Economic recovery threatens Paris Agreement targets, IEA fears
In this newsletter:
Die Welt, 5 July 2021
2) Europe faces global scepticism about its carbon border tax
Reuters, 5 July 2021
Reuters, 5 July 2021
Thomson Reuters Foundation, 5 July 2021
5) John O'Sullivan: Net-Zero: Poorer, Meaner, Slower, Dearer
The Pipeline, 2 July 2021
USA Today, 25 June 2021
Science under Attack 28 June 2021
Full details:
1) Carbon border tax: Europe's climate fortress endangers Germany's strength
Die Welt, 5 July 2021
The EU wants to impose a carbon border tax on Europe's borders and thus protect domestic producers from dirtier (sic) producers from abroad. Experts warn of a loophole that could hit German exporters seriously.
Federal Minister of Economics Peter Altmaier met two Vice-Presidents of the European Commission when he visited Brussels on Friday: Margrethe Vestager, who is responsible for digital, and Valdis Dombrovskis, who is responsible for economic issues. The CDU politician wanted to talk to both of them about the steel industry - and about how European steel producers can economically survive the tightening of EU climate targets.
The plans for a CO2 border adjustment tax are also likely to have been an issue. Because the work of the Commission on legislative proposals for such a CO2 surcharge at the borders of the EU are ready to go. The Carbon Border Adjustment Mechanism, which in Brussels is affectionately known as CBAM for short, aims to make imported products that are produced less climate-friendly overseas than in Europe more expensive at the borders of the EU.
This climate protection wall around the continent is intended to ensure that European producers with their higher energy costs and stricter environmental regulations remain competitive on their home market. Stricter climate rules and rising energy prices should be possible without endangering jobs, for example in the energy-intensive steel industry.
How exactly the border adjustment tax will be structured won't be known until July 14th, when Commission President Ursula von der Leyen and Vice-President Frans Timmermans, who is responsible for climate issues, present their large “Fit for 55” climate package; a bundle of a dozen legislative proposals aimed at promoting the climate-friendly restructuring of the EU economy. The CBAM plans are a central element of the legislative package.
Business fears
The more details of the necessarily ambitious plans become known, the clearer it becomes what they mean for European companies affected. This also applies to the border adjustment. Previously unpublished drafts of the Commission for legislative proposals confirm the fears of the companies concerned.
According to this, European producers of particularly energy-intensive products should in future be protected in the EU market from foreign competition which can produce dirtier and thus cheaper. In return, the companies in the affected industries should no longer receive free certificates for EU trade in carbon certificates. This is what it says in an unpublished draft of the Commission for a directive for the reform of the EU emissions trading ETS, which WELT has received.
"A CO2 border adjustment mechanism (CBAM) is an alternative measure to prevent the migration of CO2-intensive companies," it says. "Sectors and sub-sectors that are covered by this measure should therefore no longer receive free allocations." Changes can still be made until the final legislative proposal is published in mid-July.
From the Commission's point of view, the coupling of CBAM and free allocation is hardly avoidable: If European producers were protected from foreign competitors by both border adjustment and free certificates, they would be subsidised twice. The Commission fears that the border adjustment would then clearly violate the rules of the World Trade Organization.
For Brussels, it is crucial that the border adjustment is WTO-compliant. Otherwise, trading partners who feel they are being treated unfairly by the rules could impose punitive tariffs. Therefore, CBAM will not be a simple tax, but a complicated process in which importers have to buy special pollution certificates - similar to their competitors from the EU.
WTO-compliant or not: Researchers are increasingly sounding the alarm against the plans. In principle, economists support the plans for the border adjustment. Such measures are necessary in order to pursue more ambitious climate goals in a globally networked world than those found with trading partners.
Global trade disadvantages
Now, however, German and French researchers from the Center for European Policy Network (CEP) have spoken out. They warn that the CO2 border adjustment will only protect European companies from cheap competition in their home EU market. However, European producers could then no longer be competitive on the world market.
"The Commission is not planning a CBAM for European exporters," write the authors of a CEP study seen by WELT. “The exporters should therefore not receive any compensation for the discontinuation of the free allocation. As a result, they suffer considerable competitive disadvantages compared to their competitors from third countries. "
The authors refer to a draft of the CBAM law that became known at the beginning of June. A more up-to-date and obviously more advanced draft, which WELT has, also does not provide any support for exporters.
