Direct from Bonn

Tenth Session of the Subsidiary Bodies to the United Nations Framework Convention on Climate Change
Bonn, Germany, 31 May - 11 June, 1999

Are people really causing climate change? Disagreements Stall Global Warming Talks Converting Kyoto to Welfare Warming talks end; little progress

More meeting information NGOs Drive Global Climate Agenda Nothing to fear?

Daily Updates:

Q: COULD BOMB THREATS CAUSE THE GLOBAL WARMING MEETINGS TO SEEK NEW SPACE?
A: POSSIBLY. AN OPPORTUNITY PRESENTS ITSELF.

Renting space in a Hotel facility that you cannot easily secure is no meeting planner's number one choice. Unfortunately, UNFCCC's castle by the Rhein has insufficient conference room space. Maritim Hotel Bonn has needed large and small rooms. It is also an inestimable convenience to work where you might find sleep, but public places like hotels must present their special security headaches.

UNFCCC's head of security, Jack, would have to prefer a space he could secure more thoroughly although his appearance does not reflect anxiety. A handsome, bearded American, Jack's composure is calm and congenial. One could not tell this morning that he had been told for the third time that the same voice speaking in unaccented German and in unaccented English had phoned in a bomb threat

Whatever the unfortunate motive, a move to a different facility for both the Secretariat of UNFCCC and these global warming meetings could present itself when the German Parliament vacates its present Bonn building for its new spot in Berlin this summer.

Germany provides UNFCCC's Secretariat with its rent-free facilities now, but not with rent-free meeting rooms. So, transfer of the seat of government to Berlin might just make available a new space to be used for climate change's next large meeting, COP5 on October 25 - November 5, 1999. The past house of the German Parliament would have to be easier to secure than a public hotel.

Q: WHY ARE SOME TOPICS SIMPLY OFF-LIMITS TO DISCUSSION ALTHOUGH THEY ARE GERMANE TO THE ISSUES?
A: IF THEY WERE TALKED ABOUT RIGHT NOW THEY WOULD BLOW NEGOTIATIONS UP.

Professional negotiators do know their art. They know that if contentious matters are thrashed about publicly TOO EARLY, egos will be forced to storm out. Each player first must invest his pound of flesh in the process painlessly, so that he has more to lose by folding than by staying.

The players have not yet reached the comfort zone. The mechanisms of the Kyoto Protocol were last minute inclusions. Not every working group does meet outside of these larger conferences. So, "voluntary commitments" and "reviews of adequacies of commitments" will languish in the unlit recesses until a less threatening time. Germany displayed bad behavior in prematurely putting caps on the table. That one no-no made for a sour squabble that most Parties wanted to avoid. China says, "No contentious issue is to be in COP5" in October-November this year.

Q: CAN'T SOMEONE MAKE "ADDITIONALITY" AND "SUPPLEMENTARITY" SEEM LIKE REAL WORDS?
A: TRY THIS.

You have set rules for your teenager's allowance and earnings. There are jobs inside and outside of the house that he simply must do. Above and beyond his duties-as-usual he can earn some additional amounts on inside or outside activities. He wants more? Then, he can earn supplemental amounts on outside projects only. Now picture the inside as "domestic" and the "outside" as some other country.

Q: WHY WOULD CHOOSING A MEETING DATE LEAD TO HOT TEMPERS?
A: IT WOULDN'T NORMALLY.

The US has an election in the fall of 2000 to attend. They have asked that COP6 be held in the spring of 2001 to accommodate that political fact. Some countries have made a big deal out of sacrificing their customary timetable for the US' sake. It is not worth making this an issue.

Q: HOW ARE INDUSTRY NGOS PORTRAYED BY ENVIRONMENTAL NGOS?
A: SOME BIAS CAN BE FOUND UPON CAREFUL INSPECTION.

Yesterday's newsletter will provide an example. "Eco" has been published by Environmental NGOs at major international conferences since the Stockholm Environment Conference in 1972. Yesterday's issue was produced by CAN (Climate Action Network) groups attending these Bonn climate negotiations. Thirty-one persons are listed as representing CAN this session. Additionally, hundreds represent other environmental organizations.

