Funding The New Generation (2)

Funding The New Generation (2)
by Jo Abbess
28th June 2008

My Dear Fellow Human Being,

I think you underestimate my experience of and rejection of narrow fundamentalism. I am, for the record, Post-Evangelical, having suffered imported American Religion and its incredibly straight-jacketed thinking, loaded onto me as a young person. And I have managed to extricate myself from “us-and-them” political and religious idea-space. I no longer do polarised ideology. There are no members or outsiders. We are all one.

However, as you may not realise, I am a systems thinker, and I design and improve all kinds of systems for a living. That means that I consider all the fluid and static aspects of systems, including social, ecological and financial. It is in my nature to follow trends and project outcomes or tendencies. I also “look behind” what is in the public domain, the life and times as reported, using lateral rationalisation.

But I’m not a conspiracy theorist. In fact, I am highly pragmatic.

I also think for myself. I’m not a puppet, nor a mime. You are incorrect.

For me, it is obvious that all the current plans to deal with Carbon will amount to mere tinkering, and not achieve real and lasting emissions reductions, unless the whole of life is de-Carbonised, including power generation, transport, agriculture, manufacture and construction.

Current policy schemas being pursued will not amount to much, because innocent people in positions of influence do not comprehend the power of those who are paid to seek compromise in policy. There is no easy way to arm-wrestle the primary producers of hydrocarbons and coal into a binding, effective, self-limiting regime, as their whole raison d’etre revolves around maximising production and maximising profit.

If you tackle them to the floor and force them to control production, the price will skyrocket. If you place price and profit controls on these organisations, they will play with production and source dirtier and dirtier fuels.

De-Carbonisation cannot be achieved by auctioning Carbon to the primary producers of Energy and Fuel. De-Carbonisation requires putting financial resources into ramping up Renewable Energy technologies, Energy Efficiency, Energy Conservation, and powering down dirty Energy by regulation.

One is no longer permitted to smoke in offices, so, by analogy, one should no longer be permitted to sell Coal into the Economy. Selling Coal to power stations is as good as burning the Coal yourself.

Unfortunately, it is not possible to get serious change in the sourcing of Energy merely by applying small incentives or disincentives, subsidising the good and taxing the bad. The scale of the problem is too large.

Some Energy and Fuel sources have to be banned outright, no grace period allowed. Why no grace period ? Because we need to solve the problems faster than we are fixing them, and selling Permits to trade Hydrocarbons and Coal into the Economy does not allow us to create solutions. It just ringfences the flow of Carbon Emissions, protects it from being dismantled.

Phasing out our dependence on Carbon must be based on the laws of supply and demand : in other words : demand should be destroyed at the same time as supply is curtailed, in order to keep the Economy stable. What we are seeing with rising oil prices is destabilisation, as a stressed supply is being priced up by rising demand. This is unhelpful.

Follow the money. The money should be going into implementing Low Carbon solutions and building Renewable infrastructure. If a set of policies is not achieving that, then it is failing. Carbon Trading isn’t working, and neither will Carbon Auctions, Cap-and-Trade or even Cap-and-Anything.

Zero Carbon Britain :-

from: b d

to: jo abbess

date: Wed, Jun 25, 2008 at 7:07 PM

subject: Your criticism of Mark Lynas


Wherever I go I see your criticisms of Mark Lynas on an upstream cap – I don’t agree with your criticisms.

I don’t think you have understood how an upstream cap works and I think your criticisms are based on that failure to understand. I have my own differences with Mark Lynas but I really think more deeply about the idea of the upstream cap.

The idea of an upstream cap is NOT to produce a high carbon price which will then deliver a behaviour change which will then deliver a fall in carbon used.

Your mind, like so many other people who approach these issues, appears to me to slip over into thinking about effects on price and money flows before you have taken in the effect of a cap as an administered limit imposed on physical quantities – on physical amounts of carbon allowed to enter the economy.

One of your criticisms of Mark Lynas is based on criticisms of the ETS – since the ETS is a partial downstream cap – with a huge, so called “safety valve” in the shape of the CDM – it is not remotely comparable with what he, Oliver Tickell or Cap or Share and Feasta for that matter are arguing for. This is even more the case as permits under the ETS are mostly given to companies for free.

The idea of an upstream cap is a reducing cap carbon imposed on first suppliers of fossil fuels. Upstream. In physical quantities. Full stop.

As you are a very radical person imagine that you are blockading Grangemouth and only allow out 9/10 of the tankers that came out of it as compared to last year because you decided that you were going to reduce the amount of carbon coming out by 10% per annum. Now imagine doing that at the coal ports, at the coal mines, at the gas terminals….now you are getting the idea of an upstream cap (being reduced at 10% per annum).