"The combination of the complete abolition of the free allocation and the restriction of the border adjustment to imports increases the likelihood that production will migrate to countries with less stringent climate protection regulations," says the 40-page analysis. "The result is a loss of added value and jobs in the EU and an increase in global emissions."
Free allocations required for export products
The authors demand that the EU Commission renounce their plan. "The Commission should abandon its plan to replace the current system of free allocation of emission rights with a CBAM without replacement," the authors write.
“Instead, as long as an emissions trading system is not enforceable on a global level, the EU should do everything in its power to ensure that the most important industrialised and emerging countries agree on such a system. The free awards can only expire under this condition, as the remaining competitive disadvantages of European companies can then be absorbed. "
If the Commission sticks to its plans for CBAM, it should at least keep the free allotments for products that are exported. The authors suggest that the free awards could then be dropped for products sold in the EU.
The Scientific Advisory Council of the Federal Ministry of Economics has long warned against the EU going it alone. Depending on the design of the CO2 lock, there is a risk of expensive and time-consuming bureaucracy and even trade disputes.
The Advisory Board's researchers also advocate that the EU should join forces with other economies such as the USA, Great Britain and, ideally, China and Russia to form a climate club - a kind of climate free trade zone in which all companies produce under similarly strict climate protection requirements.
Full story (in German)
2) Europe faces global scepticism about its carbon border tax
Reuters, 5 July 2021
BRUSSELS, July 5 (Reuters) - The European Union faces an uphill battle to convince trading partners that the world's first levy on carbon imports is fair, workable and a necessary part of the bloc's attempted green revolution as opposed to a protectionist tool.
The EU is due on July 14 to unveil a package of legislation to cut net greenhouse gas emissions by 55% by 2030 from 1990 levels.
As part of the plan, it will outline what it terms a carbon border adjustment mechanism (CBAM), designed to cut emissions by creating financial incentives for greener production and by discouraging "carbon leakage," as the transfer of operations to countries with less onerous emission restrictions is known.
The bloc will want to avoid the type of fallout it incurred after a separate environmental move in 2018, when it excluded palm oil from its list of sustainable biofuels and sparked legal challenges from Indonesia and Malaysia at the World Trade Organization.
Before that, an EU attempt to charge foreign airlines for carbon emitted on flights in and out of Europe threatened a trade war after the U.S. aviation industry mustered fierce political opposition and China said it would withhold aircraft orders. The European Union was forced to announce in 2012 it would suspend the law.
Bernd Lange, chair of the European Parliament's trade committee, said the CBAM could prove the source of trade disputes - notably with the United States, if Brussels does not find an agreement with Washington.
"We have to look to an understanding so that this CBAM will not land in a WTO case. This is a big task for the next months," he told a webinar.
The Commission has said its plan will be WTO-compatible and fair, requiring importers of goods such as steel to buy emissions certificates at the same price as domestic producers.
However, a demand by EU producers that they continue to benefit from free EU carbon market certificates could create problems if imports are not afforded a similar advantage.
A draft of the July 14 proposals shows free permits would end, but manufacturing sectors are expected to lobby hard to retain them.
Benchmark prices on the EU's emissions trading system (ETS), the largest carbon market in the world, have this month hit records above 58 euros a tonne, partly in response to expectations of the border levy.
While the EU says it and Washington have agreed to discuss the plan, other countries have signalled concerns. Australian Prime Minister Scott Morrison calls any carbon tariffs "trade protectionism by another name". Russia has said it may break trade rules.
Andre Sapir, a senior fellow at Brussels-based think tank Bruegel who has testified before parliament on the CBAM, says the European Union needs to look beyond mere legality.
"There's the issue of fairness too. Advanced countries have been long-term emitters. Deforestation, advanced countries did it too," he said.
BURDEN OF PROOF
The WTO grants preferential treatment to developing countries, as does the EU with arrangements for the poorest states. If they do not extend to the CBAM, charges could hit $16 billion of developing country exports to the EU, the Centre for European Reform think tank says.
Even a WTO-compatible system with allowances for emerging countries could disrupt trade if it adds an unwieldy administrative burden.
