test requirements in the U.S. which is the reason you fail to note both vehicles emission output.

Second, the vehicle would not pass our collision tests for safety, if I removed most of the smog equipment from my car and reduced its weight by 500-1000 pounds it would get better mileage to.

The truth is the cars sold in the U.S. have the lowest emissions of any other vehicle market and are the safest.

If your going to write an article, WRITE IT RIGHT!

I didn't omit a comparison of tailpipe emissions for any other reason than space and pace … the point I was trying to make was that the person selling this car didn't know what the tailpipe emissions were. He should have known - you think it might be of casual interest given his line of work even if the federal or state governments don't mandate him to do so? He didn't even offer to find out the information where its supply is mandatory.

 Automakers are so reluctant to provide their customers with this information. I have never seen a single TV auto ad with grammes of CO2 per mile.  Consumer access to information is much harder than it is in Europe.

Last year's Honda Jazz 1.4 VTEC EST has emissions of 125g/km. It is easy to find this information on the DVLC website even for used cars as it determines your road tax rate.

Its US equivalent the Honda FIT 1.5 has emissions of around 300g/mile which is a good 100g/m more than the UK version. Emissions of ozone, etc, maybe less thanks to catalytic requirements in the US where smog is a real issue in urban areas.

But I'd be very interested to hear how the contention that tailpipe emissions in the US are less can be substantiated.

I do concede however that weight does play an important role - American motorists prefer larger "tophats" because, well everyone else has one, so it's safer, right? At least I think that the logic behind the upward trend since 1980s. But American consumers have paid for this with mpg improvement rates that have remained pretty much static for 30 years.

It's almost fair to say that they are not the same car. Not even Ford makes the same Focus for the US as the UK markets, though I'm told the European-style Focus is becoming more popular here. I hired a Ford Focus in the UK recently it had a 1.2 VETEC engine - you can't even buy a Ford Focus in the US at that size the smallest is 1.6.

And yet American motorists have been sold the lie that size matters. Tell that to Mercedes, BMW and Volkswagen who have tooled their engines to perform better with fewer litres.

The new Mercedes SLK 200 on sale in the UK does a smart 43.5mpg and spews out a modest 151g/km.

But it costs to get more out of less… and who in the US would pay $25k for a Honda FIT?

Margaret Thatcher's views on climate change astonish today's US sceptics

Earlier this month, I was lucky enough to be asked to write a short piece for the San Francisco Chronicle on the difference between Americans and Europeans in their attitudes to climate change.

You can read the original piece, An ocean apart on climate change. After the release of Meryl Steep's rendering of the Iron Lady, I thought it would be timely to reprise Margaret Thatcher's opinions on climate change in an effort to demonstrate that such issues are not defined by partisan bias in Europe as they are in the US. 

My citation elicited at least one incredulous response. The following email which arrived in my inbox on the day the article was published was considered and considerate, which is more than can be said for the rant that appeared a few days later.

You must be mistaken when you said that in 1988, Margaret Thatcher talked of human cause to global warming. The first mention of global warming was from a scientist from NASA and it occurred in 1989. He was hired by NASA in 1981 to study the temperature of Venus and soon concluded the earth was also getting warmer. He was called before congress to explain his "science" but never showed up. I can find no mention of global warming even in the 1990's. Al Gore was in the White House from 1993 to 2001 and never mentioned global warming. In 1997, he read a prepared text at the Kyoto Conference but he admitted it wasn't his words. It's all a fraud. So give me the citation, date, year and article when Thatcher said what you said she said. Give me one citation from anyone in the 1980's that mentioned global warming and its human cause.

Dear Mr C

Thank you for your response.

In answer to your query, full text from a Margaret Thatcher speech to the Second World Climate Conference in 1990 is available here:

http://www.margaretthatcher.org/document/108237

I want to pay tribute to the important work which the United Nations has done to advance our understanding of climate change, and in particular the risks of global warming. Dr. Tolba and Professor Obasi deserve our particular thanks for their far-sighted initiative in establishing the Intergovernmental Panel on Climate Change.

However, this is not the first time Lady Thatcher warned against the risks of climate change. In fact, she established the Hadley Centre on Climate Change in the UK.

Please refer to:

http://www.metoffice.gov.uk/climate-change/resources/hadley

For the following text:

Three events occurred in 1988 that assisted greatly in bringing the issue of man-made climate change to the notice of politicians:

A World Ministerial Conference on Climate Change in June hosted by the government of Canada.

A speech in September by Margaret Thatcher where she mentioned the science of anthropogenic climate change and the importance of action to combat climate change.

The first meeting of the IPCC in Geneva in November 1988. Delegates from many countries agreed to set up an international assessment of the science of climate change, together with its likely impacts and the policy options.

Thank you for your interest and I hope this provides you with the information you requested.

