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European cap-and-trade market takes a nose dive

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The European Union’s cap-and-trade system took a huge hit on Thursday, with carbon prices plummeting a record 40 percent after a panel rejected a plan to delay emission permit sales to alleviate the overabundance of permits already in the system.

“The market is panicking, really,” Daniel Rossetto, managing director of Climate Mundial, told Bloomberg, adding that traders fear that Europe’s carbon emissions market won’t continue past 2020.

An excess of carbon emission permits in the 54 billion euro trading system drove the price down 91 percent from its record high in April 2006. Carbon permit prices sank to a record low of 2.81 euros ($3.75) per metric ton immediately after the panel rejected the EU plan. However, prices slightly rebounded to 4.33 euros per metric ton.

“This should be the final wake-up call,” said EU Climate Commissioner Connie Hedegaard in a statement. “Something has to be done urgently. I can therefore only appeal to the governments and the European Parliament to act responsibly.”

The Financial Times reports that the carbon market has seen two record-low prices within the last four days, causing some analysts to say carbon permits are “worthless.”

The European Commission wanted to temporarily delay the sale of 900 million permits to alleviate the current overabundance. Analysts say this move would have boosted prices, but not high enough to provide sufficient incentives for utilities to switch to cleaner energy sources, reports the Guardian.

However, the plan was met with resistance from various governments, industries, and lawmakers.

Joachim Pfeiffer, economy spokesperson for German Chancellor Angela Merkel’s party, said the plan was “absurd” and would impose higher costs on German industry.Reuters reports that the bank Societe Generale cut its EU carbon price forecast from 2013 to 2015 by 30 percent, due to prices plunging to record lows.

“Negative news and events relating to the EU [Emissions Trading System] continue to pile up and come from all sides. So it is not at all surprising that EUA prices have fallen and have continued to be quite volatile,” they said. “The EU ETS has become a one-way market, spiraling down.”

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Is Washington Ready For a Carbon Tax?

By Amy Harder

Should President Obama and Congress pursue a carbon tax?

The policy proposal has been garnering increasing attention among Washington’s think tank and academic leaders across the ideological spectrum as a way to simultaneously combat global warming and cut the ballooning federal deficit. It’s unclear whether it will gain traction in Congress, given the dicey politics of new taxes and climate change, let alone the combination of the two. To wit: Republican leaders in the House have signed a “no climate tax” pledge, indicating a steep path to passage through the House. These challenges aside, some experts say that Congress could impose a carbon tax in exchange for a lower income-tax rate as part of the comprehensive tax reform that lawmakers hope to tackle next year.

What are the policy pros and cons of a carbon tax? How does a carbon tax compare to other policy proposals, such as cap-and-trade, in terms of both political feasibility and policy? Can Congress overcome the political hurdles to pass such a measure? If so, what would it look like?

Read more: 13 Responses

Runaway Spending, Not Inadequate Tax Revenue, Is Responsible for Future Deficits

The main driver behind long-term deficits is government spending, not low revenue. While revenue will surpass its historical average of 18.1 percent of GDP by 2018, spending remains above its historical average of 20.2 percent, reaching 22.1 percent by 2022, even after $2.1 trillion in spending cuts in the Budget Control Act.

Runaway Spending, Not Inadequate Tax Revenue, Is Responsible for Future Deficits.

USA: Higher Oil, Gas Taxes Would Hurt Jobs and Revenue, API Says

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API’s Chief Economist John Felmy told reporters yesterday that when America’s oil and natural gas industry reports solid earnings it means jobs are being created and more revenue is being delivered to government.

He said raising taxes on the industry would hurt both jobs and revenue: “If first quarter earnings are solid, it will be a positive sign for American workers, for American retirees, and, in particular, for Uncle Sam, which is desperately in need of the massive revenue our industry has been providing.

“In 2011, the three companies paying the largest share of incomes taxes in the United States were oil and natural gas companies. They paid almost $55 billion – and paid at higher effective rates than all other companies. They also paid at substantially higher rates than the U.S. federal statutory rate.

“Unfortunately, calls for higher taxes on the industry often accompany the release of earnings reports. Higher taxes are a bad idea, not only because they would be discriminatory and punitive – but also because they would hurt investment, hurt jobs, hurt future financial performance and, after a few years, decrease the revenue our industry delivers to the government.

“Instead of raising taxes, if we committed to a strong program of domestic development, we could in 2030 create as many as 1.4 million jobs, generate $800 billion in additional revenue, and substantially boost U.S. oil and natural gas production, according to a study last year by Wood Mackenzie. In just seven years, as many as one million jobs could be created.

“Our industry is successful, and our nation shares in and benefits from that success. We need to remember that when earnings are released.”

API represents more than 500 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America’s energy, supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers more than $86 million a day in revenue to our government, and, since 2000, has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.

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Obama administration sees Rio + 20 Summit in June as Festival of Global Greenness

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By George Russell
Published February 24, 2012
FoxNews.com

With gasoline prices spiking, a presidential election looming in the fall, and recent failures at reaching sweeping global agreements on environmental policy, the Obama Administration is heading into this summer’s Rio + 20 Conference on Sustainable Development with modest goals, looking for areas of broad agreement and civic engagement that can be touted as populist environmental progress.

