The Great Climate Change Boondoggle
COP21 promised utopia but delivered little. Developing countries need cheap energy, not handouts that will be lost to corruption
It is a rare sign of realism among the faithful of the global warming cult that they acknowledged, even before it had begun, that COP21, the climate change conference in Paris, would fail to deliver concrete results. Their pious hope was that a policy framework would emerge to allow a coalition of the willing to create enormous capital flows from rich nations to enable the poor to decarbonise their economies while continuing to climb out of poverty. This hope is surely a vain one.
More than 40,000 delegates, politicians, scientists, green lobbyists, self-publicists and journalists (10 per cent of the total) crammed into a purpose-built complex at Le Bourget, the old aerodrome outside Paris now used, ironically, for private aircraft only. The French government, which hosted COP21, is coy about the cost of this monstrous boondoggle: one estimate puts it at $1.1 billion, and that is without factoring in the carbon bigfoot-print of all those air flights.
COP21 sounds like a Philip K. Dick novel, but it actually stands for the 21st meeting of the Conference of the Parties to the 1992 Rio Framework. Rio was the first held under the auspices of the UN Framework Convention on Climate Change. UNFCCC signatories agreed in principle to limit climate change by reducing the output of carbon dioxide, which in practice meant reducing the use of oil, gas and coal.
The 1997 Kyoto Protocol set out legally binding emissions reduction targets for developed countries but not the poorer nations. The United States did not ratify it, and China, the world’s emerging industrial superpower, ignored it. Nevertheless the conceptual framework was accepted by the European Union, which began a major shift in power generation to subsidised renewable energy.
In the 12 years between Kyoto and Copenhagen in 2009, the popular mood in most of the developed world moved firmly in favour of carbon reduction. Al Gore’s powerful but meretricious film An Inconvenient Truth typified the propaganda that held centre stage during these years. Large parts of the media, including the BBC, began to treat the theory of man-made climate change as revealed truth. It was nearly impossible for politicians to question the theory or to avoid implementing the mitigation strategies demanded by environmentalists. But COP15 at Copenhagen was a colossal failure, with attempts to impose a top-down solution falling apart in a series of hysterical late-night meetings.
Paris was supposed to be different, relying on voluntary agreements and a great deal of good faith now and far into the future. Each country was invited ahead of the meeting to submit an Intended Nationally Determined Contribution (INDC — this process is one of the all-time great acronym generators). By the opening of the Paris conference 158 INDCs had been submitted. All express the required pieties but none commits unequivocally to the kind of radical action that would be needed — according to the high priests of climate science — to restrict global warming to a range of 1.5-2.0°C above the pre-industrial level (itself a matter of uncertainty).
Developing nations — and China includes itself in this category — do not see why their future prosperity should be restricted without the material assistance of the nations who grew rich by exploiting fossil fuels in the 19th and 20th centuries. The deal, such as it is, will depend on the rich countries agreeing to limit and reduce their own CO2 emissions, and to transfer enormous sums of money via a Green Climate Fund to developing countries to assist their CO2 reductions while not impairing their economic development. The worthy recipients of this largesse meanwhile recognise:
The importance of promoting, protecting and respecting all human rights, including the right to development, and the right to health, the rights of indigenous peoples, climate induced migrants, refugees and internally displaced peoples, children, persons with disabilities and people in vulnerable situations with due respect to sovereignty and territorial integrity of states, as well as promoting health, gender equality and the empowerment of women, while taking into account the needs of local communities, intergenerational equity concerns, and the integrity of ecosystems and Mother Earth, when taking action to address climate change.
I will spare readers more of this stuff. The utopian system encapsulated in the COP21 agreement is intended not only to reduce carbon dioxide emissions but also to transform the global economy on international socialist lines, starting with a massive transfer of wealth from developed to developing world.
Between now and 2020, the Green Climate Fund is supposed to transfer at least $100 billion a year in support of developing nations’ decarbonisation efforts. Before COP21 opened, the GCF had received pledges of $70 million (0.07 per cent of the total). Undaunted, Christiana Figueres, the Costa Rican Marxist academic who is nominally in charge of COP21, now suggests that the developed world should transfer $1 trillion a year. To adapt the late Senator Everett Dirksen: “A trillion here, a trillion there, pretty soon you’re talking real money.”
Never mind the numbers, just think what will happen to the cash. Some will be devoted to supporting the secretariat and subsidiary bodies set up pursuant to Articles 13 and 15 of the Agreement. But once indoor relief for the global chattering classes has been established, the rest of the money will be heading south, literally and figuratively. Most developing nations have problems with corruption and the rule of law. Who will guarantee that GCF money is spent the way the climateers of COP21 intended? It is all very well, heartening even, for the representatives of 158 countries to sign up to this complex and mind-bogglingly ambitious set of worthy aims. But words will mean little once the money starts arriving in Azerbaijan, Bangladesh, Zambia and the rest.