"Old, Boring, Ugly" is the large headline for their news article on an International Nuclear Forum presentation made yesterday. Forty-four participants listed appear to have interests in the nuclear industry including this author. I have represented American Nuclear Society at UN Climate Change sessions since early 1991.

A mushroom cloud photo filled one-fourth of the page and was captioned "The Nuclear Option: safe, clean, reliable."

Murray Stewart of the Canadian Nuclear Association, Karen Daifuku of FORATOM European Atomic Forum and Emma Cornish of The Uranium Institute pointed out one or two examples of bias within the article.

The following phrases are lifted and followed by Stewart's observations:

"Reactors are closing nationwide"
Some are. They are less efficient.

"Losing market share"
Some loss, but utilization rate is going up.

"By 2010, 17 licenses will expire"
Many of those have now applied for renewals.

"Since 1974 about 50% of the reactors ordered by utilities have been cancelled"
Twice as many coal-fired plants were cancelled. All forms of power generation have been cancelled because we have had excess capacity that we have been using for the past fifteen years.

"In the next twenty years global nuclear capacity will fall by half"
You would have to assume NO new plants, NO re-license, and NO improved efficiencies.

"PG&E calculated a cost at $445 million that cost $3.75 billion"
Those PG&E costs were old history. Considerably lower costs prevail now because projects are on time and on budget.

"The US consumer pays twice for ever upward costs"
Costs are not higher to the consumer. Nuclear is providing the second lowest cost per kilowatt hour.

"Most other industrialized nations have stopped construction of nuclear power plants"
No they haven't. Japan and Korea are both constructing fifteen to twenty new facilities.

"Eighty-four have been shut down"
Eighty-four is an old bogus number. It included original prototypes that were meant to have short utility.

"It is too expensive and unsafe, it produces toxic waste, and encourages risk of nuclear proliferation."
The nuclear option is neither expensive nor unsafe. Waste is contained on site with technological solutions. The link to weapons is nonsense. If you really wanted to build weapons, the last thing you would buy is a power generating plant.

Q: WHAT'S THE STATUS OF THAT LAZIO/DOOLEY BILL?
A: IT WAS PLACED IN THE HOUSE HOPPER YESTERDAY.

The legislation is expected to address demand-side management by placing a twenty- percent cap on credits to be earned through sequestration.

Q: WHAT IS THE STATE OF JOINT IMPLEMENTATION?
A: FEW SEEM TO CARE, BUT IT WILL BE ADDRESSED BEFORE THE MEETING ENDS.

Mark Hambley, head of the US delegation, told industry NGOs that all three mechanisms of the Kyoto Protocol will be addressed by the end of this Bonn meeting. That assurance comes despite the inordinate amount of time that CDMs have consumed.

The Swiss position is that joint implementation should "be launched in parallel with the CDM." Noting that the Protocol gives no guidance as to when JI can commence, Switzerland believes it should be before 2008. Three reasons are given in their position paper. Those reasons are: 1) No good reason not to and many now have vested interests in JI, 2) JI projects are just between developed countries whose emissions caps would result in "more environmental integrity" than projects in developing countries who carry no emissions burdens, and 3) early JI transfers could provide an "additional incentive for Parties to act sooner, rather than later to implement the Kyoto Protocol," particularly when "coupled with the requirement that Emissions Reduction Units acquired through JI transactions SHALL BE supplemental to domestic action."

China urges "just learn from AIJ pilot program." But, what is really known to learn? Very little, although Herman Jan Wijnants of the Netherlands will tell you that there is too much red tape to both AIJ and CDM projects.

The Activities Implemented Jointly (AIJ) Pilot Phase was intended to reveal what does and does not work about this mechanism. No early credits were issued. No comprehensive review of the phase has been completed. A hasty review is being proposed. Critics caution that a "rushed review would only lead to lessons learned the hard way and sets a dangerous precedent."

Whether or not the transactions may receive early credit, JIs have been happening. Gore's 1997 report to the UN on the successful implementation of Agenda 21 in the United States (http://www.sovereignty.net/p/sd/gorerio.htm) boasted of 23 joint implementation projects in 11 countries from renewable energy technologies to forest conservation.