Companies in countries, such as South Korea, with existing emissions trading schemes might smoothly adapt to the CBAM. Elsewhere, exporters would need to provide extensive data on their direct carbon emissions and those of their energy sources and then convince the European Commission the data is reliable.
Otherwise, they could face an unfavourable default calculation.
"The burden of proof is on the other side," said Hosuk Lee-Makiyama, director of trade think tank ECIPE. "CBAM may be a great gambit for trade negotiations, but will it actually incentivise cutting CO2 emissions?"
The system's complexity has persuaded the European Commission, initially at least, to concentrate on a few basic materials - iron and steel, aluminium, cement, electricity and fertilisers, which represent about 5% of EU goods imports.
However, there may be ways for exporting countries to circumvent these. Thijs Vandenbussche, climate policy analyst at think tank the European Policy Centre, points to possible substitutes, such as fuel ash or blast furnace slag, for cement, which may not be subject to carbon charges.
Downstream, the CBAM could persuade manufacturers of end-use products to switch components. In some cases, these might be greener, in others just not subject to extra emission costs despite being as or more polluting. In the latter case, global emissions would not fall.
If the EU wants its experiment to be a success, it will need partners. A transatlantic alliance could drive widespread acceptance. However, comments from U.S. climate envoy John Kerry that a carbon border tax should only be a "last resort" suggest such an alliance is some way off.
Just over 50 WTO members have begun talks in the last year on climate issues such as carbon border adjustments, but these are at an early stage. One function of the CBAM is to have made the debate more pressing.
"International carbon pricing is one of the slowest items to advance," Vandenbussche said. "Without this proposal, there would just be more debate. This could lead to negotiations and perhaps adjustments based on the international reaction."
Reuters, 5 July 2021
A rebound in global gas demand to 2024 following the record fall last year is poised to knock the world off track from reaching its goal of net zero emissions by 2050, the International Energy Agency (IEA) warned on Monday (5 July).
More than 190 countries have signed the Paris Agreement, which is designed to limit global warming to 1.5°C above pre-industrial levels. That will require a huge reduction in the use of fossil fuels, such as coal and gas.
“Natural gas demand is set to rebound strongly in 2021 and will keep rising further if governments do not implement strong policies to move the world onto a path towards net-zero emissions by mid-century,” the IEA said in its latest gas outlook.
Gas demand in 2021 is expected to rise by 3.6% as global economies recover following a record fall in 2020 when restrictions to limit the spread of COVID-19 caused a drop in demand.
From 2022-2024, demand growth is expected to average 1.7% per year, meaning gas demand would be too high to keep to the IEA’s roadmap towards meeting global net zero emissions by 2050.
In May, the IEA published its pathway for the energy sector to meet the net zero emissions target and said investors should not fund new oil, gas and coal supply projects.
But new demand could be met by projects already approved or under development before the pandemic, the latest report has warned.
Full story
Thomson Reuters Foundation, 5 July 2021
BRUSSELS, July 5 (Thomson Reuters Foundation) - European Union targets to boost biofuel use are likely to have led to the deforestation of an area roughly the size of the Netherlands over the last decade to expand soy, palm and other oil crops, a report said on Monday.
About 4 million hectares (9 million acres) of forests mainly in Southeast Asia and South America have been cleared since 2011 - including about 10% of remaining orangutan habitat, according to estimates by campaign group Transport and Environment (T&E).
That suggests efforts to replace polluting fuels such as diesel with biofuels are paradoxically increasing planet-warming carbon dioxide emissions, said Laura Buffet, T&E's energy director.
"A policy that was supposed to save the planet is actually wrecking it," she said. "We cannot afford another decade of this."
It found that EU demand for biodiesel required the cultivation of 1.1 million hectares (2.7 million acres) of palm in Southeast Asia and 2.9 million hectares (7.2 million acres) of soybeans in South America.
An EU spokesperson could not immediately be reached to comment on the report.
Hit by criticism of deforestation linked to palm oil use in biodiesel, the EU agreed in 2018 to phase out the use of palm oil in transport fuels by 2030.
But a resulting surge in the use of soy oil in European biodiesel is now threatening to displace deforestation from Southeast Asia to South America, the researchers noted.