Even if corruption were not a problem, the difficulties of operating such a massive system have been amply illustrated by the abject failure over the past decade of the EU’s Emissions Trading System (ETS).
On paper, this cap-and-trade approach is an intelligent and effective way of rationing carbon and producing a price for CO2. A cap is set on the amount of greenhouse gases that can be emitted by 11,000 power stations and factories in 28 member states. EU Allowance Units (EUAs) are then auctioned off or allocated for free, and can be traded on the open market. The cap is supposed to be lowered over time. If a factory or power station exceed its allowance, it purchases EUAs on the ETS market. Conversely, if it produces less CO2, it can sell leftover credits. The idea is to find the most cost-effective way of reducing emissions without significant government intervention.
The ETS was undermined from the beginning by an over-allocation of allowances, the number of which is essentially a political decision. In the Brussels horse-trading, each country got more than its share. Having started in 2005 with carbon prices of €10-15 per ton, the market price fell briefly to zero in 2007. The system was further undermined by the recession of 2008-09, which saw a substantial fall in economic activity. This meant that the already comfortable supply of EUAs became overwhelming.
The ETS depends on the EU having the will — and indeed the information — to ration EUAs over time and in ever-changing economic circumstances. So far it has failed to do so. The only country that regularly checks installations to ensure they are actually complying with regulations is, you guessed it, the UK. And even the UK checks only 1 per cent of qualifying sites.
The ETS has raised costs for European industry while failing to produce a serious carbon price which would support low- carbon technology and make fossil fuels uneconomic. To be effective, the carbon price should be of the order of €75 per ton; the current EUA price is €8 per ton. If the EU, composed of 28 advanced economies with reasonably high legal standards, is unable to operate its own system effectively, it is clear that a global system is doomed to fail.
The real challenge for the COPsters comes from China, India and other large developing countries. China is the world’s largest user of energy, 90 per cent of which is fossil-fuel, two- thirds of it coal. China accounts for half of the world’s annual coal burn. It is also the world’s largest emitter of CO2: 24 per cent of the global total in 2014. Chinese economic development plans call for significant increases in energy consumption, including coal, between now and 2030. The proportion of coal in the mix will fall, but only from 66 per cent to 62 per cent in the next ten years; and it will rise in absolute terms. China will increase its reliance on renewables, building on hydro as well as its low-cost production of wind turbines and solar panels; but the overall consumption of coal, oil and gas will continue to grow for the foreseeable future.
As a succinct assessment by the Global Warming Policy Foundation points out, the Chinese government is concerned much more by internal pressures than external opinion. It needs to maintain China’s economic growth. A senior official recently put it this way: “All our policies, measures and actions for addressing climate change are conducive to national development mode transformation and structural adjustment, thus promoting the quality and efficiency of our economic growth. That is an internal requirement for the sustainable development of our country.”
In other words, China will act in its own interests. Internally, that will mean improving energy efficiency, currently one-third the level of the United States. Doing so would reduce CO2 emissions and the energy costs to China’s economy. Externally, China is posing as the champion of developing countries in their climate change negotiations with the industrial world.
Whatever one’s view of climate change, it is impossible that COP21, or anything that flows from it, will hold carbon emissions to the levels and in the manner required by environmentalists. And that is a good thing: why should poor countries continue to be denied cheap electricity and economic development, while richer nations hamstring their own economies?
In the real energy world, the prices of oil, coal and gas have dropped sharply in recent years. This is partly policy — Saudi Arabia’s decision not to support high oil prices by cutting its own production — but mainly it is due to the great advance brought about by fracking for hydrocarbons. This slashed the costs of producing oil and gas, and in America cheap gas undercut coal which accordingly became even cheaper and flooded the world market. The world outside America is still catching up with this fundamental shift, but the fact is that the cost of hydrocarbons has been cut and will not return to historic levels.
Fracking did not come about overnight: work in the field and in the laboratory took 40 years. There is every reason to hope for technological breakthroughs in cleaner forms of energy as well. Given the rate of advance in science generally, and the amount of money being poured into clean energy research around the world, a silver bullet, or a series of silver bullets, must sooner or later transform energy supply. One area of rapid advance is in electric battery research, with the prospect of large-scale electricity storage and cheaper long-range electric cars.
Lower-cost fossil fuel is a benefit to the global economy, and most particularly to poorer countries. Individual nations — and individuals — will continue to make their own decisions about supporting renewable energy, responding to changing costs and evolving technology. But the global initiative represented by COP21 is an expensively overblown irrelevance.