Felicity 

---

Thanks for the reply. Your data did contain an article in November 1990, not 1988. But that matters little. I am not a scientist but believe global warming is a contrivance by environmentalists to save the polar bear, seal, walruses and to keep oil drilling off the coast and disturb the views. Here's why I am not a believer. I am told and have read where global warming has been going on for 100 years. So why didn't someone tell us before 1990? That's 90 years into the problem. We put a man on the moon in July 1969, but no scientist knew about the earth warming. Now when I read about 100 years of climate warming I wonder where they got the data from 1940. Who measured the earth temperature in 1950? Who measured the temperature of Africa? Now also the seas have warmed a degree or so. Same question who measured the seas in 1940, 1950 and 1980? What instruments did they use. But more importantly there is no evidence of it in California or the US. I did research hurricanes for the last 100 years and there is no "trend" toward more violent or more of them. Same thing with tornados. The most people ever killed in one tornado season was in the 19th century when 8000 died in one season. We do have droughts in the southwest and rain torrents in the mid west and that is usual. I see no "global" weather or trend. I see no famine in America, Europe, Canada or South America. I do see famine in some underdeveloped countries but not in developed countries. I see no lack of water and last year we had 50 feet of snow in the Sierra, well above normal. But this year there is only 4 feet so far. But the climate change people change with the times. When there were many cold winters in the world,  global warming was changed to climate change. Now that there is no change, the new term is "harsher weather". It's all a lie. I live on the San Francisco bay and see no rise in the seas. But anyway thanks for the documents, I will use them next time I write to global warming "scientist".

Dear Mr C

Thanks very much for your email and I'm sorry that I have not had the chance to respond sooner. I have added links and citations to your comments below. I hope you find these resources useful. As you rightly mention, neither of us are scientists - we can only use the information we have access to.

Thanks for the reply. Your data did contain an article in November 1990, not 1988.

In September  1988 Margaret Thatcher did talk of concerns over climate change:

Recently three changes in atmospheric chemistry have become familiar subjects of concern. The first is the increase in the greenhouse gases—carbon dioxide, methane, and chlorofluorocarbons—which has led some[fo 4] to fear that we are creating a global heat trap which could lead to climatic instability. We are told that a warming effect of 1°C per decade would greatly exceed the capacity of our natural habitat to cope. Such warming could cause accelerated melting of glacial ice and a consequent increase in the sea level of several feet over the next century.

 But that matters little. I am not a scientist but believe global warming is a contrivance by environmentalists to save the polar bear, seal, walruses and to keep oil drilling off the coast and disturb the views. Here's why I am not a believer. I am told and have read where global warming has been going on for 100 years. So why didn't someone tell us before 1990?

This should shed some light: My earliest citation of bothphrases is a report in The Hammond Times (of Indiana) dated Nov. 6, 1957, about California scientists “studying the possibility that this continued pouring forth of waste gases may upset the rather delicate carbon-dioxide balance in the earth’s general atmosphere and that a large-scale global warming, with radical climate changes, may result.”

 That's 90 years into the problem. We put a man on the moon in July 1969, but no scientist knew about the earth warming. Now when I read about 100 years of climate warming I wonder where they got the data from 1940. Who measured the earth temperature in 1950? Who measured the temperature of Africa? Now also the seas have warmed a degree or so. Same question who measured the seas in 1940, 1950 and 1980? What instruments did they use.

It's interesting that you mention Nasa here, as the agency carries out measurements of land and sea temperatures. This might be a useful link to find this data:

http://climate.nasa.gov/evidence/

NOAA also takes a lot of measurements:

http://www.nesdis.noaa.gov/

Historical temperature data dates back 150 years and I know that there is some controversy around historical global temperatures, but perhaps you could put your questions to the Global Historical Climatology Network also at NOAA:

http://www.ncdc.noaa.gov/ghcnm/

This film also shows temperature patterns in a more accessible way:

http://climate.nasa.gov/ClimateReel/TemperaturePuzzle640360/

But more importantly there is no evidence of it in California or the US.

Try the EPA:

http://www.epa.gov/climatechange/

 I did research hurricanes for the last 100 years and there is no "trend" toward more violent or more of them. Same thing with tornados. The most people ever killed in one tornado season was in the 19th century when 8000 died in one season. We do have droughts in the southwest and rain torrents in the mid west and that is usual. I see no "global" weather or trend. I see no famine in America, Europe, Canada or South America. I do see famine in some underdeveloped countries but not in developed countries.

It is very difficult to pin extreme weather events to climate change and to link the two so closely in my view will only lead you into trouble. Climate risk is not very well discussed in the US. It basically boils down to this: you always insure your house, even though you would assess the chances of it burning to the ground are minimal, the consequences of it doing so would be devastating for you and your family. Reinsurers Swiss RE says this of climate risk:

Economic losses from climate-related disasters are already substantial, and they are on the rise. Insured losses alone have jumped from an annual USD 5 billion to 27 billion over the last 40 years. Without further investments in adaptation, climate risks could cost some countries up to 19 percent of annual GDP by 2030 and set back years of development gains.

Here's the link to the original document:

  I see no lack of water and last year we had 50 feet of snow in the Sierra, well above normal. But this year there is only 4 feet so far. But the climate change people change with the times. When there were many cold winters in the world,  global warming was changed to climate change.

The global average surface temperature in 2011 was the ninth warmest since 1880, according to NASA scientists. The finding continues a trend in which nine of the 10 warmest years in the modern meteorological record have occurred since the year 2000.

Now that there is no change, the new term is "harsher weather". It's all a lie. I live on the San Francisco bay and see no rise in the seas. But anyway thanks for the documents, I will use them next time I write to global warming "scientist". 

I hope you find these resources useful.

Kindest regards

Felicity