Soy oil used in biodiesel production spiked 17% in 2020, while palm oil volumes rose just 4.4%, the report's data showed.
Since 2018, soy oil in European energy systems has risen from 34% of the total soy oil consumed in Europe to 44%, solely because of biodiesel, the report said.
"This trend is troublesome because soy could easily become the new palm oil," researchers noted.
Full story
5) John O'Sullivan: Net-Zero: Poorer, Meaner, Slower, Dearer
The Pipeline, 2 July 2021
One of the most consistent themes of this occasional column has been the contradiction between the pessimistic analyses of the costs of the Net-Zero policy adopted by the Western world and the optimistic belief of its governments that its overall impact will be positive all round.
Keep in mind that this contradiction is not an argument that global warming or climate change is not happening, or if it is happening, that it’s not damaging. It’s a question directed solely at whether or not Net-Zero—as a solution to climate change—will in fact make life better or worse. Climate change may be a real problem without Net-Zero being a solution to it. And if that’s the case, we should be looking for other solutions.
Realization of that possibility—which was slightly below Net-Zero a year ago—is now breaking rudely in upon the community of public policy intellectuals. Dominic Lawson in the London Sunday Times pointed out that the G7’s proposed reduction in carbon emissions would be swamped by China’s increase in them and thus render the sacrifices made by the West’ populations pointless. Irwin Stelzer in the Washington Examiner demonstrated that the policy was politically unachievable. And Bjorn Lomborg of the Copenhagen Consensus, a veteran of the climate wars, recently argued that the contradiction above--he calls it Orwellian “doublethink”—will collapse into itself when predictions of the International Energy Authority come to pass:
"By 2050, we will have to live with much lower energy consumption than today. Despite being richer, the average global person will be allowed less energy than today’s average poor. We will all be allowed less energy than the average Albanian used in the 1980s. We will also have to accept shivering in winter at 19°C and sweltering in summer at 26°C, lower highway speeds and fewer people being allowed to fly."
Let me add the conclusion that all three writers make clear. At these prices, Net-Zero simply isn’t going to happen. Almost everywhere it has been offered to the voters, the voters have rejected it—most recently in a Swiss referendum that asked them if they would pay higher taxes in order to meet Net-Zero targets. They voted no.
Such popular resistance is making itself felt before any serious sacrifice has actually been imposed on electorates. Until now, their pain has been purely rhetorical. How will they react when told that they can’t drive fast cars, take plane rides to Sicily, or turn up the heating on winter nights? They’ll vote no.
Since Net-Zero is not a solution, the obvious question arises: is there another solution we haven’t yet considered?
Dominic Lawson rules out the heavy reliance on higher “hypothecated” energy taxes promoted by the G7 on the commonsensical grounds that if U.K. chancellors have fought shy of raising fuel duty for twenty years, they’re not likely to embark on massive new ones in the more straitened circumstances of today. In his Examiner article, Irwin Stelzer proposes among other things that we should concentrate on developing carbon-capture technologies that would allow us to use fossil fuels without adding to carbon emissions. That’s a narrow solution—we shouldn’t rely excessively on single possible innovation--but it makes sense.
And Bjorn Lomborg offers a broader version of the same thing on the basis of a highly topical comparison:
"COVID is fixed with vaccines, not unending lockdowns. To tackle climate, we need to ramp up our investments in green energy innovation. Increasing green energy currently requires massive subsidies, but if we could innovate its future price down to below that of fossil fuels, everyone would switch."
What makes all of these proposals more persuasive, however, is an argument advanced in a monograph published by London’s Global Policy Warming Foundation. In this short analysis, Tim Worstall, a businessman and blogger, begins by establishing that relying on future innovations as a solution to global warming becomes more plausible as the likely crisis looks more manageable.
Not convinced? Think about it this way. If climate change really is an “emergency” likely to produce prolonged droughts, a rise in the sea level threatening coastal cities, crop failures, starvation, and all the other predictions made by Greta Thunberg and Extinction Rebellion—and all by the day after tomorrow—then we probably couldn’t rely on continuous gradual innovation to reduce the price of renewables, the carbon emissions of greener fossil fuels, and the invention of alternative fuels not yet imagined. We would be climbing a very steep hill by baby steps.