Q: IS IT POSSIBLE FOR GERMANY TO MAKE ITS EU BUBBLE SHARE WITHOUT NUCLEAR?
A: CONVENIENTLY ENOUGH, THEY WILL NOT HAVE TO TRY.

Last Fall, Germany's new Chancellor, Gerhard Schroeder, had declared nuclear power to be no longer "socially acceptable or economically justified." He did not say for which generation of Germans.

German delegate Franz-Josef Schafhausen helped to clarify the timing of the Chancellor's policy. "Yes, we are phasing out nuclear over the next twenty to thirty years."

That's as convenient as President Clinton trying to bind us to a treaty that will not have hard consequences until after he and Gore are gone.

Schafhausen spoke the party line of a three-pronged attack on that beneficial gas which accounts for 0.0365% of our atmosphere. He touted efficiencies, gas plants and renewables. It is just lucky for Germany that through the first commitment period it will also be able to rely on nuclear power.

Nuclear accounted in 1997 for a full 36% of the European continent's energy supply. It accounts for 40% of Germany's. Without knowing if the bubble will work better for the EU than the euro is performing, it is certain that Schroeder has ducked a hard one for now.

Q: WHAT DOES IT MEAN TO AMERICAN ENTITIES IF PROPOSED LEGISLATION LIKE LAZIO/DOOLEY'S (US HOUSE) BECOMES LAW?
A: IT COULD GREATLY CONSTRAIN SEQUESTRATION AS AN OPTION.

Since the parties in Bonn can not agree as to what constitutes a forest, just think of sequestration as any ole asparagus patch if you've planted it since 1990. Theoretically, your crop is removing dreaded carbon dioxide. As such, your asparagus has become a sink.

The Lazio/Dooley bill places a cap of 20% on credits that could be earned through removal of greenhouse gases by sinks in the agricultural and the land-use change and forestry categories. So?

So, the potential for carbon equivalent credits is huge if only forest management is included. The addition of cropland and rangeland just increases the numbers. Certainly over 190 million tons of carbon equivalents are on the table that might possibly count toward this first commitment period 2008-2012. Those tons, alone, equal about 13% of the assigned task to the US for complying with the Kyoto Protocol target. So?

So, if a Lazio/Dooley bill limits sink use to 20% of target, then less than 7% of the task remaining can be explored by US entities through sequestration. That represents a very heavy command hand to entities who have been poised to purchase millions of dollars of acreage "out there," expecting a new asparagus patch to offset production activities "here."

Q: IF WE ARE NOW DISCOVERING THAT SEQUESTRATION HAS SHRUNK DRAMATICALLY AS AN OPTION TO ATTAINMENT OF THE US ASSIGNED TASK AND THAT THE COSTS AND RISKS OF CDMs SHUTS DOWN THAT OPTION, IS OUR BEST FLEXIBILITY HOPE EMISSIONS TRADING?
A: THE SHOWDOWN THAT EMERGED THIS WEEK BETWEEN THE US AND THE EU BUBBLE DIMS THE ET PROSPECT.

The headline on the UN Foundation News Wire service says: "CLIMATE CHANGE: Kyoto Pact Threatened by US-EU Dispute."

Every party present in Bonn seems determined to force Americans "to change their evil ways." Discussion after discussion results in cutting the US off from any flexibility mechanisms which were hoped could keep US citizens from experiencing "the wrenching transformation of society" that Vice President Al Gore clamored for in his book, Earth in the Balance.

It is looking like "wrenching" is to be our fate.

This week's scolding comes as a position by the EU that emissions trades must be capped at 674,000 tons of carbon dioxide. Since, without such a cap, US companies might trade as much as 2.07 million tons, the EU proposal dashes trading prospects by as much as 66%. The EU, by the way, enjoys a cozy umbrella arrangement among the 15 countries. Theirs is a regional "net-gross" calculation that was expressly verboten in Kyoto. Want an EU project? No problem. Let Germany close another unproductive East German plant and produce credits enough for any new project.

