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Durban Climate Deal

by ChrisCook Sun Dec 11th, 2011 at 08:18:41 AM EST

So a Durban Climate Deal has been struck


With tempers rising and the talks minutes from being abandoned, the chair, South African foreign minister Maite Nkoana-Mashabane, ordered China, India, the US, Britain, France, Sweden, Gambia, Brazil and Poland to meet in a small group or "huddle".

Surrounded by a crowd of nearly 100 delegates on the floor of the hall, they talked quietly among themselves to try to reach a new form of words acceptable to all.

But it was Brazil's chief negotiator, lawyer Luis Figueres, who came up with the compromise, proposing to substitute "an agreed outcome with legal force" for "legal outcome". This, said an EU lawyer, was much stronger, effectively meaning "a legally binding agreement".

The key point here is that the phrase agreed outcome with legal force is precisely the associative legal approach I have been advocating for 10 years, and which I have recently termed Nondominium.

The agreed outcome and framework agreement are not difficult to architect with a bit of imagination: but it is impossible to attain the desired outcome using the Western forms of finance capital and enterprise models - based upon 'Anglo' jurisprudence of Law (statute) and Equity (judge made common law created by lawyers for lawyers) - which actually caused the problem in the first place.

When the next phase of the evolution of financial markets kicks in, probably in Q1 2012, with the collapse of the current commodity and equity bubbles, I think we'll see common sense beginning to assert itself.

This will be driven by those who actually have the resources: after all, as Stalin might have put it...........how many barrels has the G7?


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I haven't really followed the climate change negotiations but would be interested in your view on the outcome. Climate Change scientists appear to be disappointed whilst the politicians are hailing it as a "success". Obviously, in political terms, an agreement tends to be better than no agreement if it is an improvement on the status quo. As I understand it the agreement extends Kyoto both in terms of lifespan and scope - and includes the worlds biggest CO2 emitters - China an USA -  for the first time. Should it therefore be viewed as an incremental positive even if it goes no where near far enough to halt global warming?

PS why do you regard current equity prices as constituting a bubble?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Dec 12th, 2011 at 10:38:46 AM EST
Obviously, in political terms, an agreement tends to be better than no agreement if it is an improvement on the status quo.

According to The Guardian (h/t dvx, with my emphasis):

A major crisis had been provoked after 3am on Sunday morning when the EU clashed furiously with China and India over the legal form of a potential new treaty. The EU plan to bind all countries to cuts was close to collapse after India inserted the words "legal outcome" at the last minute into the negotiating text.

...

"We don't ask too much of the world that after this second period all countries will be legally bound. Let's try and have a protocol by 2018."

...

But it was Brazil's chief negotiator, lawyer Luiz Alberto Figueiredo, who came up with the compromise, proposing to substitute "an agreed outcome with legal force" for "legal outcome". This, said an EU lawyer, was much stronger, effectively meaning "a legally binding agreement".

"Yes, yes," cheered the crowd of onlookers around the politicians, and the talks were back on track.

Two hours later the 16-day talks were effectively over, with a commitment by all countries to accept binding emission cuts by 2020. As part of the package of measures agreed, a new climate fund will be set up, carbon markets will be expanded and countries will be able to earn money by protecting forests.

But it appears the actual size and shape of the cuts still needs to be negotiated?

What kind of an "agreement better than no agreement" is this?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Dec 12th, 2011 at 11:16:29 AM EST
[ Parent ]
Come on - it's an agreement that there is an agreement.

These aren't detail people, so you can't expect them to deal with minutiae like quotas and cuts.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Dec 12th, 2011 at 11:21:38 AM EST
[ Parent ]
What do you mean these aren't detail people focused on minutiae?
But it was Brazil's chief negotiator, lawyer Luiz Alberto Figueiredo, who came up with the compromise, proposing to substitute "an agreed outcome with legal force" for "legal outcome". This, said an EU lawyer, was much stronger, effectively meaning "a legally binding agreement".