As Worstall points out, however, those alarming predictions were rooted in a “worst case” scenario of future trends in carbon emissions that assumed a world in which the consumption of coal (the “dirtiest” of fuels which is actually declining in use throughout the West) would rise to higher levels than ever before—with the result that there would be a rise in temperature of almost five degrees (over pre-industrial levels) by the end of this century.
As several environmentalists (including Nature magazine) have complained, however, this worst -case scenario has since been treated as “business as usual” in official and unofficial discussions of climate policy. That in turn has led to a massive exaggeration of both global warming and its “emergency” impact.
How can we be sure that this “cooler” prediction is accurate?
Good question. And it has an even better answer. It’s not a prediction. It’s already been happening for some time. The explanation is fracking, which has reduced the use of coal and replaced it with the cleaner greener fuel of natural gas wherever governments and the courts have allowed it to be developed over the protests of , ahem, the Greens.
The fall in American carbon emissions under the late Obama and Trump administrations occurred almost entirely because of the spread of fracking (which incidentally also fueled a rise in American growth and prosperity.) And if you want a negative example, Angela Merkel’s boneheaded decision to abandon Germany's nuclear power led directly to the greater use of coal and a consequent rise in carbon emissions in a Germany that was meanwhile spending massively on unreliable renewables.
Fracking! It’s the start of the answer—the remainder is innovation—to the problem of halting global warming without closing down the world economy (which is otherwise the respectable establishment strategy.) If you want to ne technical about it, fracking has helped to move the world from a Representative Concentration Pathway of 4.85 to an RCP of between 4.5 and 6. And as every schoolboy knows, that makes a helluva difference.
So, following Chancellor Merkel’s example, Boris Johnson has blocked fracking in the UK, and Joe Biden is placing obstacles to it in the U.S.
There’s a horrible sort of inevitability about that, isn’t there?
USA Today, 25 June 2021
Too often news stories and research focus only on the negative climate change impacts.
Imagine the news media touting new research showing almost nobody died of influenza last year. The information would be true. In the United States, only 600 people died from the flu in 2020, down 97% from its usual level.But most people would recognize this story by itself to be phenomenally misleading because it leaves out the huge death burden from COVID-19. Similarly, reports on the global economy in 2020 would be seriously cherry-picking if they only told us about the economic boom in the health care sector. To be well-informed, we need to hear both negative and positive impacts.
Yet, when it comes to climate change, too often news stories and research focus only on the negative impacts. This makes commercial sense because stories of Armageddon generate more clicks, drive fundraising and make for better political campaigns. But it leaves us poorly informed.
Technology decreasing heat deaths
Last month, a landmark study in Nature Climate Change made headlines around the world. Rising temperatures from global warming increase the number of heat deaths,now causing more than a third of heat deaths,or about 100,000 deaths per year.
Obviously, this is a powerful narrative to justify urgent climate policies.
But the study left out glaring truths that even its own authors have abundantly documented. Heat deaths are declining in countries with good data, likely because of ever more air conditioning. This is abundantly clear for the United States, which has seen increasing hot days since 1960 affecting a much greater population.Yet, the number of heat deaths has more than halved. So while global warming could result in more heat deaths, technological development in, for instance, America, is actually resulting in fewer heat deaths.
More important,cold deaths vastly outweigh heat deaths worldwide. This is not just true for cold countries like Canada but also warmer countries like the United States, Spain and Brazil. Even in India, cold deaths outweigh heat deaths by 7-to-1.
Globally, about 1.7 million deaths are caused by cold a year, more than five times the number of heat deaths.
This matters because rising temperatures from global warming will reduce the number of cold deaths. Yet, the Nature Climate Change study scrupulously decided to only look at heat deaths by limiting its research to the four warmest months, ignoring the number of cold deaths, which were five times higher.
Cold deaths plummet as temperature rises
In The Lancet, some of the same authors estimated recent changes in full-year heat and cold deaths from the 1990s to the 2010s. Reliably, they found that heat deaths increased, but cold deaths decreased even more for all regions and, on average, twice as much. This suggests that leaving out cold deaths flips the central message.
Global warming up to now possibly means about 100,000 more heat deaths. But the Lancet full-year research shows it also very likely means we have avoided even more cold deaths, perhaps as much as twice that, equivalent to 200,000 avoided cold deaths.