Has any US delegate spoken out about Emissions Trading?

Yes. Notably, David Doniger.

Doniger yesterday called the EU bubble "a double standard." Doniger stressed that he "knows domestic action is needed, like efficiency standards, but," he emphasized, "don't limit choices to just domestic ones because we do NOT know where the lowest cost and highest efficiencies will come from. Domestic action has knowable legal imputs, so they will happen, but do not use a double standard like the EU bubble against the market mechanisms." Doniger was frustrated that caps had eaten up so much time here this week.

The German delegate, Franz-Josef Schafhausen, stoically replied, " Article 3 should be only domestic measures. Limits are needed for any non-domestic measure."

From the UK, Jo Simmons supported the EU's position on ceilings "because non-domestic action sends such poor signals."

Now, let's see?

CDMs are too costly and too risky.

Sequestration will be too limited to matter.

ETs might be shut down to a trickle.

That would leave only Joint Implementation as a flexibility mechanism. That mechanism is only between developed countries, so forget the hoped-for flow of North wealth to the South. How are JIs doing in Bonn conversations?

I'll visit this tomorrow.

Q: SHOULD THE PARTIES BE OPTIMISTIC ABOUT BREAKING THROUGH THE PROBLEMS WITH CLEAN DEVELOPMENT MECHANISMS (CDMS)?
A: NO.

Tom Black, delegate of Columbia, represented himself rather than the G-77 plus China of which he is a member, when he delivered today a scathing indictment of the prospects for workable CDMs.

Emphasizing that 42% of the entire potential demand for absolutely any mechanism - Clean Development Mechanism, Joint Implementation, or Emissions Trading - will come from the United States, Black thundered out, "if the US does NOT ratify this Protocol, we are all wasting our time!"

Black made a detailed and thorough presentation that demonstrated the truth of his assessment. He showed that the costs and risks of CDMs are looking just like other failed offset programs that he has tracked. An example offered was the San Francisco Bay emissions offset that was killed by high approval costs. Likewise, the Los Angeles offset project had transaction costs of $60,000.

Costs are pushed up by such burdens as approvals, certifications, taxes, legal expenses, VATs, insurance and approval time. Black suggests that the US marginal cost per ton of emissions will be about $180, without considering transaction costs. Thus, CDMs offer no advantages. Annex I parties will just wait until all these uncertainties diminish.

If CDMs are too costly and too risky, then only the Emissions Trading market will be pursued. That market is just between the already developed countries. So, instead of any North-South flow of wealth and technology, only a North-North flow will result.

Q: IS CLINTON'S 3 JUNE EXECUTIVE ORDER TO GREEN THE FEDS RELATED TO THE KYOTO PROTOCOL?
A: WHAT DO YOU THINK?

Why would the Kyoto Protocol mandate of a 30-35% reduction in emissions be specified if he were just doing this to save taxpayers money?

Why are U.S. Representatives Lazio (NY) and Dooley (CA) introducing a bill this week which would cap the amount of credits the US could earn through sequestration at a mere 20%?

Why has Senator Chafee submitted legislation about credit for early action?

Where is the economic analysis on whether the effects of credit for early action might end up positive or negative on CDM and JI projects?

Is it true that credit for early action would be fine if we could just agree on what credit, or early, or action means?

Without implementation of the global warming treaty, such actions are daft.

Q: ANY MISCELLANEOUS NOTE TODAY?
A: TWO.

1) Australia is said to have carbon rights legislation to confer separate rights to the ownership of the trees on the land.
2) Pakistan appointed judges this week to oversee new environmental tribunals.

Q: DO ALL THE PLAYERS IN BONN THINK THE KYOTO PROTOCOL WILL HAPPEN?
A: OH NO, BUT THEY HAVE VERY DIFFERENT REASONS AS TO WHY NOT.

One vocal and respected member of the European Business Council feels that baselines will absolutely never be agreed upon by the parties. Without baselines, there is no way to say you have met your emissions reduction obligation. So. he pushes for hammering consumers with carbon taxes and funding more persuasive tactics through the general Tobin tax on all currency transactions.