Of course the government does not need to blockade things – it can make a law and do the same job with a permit scheme – the companies operating at those locations would not allowed be allowed to take the tankers out of the gates without a permit for the carbon of the fuel in the tanker when burned and the numbers of permits available throughout the economy would be reduced year by year.

If you do that you have then achieved your carbon reductions….

Full stop.

Of course, “downstream” people and companies will find they have to cope with and accomodate themselves to less fuel (carbon) available – but they will be accomodating themselves to a fait accomplis. From a climate point of view the reduction in emissions for that year inside the economy will have been achieved…

Now do you get it?

The price rises are the subsequent effects as the consequences spread downstream and companies and individuals adjust to what has already happened.

You appear to have a fixed idea that only downstream caps actually stop the physical quantity of carbon reaching the atmosphere.

Au contraire – the point of an upstream cap is that the physical quantity of fuel and carbon coming out of the refinery gates, out of the coal ports, out of the gas pipelines coming into the country – will be reduced year on year. The PHYSICAL QUANTITIES WILL BE CAPPED AND REDUCED.

It is a no nonsense approach because it is so easy to do and so difficult to evade. In the UK there are only about 60 -70 locations where all the fuel which gives rise to emissions enter the economy. Blockade…..sorry impose a permit scheme at those locations and you have achieved your goal.

Now instead of a blockade – much simpler if you limit the number of permits and you make the first suppliers running the refineries, the coal ports, the gas terminals buy them if they want to sell fuel. That’s the auction.

Where the money from the auction goes is a subsequent matter. If the fossil fuel suppliers are forced to buy supplier permits in an auction then there is revenue available from their purchase of the permits to the auctioning agency. What happens to that money is an open question and a matter for debate and a policy decision.

But whatever happens to the auction revenue it will not undo the effect of the cap – at least not directly. Of course Mark Lynas is quite right that if some or all of the permit revenues are to flow into funding renewables sector investment and energy efficiency that will lead to a more rapid energy transformation of the economy. Well, it might. But it might also lead to much more social and political resistance against the rapid tightening of the cap as people find it really difficult to cope. In that sense it might actually slow down the transformation – which has to achieve a difficult balance act with public acceptability. In terms of political and public acceptability I happen to believe that it would be better that that revenue goes to the public equally – also because in a Zero Carbon Britain households will need resources to get their homes and gardens in order and the biggest transformation of all has to take place at household level where resources should therefore be concentrated…..

But whatever happens to the revenue from an auction (if that is the way permits are distributed) it will not somehow undo the effects of the upstream cap as some of your criticisms seem to imply.

For example if people on a low income find that they have more income as a result of getting some or all of the permit revenues of an upstream cap – and if they can even use this extra revenue to buy some more fuel for themselves in the first few years of the process it will NOT mean that the fall in the physical quantity will somehowhave been thwarted. It will still be the case that each year less will be coming out of the refinery, coal mine, gas terminal gates and pipes – so downstream of those gates and pipelines it is physically impossible for there to be an increase in the amount supplied –

What is in the economy to be distributed can only still be what has previously been allowed into the economy – no more can magically appear from anywhere.

What might happen because of price changes is, however, that the way that the declining quantity is distributed between different groups in society might shift from one group to another to some degree because of the price changes – and depending on who gets the permit revenues.

But just because some people might be better off as a result of their share of higher permit revenues does not mean that, if and when they spend their extra money on more fuel (if they do) that the cap is somehow rendered nul and void. All that is happening is that the more limited amount of fuel that is available might be distributed more in the direction of those who are now better off and away from those who are worse off – without any change in the total amount available changing at all (Because that’s been capped!!!)

Also if there is less fossil energy then the price of fossil energy rises. That makes renewables more competitive. If people want the same amount of energy in the economy then they will have to invest in creating non fossil energy sources – which are not capped.

I hope you understand the issues better now.


from: jo abbess

to: b d

date: Thu, Jun 26, 2008 at 12:31 AM

subject: Re: Your criticism of Mark Lynas

hi b,

it’s late, so i’m not going to read all of your paragraphs properly just now.

my objections to proposing an “upstream” cap are, briefly :-

1. sign up

at the current time, i cannot envisage the big energy companies doing more than lip service to assenting to being capped.

the big energy companies exist to make profits for their shareholders. they will either do this through selling more product, or they will do that by making more profit per unit of product.

they will not sign up voluntarily to having their business capped. even worse than that, they will find any way possible to get round the cap if it is enforced through law and regulation.

more pernicious, they will do everything they can to block the laws and regulations for the cap being made in the first place.