"Yes, yes," cheered the crowd of onlookers around the politicians, and the talks were back on track.



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 12th, 2011 at 11:28:24 AM EST
[ Parent ]
The fundamental reason there has been stalemate in climate negotiations over the past decade has been because of mutually exclusive bargaining positions :

On the one hand, we had :

  • The EU, ready to make (moderate) sacrifices, ready to make deals with anyone
  • The poorest nations, who suffer the most from climate change, eager to benefit from transfers of technology and money for clean development, but bringing no bargaining power to the table, generally aligned with the EU

On the other hand :
* The US, which will accept no constraints unless everyone is subject to those constraints

On the third hand :
* Emerging nations (BRIC etc), rapidly expanding their carbon production, generally unwilling to accept mandatory constraints on CO2 production that would limit economic growth.

The success at Durban is that everyone agreed to negotiate a contractual arrangement in which there will be legally binding constraints on everybody. Impossible to actually put the constraints in there at the same time; specific targets would probably, at this stage, have made it impossible to sign up to the starting framework.

Will it be possible to put meaningful targets into the framework? Maybe, maybe not. But without a framework, you can put up all the virtuous numbers you want, they have no effect.

The fascinating thing is that this result has come about because of the tough bargaining position of the EU. Instead of being endlessly conciliatory, Hedegaard effectively said "No more Mr Nice Guy, we can take our marbles and go home if you won't play nicely."

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Mon Dec 12th, 2011 at 11:50:16 AM EST
[ Parent ]
What would it have meant for the EU to take its marbles and leave, in this case, that forced the hand of the BRICs?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Dec 12th, 2011 at 11:59:50 AM EST
[ Parent ]
For a start : An end of the subsidies they get through Kyoto.

They earn carbon credits on certified projects : wind, solar, and less obvious things like coalbed methane (arguably a scam) and CFC reduction (absolutely a scam). I'm not sure how vital this was in, for example, the emergence of the Chinese wind industry.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Mon Dec 12th, 2011 at 12:14:57 PM EST
[ Parent ]
Kyoto carbon credits and emissions trading are complete bollocks, and I've been saying so for almost seven years.

It is impossible to transition to a low carbon economy  by monetising through administrative fiat something entirely worthless (ie CO2) - but old habits die hard, and it's no surprise that it was Enron who dreamt up the emissions market in the first place.

The answer is to monetise energy through the simple expedient of producers issuing undated credits redeemable in payment for energy. ie we should monetise the intrinsic energy value of carbon, essentially by denominating carbon credits in energy not dollars.

Note here that energy-based currencies - such as carbon fuel credits; electricity credits; or even heat credits - are not the same thing as the absolute energy unit of account by reference to which such currencies would be exchanged against other value and currencies.

I believe that a window will shortly open to a global transition to a low carbon economy based upon the development of a global market in gas.

That was the subject of my recent presentation in Tehran on the subject of
Transition through Gas, and it is pleasing to note that Iran appears to be following the strategy I outlined.

If and when the current bubble in the oil price collapses (Q1 2012, in my view) the Russians will probably reconsider their insistence on long term supply contracts where gas is priced against a ludicrously manipulated oil price.

Instead of pricing oil against dollars, and gas against oil, the solution is to price oil and dollars against the energy value of gas.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Dec 12th, 2011 at 04:17:50 PM EST
[ Parent ]
So, it turns out that not only is methane a greenhouse gas in its own right, but if you burn it, you then release a lot of CO2. So the idea that a global gas market opens a global transition to a low-carbon economy is, to use your own phrase, "complete bollocks". As is the idea that an emissions market goes back to Enron: the sound economic principles of pricing pollutants goes back to Pigou around 1920. Nice attempt to smear carbon-trading by association with Enron, but a #fail.

And, as you've been reminded on several occasions, specie currencies such as your proposed energy currency #fail.