A savvy NGO representative stated firmly to me that "these bureaucrats will keep stringing together multiple meetings, but Kyoto will never happen" because there is no political benefit to being the man in one of the 38 countries on the hook, who tells people they can not have energy. And, it also won't happen because there is no environmental benefit to it.

The most powerful reason for there to be no passage of the Kyoto Protocol or any treaty like it rests on the absence of any rebuttal to seven statements put forward a few years back. One of the abler voices asking proponents of the Kyoto Protocol to commence open discourse is William Niskanen, Chairman of Cato Institute. Niskanen challenged proponents "to demonstrate the accuracy of all of the following statements" (here paraphrased):

1. Increases in carbon dioxide cause increases in temperature
2. Temperature increases lead to more costs than benefits
3. Emissions controls are the most efficient means of "solutions"
4. Early measures are superior to later measures
5. Emissions controls can be monitored and enforced
6. Governments will approve the control measures
7. It is desirable to control emissions in the rich countries even if they are not controlled in the poor

Arguing the scientific case for the Kyoto Protocol's ratification has to be based upon finding every one of those seven statements true. But, not one of the seven passes any rigorous test.

The European Business Council member's problem with baselines is exactly a piece of #5 above -"emissions controls can be monitored and enforced."

The NGO representative's concerns are reflected in #6 and #7 - "governments will approve the control measures and it is desirable to control emissions in the rich countries even if they are not controlled in the poor." China, Mexico, Brazil, India and most of the world will not play. If it really were a global problem, everyone would have to play.

Q: HOW CAN CERTIFIERS TELL WHICH PROJECTS HAVE BEEN DONE TO REDUCE EMISSIONS AND WHICH HAVE BEEN DONE BECAUSE THEY SIMPLY ARE COST EFFECTIVE?
A: THEY CAN'T. THAT'S WHAT MAKES IT ALL SO POLITICAL.

Rob Watson and Ken Newcombe of the NRDC and World Bank, respectively, agree that "the potential for perverse incentives is a general concern for any emission reduction transactions that require additionality." What's additionality? That's from the Kyoto Protocol, Art. 6 and Art. 12. Additionality means reduction in emissions by sources, or an enhancement of removals by sinks, that is additional to any that would otherwise occur. According to whom?

Do you think that replacing a coal-fired operation with nuclear generation might qualify as a project? Melinda Kimble with the U.S. delegation says "No." She reminded all at a press conference in Buenas Aires last November that such a project would reduce emissions, but would not be in compliance with the Framework Convention on Climate Change because nuclear is "not sustainable. It is too risky." According to whom?

Disposing of the nuclear option, CDM projects are viewed as catalysts stimulating sustainable development while pushing photovoltaic and requiring land use management. One fuel cell manufacturer has done a small project in Bolivia to generate market goodwill even though the rate of return was marginal. Jorge Barrigh of Ballard Fuel Cells told an attentive audience that "regardless of our opinion on the science of the climate debate, it is smart to put fuel cells and new technology into your future projects." Jorge admitted that the additionality evaluation for the project was too time-consuming and made him ready to walk it.

Q: WON'T THE NEED FOR CERTIFIERS, AUDITORS, PLANNERS, ENFORCERS, ETC REQUIRE MUCH GREATER FUNDING?
A: OF COURSE.

A 50% budget increase has been proposed. A 59% rise in the number of staff has been proposed. If the Parties are going to ask the Secretariat to be everywhere and to do everything, then money must pay for the increased workload. Many consultants and experts have been hired.

Despite wish lists, the political realities of many of the Parties back home would call for a zero-growth budget. Wars, burdensome regulations, high taxation and possible Y2K glitches call for fiscal restraint.

Q: IS THERE ANY LULL IN THE ACTIVITIES OF THE UN BEING FORECAST, PERHAPS BECAUSE OF COSTS?
A: NONE.

The next six months parades no fewer than 16 additional meetings on just this climate change topic (see www.un.org/events/ref38.htm).

There are ten more meetings this year alone on the related topic of desertification, including the Second International Forum of Mayors on Cities and Desertification and that topic's COP3 in Brazil in mid-November.