2. ownership

the only way to engage the upstream operators in any form of cap-and-something is to include a price signal : that is, either carbon permits, the auctioning of carbon rights, or rebate for quota (is there another way ?)

this inevitably creates “property”, and the ownership of this carbon property goes to those who are carbon wealthy, that is, their capital and assets are built on the use of carbon energy from the past.

this will inevitably serve to perpetuate inequalities, and also, it will ringfence protect the carbon-dependent businesses. they, after all, will have the right to burn.

3. de-carbonisation

the purpose of setting any carbon reduction goals is to actually reduce the amount of carbon emissions, permanently, to create a more sustainable energy future.

every scheme that creates carbon rights and prices them diverts funds from the real way to cut the carbon – de-carbonisation, in every process, machine, energy source.

the future is renewable energy. we need to finance this. it won’t happen if companies are raising prices in order to stand still in terms of profit-making.

i had some more to add, but it has temporarily vanished from my mind.



from: b d

to: jo abbess

date: Thu, Jun 26, 2008 at 7:54 AM

subject: Re: Your criticism of Mark Lynas

Jo – you write a 341 word reply before, as you admit, you have actually read properly what I have to say. Your points 2 and 3 were covered in my e mail.

As regards point 1 that too quite simply gets things upside down – the energy suppliers want downstream capping because it means that they don’t have to do anything and because they know that downstream capping will be immensely complicated and so will take ages to come into existence, if it ever does.

Upstream capping would be directly a reduction in their rights to sell – they would have to pay for the privilege of having their right to sell limited.

When Gordon Brown was Chancellor he was asked who the most powerful people in the country were and listed Lord Browne, that time CEO of BP, as, at that time, the most powerful person in the country.

Of course politicians and parliament will be reluctant to take on the sellers of fossil fuels because they are so powerful – but that’s just the point – an upstream cap focuses the political attention at the source of the problem.

Leaving aside land use caused emissions, the climate crisis is caused by the use of fossil fuels – so they are toxic goods and progressively reducing the allowed amount of these toxic goods allowed in the economy is the obvious solution. That means taking on the political and lobbying power of the sellers of fossil fuels. The point of politics is to create a political momentum so that the energy companies have no choice but to participate – because it would be illegal not to.

I answered your points 2 and 3 already in my first e mail. Indeed the whole point of my e mail was to answer those points so to repeat them without reading my response to those points is very frustrating to me.


from: b d

to: jo abbess

date: Sat, Jun 28, 2008 at 9:17 AM

subject Re: Your criticism of Mark Lynas

Jo – here’s another e mail for you to skim read, to assume to be wrong, and then ignore lest it cause you cognitive dissonance:

NO you did NOT answer my email at all – witness this statement:

“An Auction of Carbon Permits under the proposed Kyoto2 policy would advantage Big Energy producers and generators, who have the wealth to snap up the rights to burn, and then pass on the added cost to their consumers.”

An upstream cap does not involve “rights to burn”. It is about a right to sell fuels that other people and other companies can then burn.

Permits to supply in an upstream system are MEANT TO BE purchased by “big energy” suppliers. Only big companies supply coal, oil and gas.

There is a difference between permits to buy (and then burn) and permits to sell (to other people that burn). How much clearer can one say it and yet you still don’t take it in?!

The psychological mechanisms work like this: you convince yourself you are right, after all, all of your friends think in a similar way and you have committed yourself to an idea by writing and speaking about it with people….then along come critics….so you sneak a quick look at what they say….you skim their idea, find a phrase that you think proves that they are wrong…don’t bother to really try to understand the other point of view…and then repeat what you’ve said a hundred times before…it’s called cognitive dissonance.

Many years ago when I was a young Trotskyist I used to do it myself – in debates I just read the people on “our side” of polemical arguments. After all, if I had been convinced by the other people, in another group, I would find it a difficult one to argue their case in my group – I might even end up ostracised, without a social network. I would have to fall out with people I got on well with. So I fell in with their way of thinking.

As you know if you go to a meeting and everyone else there is arguing for one thing, and you are a critic arguing for something else, eventually you end up silent because it is an uncomfortable role to be in. That’s partly why, having created a momentum by being in the market of ideas in the UK first, David Fleming and Mayer Hillman, have created a set of assumptions about how carbon trading is and must work and it is very difficult for people who argue for upstream caps to get listened to. When they do acknowledge there is a different possible way of doing things, people don’t really look at it closely and take in the real differences – as that is not the taken for granted “correct idea” in their social network.


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