“We consider it an aspirational meeting,” a U.S. State Department spokesman told Fox News.

“This is a good, positive meeting,” in which “we go forward in as pragmatic a way as possible.”
The apparent aim is to turn the June Rio + 20 Conference –a nostalgic reference to the last environmental summit Rio de Janeiro hosted in 1992– into a festival of global greenness, in order to create the widest possible sense of participation around the planet. In short, something like a global Green Woodstock, this time enhanced on Facebook, Twitter and YouTube.

Nevertheless, the long-term goal of Rio + 20 remains the same: to push the world as fast as possible toward a drastic reordering of social, economic and industrial policies, reorganize global distribution of food and water supplies, and engage in mammoth international financing exercises and new exercises in “global governance” to make the whole scheme work.

Click here to read more on that story from Foxnews.com.

Only now, the emphasis is on cooperation rather than hard bargaining—especially in the wake of the failure last December of another U.N. effort in Durban, South Africa, to create a new global environmental deal to replace the Kyoto Accord on greenhouse gas suppression, which expires at the end of 2012. The Durban failure followed the even more highly publicized failure to achieve the same thing at a summit in Copenhagen in December, 2009.

Yet another reason for soft-pedaling the discussion is the U.S. presidential elections in November. A happy-face summit in Rio that mobilizes environmental enthusiasm around the world is definitely more to the advantage of the incumbent Obama Administration than a strident meeting that ends in failure or fizzle. The recent spike in gasoline prices in the U.S. is also likely to dampen domestic enthusiasm for environmental mandates that would likely make carbon-based energy even more expensive.

Hence the need for a new strategy. Or, as a U.S. diplomat put it at a U.N. session last month to begin considering the “zero draft” of a communiqué put it: “We should focus on partnership, inclusion, and cooperation rather than false distinctions between countries.”

A first round of “informal-formal” negotiations on the draft is slated to begin in New York City in mid-March, immediately after a major preparatory meeting for the Rio conference that starts on March 4. Negotiations over the outcome document will like continue through the Rio summit itself, which is scheduled for June 20-22.

Conciliatory themes very much lie at the center of U.S. notions concerning the Rio communiqué, chief among them being to keep any broad, sweeping statements about the summit aims short and sweet, and concentrate as much as possible on engaging a global audience.

Indeed, at a preliminary meeting on the draft in December, the U.S. declared that the zero draft “should provide a political statement no more than five pages long. We do not see the need for chapters in a concise political document.”

So far, the zero draft, entitled “The Future We Want,” isn’t there: it is 19 pages long, and broken into five chapters.

One approach for Rio that the U.S. government is strongly backing is to engage as many people, institutions, businesses and governments as possible around the world to sign onto a “Compendium of Commitments” –in effect, a set of green goals of their own devising—that will create a groundswell of activity in line with the conference’s aims.

“These are voluntary, non-regulatory commitments that any party is willing to put forward,” a State Department spokesman who is knowledgeable about the process told Fox News. “It would not require a negotiated resolution on behalf of the U.N. community. “ It could be, say, a beverage company that promises to cut water usage over the next ten years.”

“This is what we really see as valuable.”

To that end, a flotilla of senior Obama Administration officials descended earlier this month on Stanford University, for a two-day conference entitled US Rio + 2.0, on using “connection technologies,” meaning social media, “to advance sustainable development solutions in the fields of health, the environment, agriculture, and sustainable economic growth.” The conference aimed at highlighting a fast-mutating array of high-tech opportunities to create new solutions to social and economic problems—akin to the Compendium approach that the U.N. is now advocating for Rio + 20.

At the Stanford session, Environmental Protection Agency chief Lisa Jackson declared that “The Internet and social networks give citizens from across the globe the ability to participate in the push towards sustainability in their own communities. We should challenge ourselves to find creative new ways to apply existing technologies, and look ahead to emerging technologies and their potential impacts.”

Jackson’s statement is now linked prominently on the State Department’s own Rio + 20 website page.

But even while discussion of the Rio + 20 outcome is being framed in feel-good, futuristic terms, the old, tough issues of the global green economy debate linger in the bureaucratic langue of the middle passages of the zero draft document.

Among other things, the document as written includes an agreement to “provide new, additional and scaled up sources of financing to developing countries,” without going into details. It also includes a need to “gradually eliminate subsidies that have considerable negative effects on the environment and are incompatible with sustainable development”—rhetoric that could justify such controversial measures as the Obama Administration’s new, proposed tax bias against oil and gas companies.

Moreover, the document contains a time line that, in veiled terms, continues to call for more efforts to overcome the failure to produce a comprehensive global agreement on “sustainable” development by 2015 that would take increasing effect over the following 15 years.

It also argues that “strong governance at local, national, regional and global levels is critical for advancing sustainable development,” and says strengthening this “institutional framework” should involve identifying “specific actions in order to fulfill the sustainable development agenda through the promotion of integrated decision making at all levels.”

Click here to read the Zero Draft document.

When it comes to what specifics the U.S. delegation favors, a State Department spokesman told Fox News that “what happens will be coming into focus in the next few months.”
In the meantime, he said, “we are listening to a lot of views.”

George Russell is executive editor of Fox News and can be found at Twitter@GeorgeRussell
Click here for more stories by George Russell

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