There are eleven meetings to attend within the next six months on the also related issue of biodiversity. The 7-11 June meeting this next week is on Legal Aspects on Implementing Biodiversity-Related Conventions.

The UN has scheduled an aggressive next few years. No fewer than five to ten BIG conferences will be held during 2000-2001. The Millenium Assembly 2000 is anticipated as the pivotal endorsement of all things global.

It is possible that the small meeting of only 120 persons in Sintra, Portugal, this weekend will instigate even more important international meetings. Sintra hosts the 47th Bilderberg meeting. No press releases will be issued. Like-mindedness will reveal itself through policy changes. Most of those policy directions will appear at UN meetings.

Q: IF MAN-INDUCED GLOBAL WARMING WERE TRUE AND IT REALLY WAS MORE PROBLEM THAN OPPORTUNITY, WOULDN'T EVERYBODY HAVE TO BE PART OF THE SOLUTION?
A: YES, OF COURSE. BUT WHY COMPLY IF YOU DON'T HAVE TO?

The sheer unfairness of the situation seems to be the big issue to Gene Trisko. Trisko is Attorney at Law for the United Mine Workers of America. As such he is an NGO (Non-governmental Organization) representative to the climate change sessions in Bonn this month. He is perplexed by what he sees is an outright violation of UN procedural rules. Specifically, a document dealing with the adequacy of commitments has, in his words, "been swept under the rug." Noting that there has been no agreement on any elements of that document, Trisko watched this document receive no vote at all in Buenas Aires at COP4 (the Fourth Conference of the Parties) last November, and receive a postponement here in Bonn until COP5 later this year. His analysis is that that the science, if true, would push developing countries into having to comply because the response must be global. But, developing countries are not on the hook, only 38 advanced and in-transition countries are. None of the 38 countries that would be bound by the Kyoto Protocol have ratified it.

Q: WHAT'S TO KEEP THE UN AND THE WORLD BANK FROM BECOMING THE WORLD'S COMMAND CENTER?
A: VERY LITTLE, UNLESS YOU WRITE EXIT STRATEGIES LIKE SUNSET CLAUSES INTO EACH DOCUMENT.

John Palmisano, Director for Environmental Policy, European Business Council for a Sustainable Energy Future, said today that the great danger in this climate change treaty process is UN groups like UNCTAD, UNDP, UNEP, the World Bank and others, becoming small empires. Palmisano said, "It is hard to imagine any country abdicating their sovereign rights and putting authority in some central committee." He sees "multilateralization" --the term he uses for empire-building - as almost automatic, because, after all, only "parties" to the treaty can earn Certified Emission Reductions (CER). Therefor, entities are forced to send their reductions through their governments. Thus, new layers of state bureaucracy are required.

The creation of flexibility mechanisms (to obtain required levels of emissions reductions) is complex and problematic. The CDM (Clean Development Mechanism) could be viewed as just one of many energy project developments if it were not for the completely arbitrary valuation of a certified emission reduction (CER). If the World Bank is proposing to purchase CERs, whether they have made economic sense or not, then there exists no price to give accurate information about supply and demand. We would be playing with the same smoke and mirrors that socialism has always embraced and always failed at. "Remember," John urged, "no exit strategy is needed in a competitive market." When you no longer serve, you fail.

Q: WHAT BENEFIT IS AN INTERIM CDM? THE RULES ARE NOT EVEN AGREED UPON YET.
A: FAKE IT UNTIL YOU MAKE IT.

Retroactive crediting will probably be allowed. An interim phase might reduce the risk a little. Since the climate change treaty is so hard for real people to understand, just DO some CDM projects so that they can be seen and understood. Years from now it will all seem much clearer. Interim CDMs would give us experience on how two countries pass legislation and laws to effect the reductions. Those laws and their regulations should begin to send price signals which will help everyone know how to value compliance and how to punish for non-compliance.

Q: SINCE CHINA DOESN'T LIKE INTERIM CDMS, WHAT DOES CHINA NEED TO BE HAPPY WITH A CDM?
A: PRIMARILY THAT CHINA NOT LOSE ANY DOMESTIC MARKET TO THE GLOBAL MARKET.