And an "intrinsic energy value of carbon" is meaningless. Not only is there such a thing as zero-carbon energy, but there is also zero-energy carbon. So equating the two is meaningless, pointless, and for tackling climate change, an #epicfail

by LondonAnalytics (Andrew Smith) on Tue Dec 13th, 2011 at 09:47:23 AM EST
[ Parent ]
.........which may be conventional, but as you will have noticed, this generation of financial markets is actually melting down as we watch.

I assume - and have architected - a dis-intermediated market, and indeed we are already seeing a shift to dis-intermediated markets because service provision is 'capital lite'.

My proposal for a natural gas market based upon a Caspian benchmark is for an 'Energy Clearing Union' architecture with no intermediaries and no central counter-parties.

The current trend to dis-intermediation at a time of systemic capital starvation is why the oil market - and other markets - has been inflated by inflation hedging funds causing the every inflation they seek to avoid.

My starting point is the trend to collaborative legal and financial frameworks for 'peer to peer' and 'peer to asset' credit. Within such a clearing union framework, undated credits redeemable in payment for natural gas; credits redeemable in payment for electricity; even credits redeemable in payment for heat may all be issued by producers.

There is also the potential for energy loans instead of fiat currency loans to finance and fund energy savings: ie a Green Deal which could actually work.

Money is not an object, but a relationship, and a unit of currency and a unit of account are not necessarily the same thing although it is conventional for them to be conflated.

An absolute unit of energy may be a standard measure of value in the same way that a metre is a standard measure for length, and a kilogramme a standard unit of measure. The different types of energy currency could then be priced against this Energy Standard.

There can no more be a shortage of energy units of account than there can be a shortage of metres or kilogrammes.  Supply, demand, surplus and shortage apply only to currencies.

My proposal to energy producers is to increase carbon prices massively, and then to compensate populations with units redeemable in payment for the relevant carbon fuel, or the energy equivalent.

If they save fuel they then have a Unit which is self-evidently valuable in exchange, rather than valuable by complex and intermediated legal and administrative fiat.

Your critique would be apt if it were based upon what I am proposing, rather than what you think I am proposing.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Dec 13th, 2011 at 02:11:14 PM EST
[ Parent ]
So, it turns out that not only is methane a greenhouse gas in its own right, but if you burn it, you then release a lot of CO2.

Yes.  Though its worth noting a) that CO2 has a lower global warming potential than the methane, so if burning it stops it being released, its a net benefit; and b) you can burn it far more efficiently than coal (meaning less CO2 per GJ of energy for your computer).

a) means that projects such as landfill methane generation are actually beneficial (in that they burn methane which would otherwise be released into the atmosphere; I'm not sure if this is true of coal-seam methane).  b) is why substituting gas for coal (as done in the UK) is one of the quickest means of reducing emissions in indusrialised nations (but is still only a stopgap measure on the way to total decarbonisation).

by IdiotSavant on Tue Dec 13th, 2011 at 05:25:56 PM EST
[ Parent ]
It's rearranging the deck chairs.

These estimates show that 2010 was by far a record year for CO2 emissions from fossil-fuel combustion and cement manufacture. Globally 9,139 Teragrams of oxidized carbon (Tg-C) were emitted from these sources. A teragram is a million metric tons. Converted to carbon dioxide, so as to include the mass of the oxygen molecules, this amounts to over 33.5 billion metric tons of carbon dioxide. The increase alone is about 512 Tg-C, or 5.9%, over the 2009 global estimate.

http://cdiac.ornl.gov/trends/emis/perlim_2009_2010_estimates.html

by asdf on Wed Dec 14th, 2011 at 01:16:24 AM EST
Agreeing that a yet to be agreed number of deck chairs may be combined together into rafts in a yet to be agreed way to address the lack of seats on the lifeboats ...

... is arguably better than having to argue about the general point once its more obvious to all passengers that steerage is awfully wet and there's nothing that will keep the flood out of first class.

IOW, it gets nothing positive done, but it removes one of many hurdles to getting something done if people actually decide to do so.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Dec 14th, 2011 at 08:39:23 PM EST
[ Parent ]


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