Climate change is still a real problem. It affects many other areas, and even for heat and cold deaths, very high-temperature rises could see extra heat deaths outweigh avoided cold deaths in the long run.
But we’re not well informed when climate narratives only tell us the negative stories. Not only does technology make us much more resilient, but for now, global warming likely saves us more deaths than it causes, possibly 100,000 lives each year.
Science under Attack 28 June 2021
In the news recently have been two revelations about the sometimes controversial world of coral reef research. The first is fraud allegations against research claiming that ocean acidification from global warming impairs the behavior of coral reef fish. The second is an about-face on inflated estimates for the extinction risk of Pacific Ocean coral species due to climate change.
The alleged fraud involves 22 research papers authored by Philip Munday, a marine ecologist at JCU (James Cook University) in Townsville, Australia and Danielle Dixson, a U.S. biologist who completed her PhD under Munday’s supervision in 2012. The fraud charges were made in August 2020 by three of an international group of mostly biological and environmental scientists, plus the group leader, fish physiologist Timothy Clark of Deakin University in Geelong, Australia. The Clark group says it will publicize the alleged data problems shortly.
The research in question studied the behavior of coral reef fish in slightly acidified seawater, in order to simulate the effect of ocean acidification caused by the absorption of up to 30% of humanity’s CO2 emissions. The additional CO2 has so far lowered the average pH – a measure of acidity – of ocean surface water from about 8.2 to 8.1 since industrialization began in the 18th century.
Munday and Dixson claim that the extra CO2 causes reef fish to be attracted by chemical cues from predators, instead of avoiding them; to become hyperactive and disoriented; and to suffer loss of vision and hearing. But Clark and his fellow scientists, in their own paper published in January 2020, debunk all of these conclusions. Most damningly of all, the researchers find that the reported effects of ocean acidification on the behavior of coral reef fish are not reproducible – the basis for their fraud allegations against the JCU work.
In a published rebuttal, Munday and Dixson say that the Clark group’s replication study differed from the original research “in at least 16 crucial ways” and didn’t acknowledge other papers that support the JCU position.
Nevertheless, while the university has dismissed the allegations after a preliminary investigation, Science magazine points out that a 2016 paper by another former PhD student of Munday’s was subsequently deemed fraudulent and retracted. And Clark and his colleagues say they have evidence of manipulation in publicly available raw data files for two papers published by Munday’s research laboratory, as well as documentation of large and “statistically impossible” effects from CO2 reported in many of the other 20 allegedly fraudulent papers.
The about-turn on coral extinction involves another JCU group, the university’s Centre of Excellence for Coral Reef Studies. Four Centre researchers published a paper in March 2021 that completely contradicts previous apocalyptic predictions of the imminent demise of coral reefs, predictions that include an earlier warning by three of the same authors of ongoing coral degradation from global warming.
As an example of past hype, the IUCN (International Union for Conservation of Nature) states on its website that 33% of all reef-building corals are at risk of extinction. The IUCN is highly regarded for its assessments of the world’s biodiversity, including evaluation of the extinction risk of thousands of species. An even more pessimistic environmental organization suggests that more than 90% of the planet’s coral reefs may be extinct by 2050.
The recent JCU paper turns all such alarming prophecies on their head. But the most astounding revelation is perhaps the sheer number of corals estimated to exist on reefs across the Pacific Ocean, from Indonesia to French Polynesia – approximately half a trillion, similar to the number of trees in the Amazon, or birds in the world. To estimate abundances, the JCU scientists used a combination of coral reef habitat maps and counts of coral colonies.
This colossal population is for a mere 300 species, a small fraction of the 2,175 coral species estimated to exist worldwide by the IUCN. And of the 80 species considered by the IUCN to be at an elevated risk of extinction, those in its “critically endangered” and “endangered” categories, 12 species have estimated Pacific populations of over a billion colonies. One of the study’s authors remarks that the eight most common coral species in the region each have a population size larger than the 7.8 billion people on Earth.
The implication of this stunning research is that the global extinction risk of most coral species is lower than previously estimated, even though a local loss can be ecologically devastating to coral reefs in the vicinity. So any future extinctions due to global warming are unlikely to unfold rapidly, if at all.
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