Lu Xuedu of the Chinese delegation has worked in the science and technology of climate change ever since 1982. He acknowledges that 74% of Chinese energy consumption is fueled by coal. That's the coal equivalent of 1.2 billion. Obviously, there exists great potential for Chinese CDM projects. Xuedu stated today that China opposes interim CDMs before modalities are established. He urges his colleagues to just learn from the AIJ (Activities Implemented Jointly) pilot program. He expresses that his country is not always able to manage advanced technology. There have been 14 new plants in China using highly advanced intensified coal gasification and cycle technology, but those processes were used without consideration to their suitability for CDM or UNFCCC. They simply were economical and efficient. Only a small area of China has efficient boilers. Western China has utility plants whose technology can only be described as backward.

When asked what would China need to be happy with a CDM, Xuedu shared that, without naming every element, China would need at least three things. They are 1) that the benefits be balanced between Annex I and non-Annex parties, 2) that technology actually transfer, and 3) that China not lose domestic market to the global market.

Q: WHAT'S THIS NEW CARBON FUND?
A: AN UNOBJECTIVE, UNECONOMIC LENDER TO MEDDLE IN MARKETS

Robert Watson and Ken Newcombe at a World Bank side event called for the creation of a global prototype carbon fund (PCF). The fund, they claim, would fill the need of developing countries for a guarantee that there would be a buyer of emissions, whether or not the project resulted in any overall reduction of carbon dioxide emissions. It was presented that this fund is necessary to underwrite the risks of investment.

It was argued that, since much carbon dioxide is available at a price range of $5-15/ton, then a price of $20-30/ton paid for certified emission reductions (CER) would allow price rent to flow to the developing countries.

Q: WHEN DO WE HAVE TO PLAY?
A: NEXT YEAR, BUT BEGIN NOW

Certified Emissions Reductions (CERs) that are derived from Clean Development Mechanisms (CDM) and Joint Implementation (JI) projects are to be obtained starting in the year 2000. What must first occur is a determination of baselines and additionality for those CDM and JI projects. Tracking, compliance and liability terms must be agreed upon. National WorldWideWeb sites are proposed to raise awareness. Finance, exchange and broker operations must be established.

The only way a party to this treaty is going to turn its early credits for emission reductions into assets of value is to go along with implementation of the Kyoto Protocol whether its representative bodies have authorized it or not.

Q: WHERE IS THE USA NOW?
A: BEHIND, BUT TAXATION COULD HELP US CATCH UP

A review of the Second National Communication of the USA was released 12 May 1999. Poor marks were followed by cautious optimism. The review noted that some twenty agencies were directed to develop the USA climate policy. Leading the effort is the Department of State, Department of Energy and the Environmental Protection Agency. Clinton's 1993 Climate Change Action Plan (CCAP) and two climate action reports since then make up the USA climate policy.

The reviewers found that the US political system causes difficulties because a Congress must approve funds. Further complicating this process is the fact that no one congressional committee has the single task of CCAP. Additionally, states and local governments actually control some efforts.

If the USA had had less economic growth and considerably higher fuel and gasoline prices, the increase of greenhouse gas emissions would not have been so rapid. From 1960 through 1993, the USA actually experienced a 3% economic growth rate. US energy taxes are too low. Gas prices even fell during this period. Furthermore, Congress only provided half of the money needed to promote the CCAP during that time. In 1998, only 64% of the funds were forthcoming.

However, the Clinton administration has now made climate change its priority and the world expects new effects after the year 2000.

Q: WHEN DOES A BOMB "DE-FUSE" A SITUATION?
A: WHEN IT BREAKS A LOT OF ICE INSTEAD OF WINDOWS.

An afternoon bomb threat caused a total evacuation of the Maritim Hotel-Bonn for three hours today. All programs were suspended and a reception postponed. Delegates and observers actually mingled and conversed. Tensions which had been present in the prior plenary sessions were noticeably absent after this scare.

Copyright © 1999 Sovereignty International and Freedom.org. Unmodified use and redistribution permitted provided this notice is maintained.