Daily Archives: June 26, 2009

Fiona Harvey

As of Friday afternoon, it looks as if there will be a vote on the US cap-and-trade bill today in the US, though it still could carry over to next week.

The bill as it stands has been heavily modified to try to garner every last possible scrap of support in the House.

This includes some major sops to farmers – the inclusion of agricultural credits, based on the sequestration of carbon in soils.

Such credits are notoriously hard to do properly – it is extremely difficult to quantify how much carbon is being released from soils, to verify that farmers have followed the correct methods to conserve carbon dioxide in the soils, and to police the awarding of the credits.

Mitchell B. Feierstein, chief executive of Glacier Environmental Funds in London, which specialises in buying and selling carbon credits, explains: “Agricultural credits can have credibility, but it’s crucial to establish credible baselines and robust methodologies ensuring any credits generated
are quantifiable, real, permanent, verified and certified by an independent 3rd party, are given unique serial numbers and stored in a credible custodial registry maintained by a creditworthy counterparty. These criteria are imperative and not flexible.”

He continues: “You have to ensure any credits involved in the US program provide genuine
environmental benefits; otherwise you are just creating a way for people to
arbitrage the system and/or opening the door to green wash.”

But he is doubtful that current methodologies for awarding such credits are adequate for use in a mandatory federal cap-and-trade system. He says: “I do not know of a proven baseline or methodology currently in existence that quantifies and ensures permanence and performance in these categories. Many existing methodologies are not robust and lack credibility. An example
is certain “credits” based on current methodologies trading for 60 cents a tonne. Mostly all of these “credits” are business as usual and would have happened anyway and provide extremely questionable environmental benefits. This must be prevented.”

But it seems that awarding large numbers of agricultural credits was politically necessary to get Representatives from the big farming states on board.

There is also a nod to industries worried that, if they are covered by a cap-and-trade system, they would be undercut by a flood of cheap imports from countries without restrictions on carbon dioxide emissions.

The bill as it stands now makes it mucht easier for the US to impose import tariffs against countries that do not control their carbon emissions.
These “border tax adjustments” may be permitted under World Trade Organisation rules, according to a report published this week by the WTO and the United Nations Environment Programme.

Kate Mackenzie

In lieu of usual Friday number/quote/image-of-the-week post, here is a multimedia report from our West Africa correspondent Matthew Green.  Navigate the labyrinthine channels of Nigeria’s oil-rich delta and watch video reports as Matthew investigates the conflicts caused by oil production in the region.

Fiona Harvey

On Energy Source:

Going to the zoo to hear about climate change from Gordon Brown

US oil prices – what oil price can the US afford?

More on the new man at BP

US catches up on offshore wind

Elsewhere:

Offshore wind plans in Norway (Reuters)

US to spend $3.9bn on smart grid (Reuters)

Oil price steadies after Nigerian pipeline attack (Bloomberg)

Petroleos de Venezuela may need to raise $3bn (Bloomberg)

Kate Mackenzie

After a long and difficult search, BP has named the man who will succeed Peter Sutherland as chairman:

BP said on Thursday that it had appointed Carl-Henric Svanberg, chief executive of Swedish telecoms equipment maker Ericsson, to take the place of Peter Sutherland as chairman of the UK oil major.

The decision ends a long search process.

Mr Svanberg will join the BP board as a non-executive director and chairman designate on September 1 before taking up his role fully on January 1 2010, the company said in a statement.

The FT’s telecoms editor, Andrew Parker, talks a bit about Svanberg in this video:

Related links:

BP names Svanberg as chairman (FT, 25/06/09)
More trouble for BP’s board, courtesy of RBS
(FT Energy Source, 07/04/09)

Fiona Harvey

Gordon Brown laid out the UK’s position in the international talks on a successor to the Kyoto protocol this morning, and he did so at a rather surprising venue: London Zoo.

There was a nod towards the natural world in his speech, when he mentioned the damaging effects of climate change.

But mostly he was talking about money – how the developed world must finance emissions reductions in the developing world, and help poor nations to adapt to the effects of climate change.

This is a very important point – as we have pointed out before, financing is a make or break issue for the ongoing negotiations set to culminate in Copenhagen this December.

Mr Brown became the first leader to put a figure on the amount needed – $100bn per year in assistance by 2020.

Which sounds good, but rather overlooks the fact that he will be long gone by then and he has no proposals for the amount of financing needed in the interim.

He also failed to put any money at all on the table from the UK. leaving wide open the question of what the UK will do to assist the developing world.

And one more lingering question – why on earth the zoo?

- White House lobbies wavering lawmakers on climate bill
Commitment to cut emissions by 17% (FT)

- Carbon credits for land use placate US farmers
Some farmers reverse opposition to cap and trade (FT)

- Europe moves to reduce pollutants
Legislation would cut emissions by a third by 2020 (FT)

- EU invests in China carbon capture and storage
Agrees to contribute €50m to building facility (FT)

- Paris poised to sell Areva stake to raise €2bn
Ready to sell to strategic partners in Asia and Mideast (FT)

- New BP head calls for ease on resources
Says growth in car ownership and air travel unsustainable (FT)

- Steep learning curve faces BP’s surprise new chairman
Svanberg’s expertise should serve oil group well (FT)

- Svanberg profile: Charmer with great contacts
Ericsson recaptured market share under his leadership (FT)

- ‘The tank’ chairman who took BP global
Outgoing chairman oversaw huge acquisitions (FT)

- Malaysia’s Petronas profits hit by increase in payments to state
Oil company is single biggest contributor to country’s coffers (FT)

- Lex: Beyond Peter

Energy Source is no longer updated but it remains open as an archive.

Insight into the financial, economic and policy aspects of energy and the environment.

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