The Unavoidable Economic Truth

The Unavoidable Economic Truth
by Jo Abbess
4th March 2009

Lord Drayson has discovered what many people have already found out : “It’s difficult to get a man to understand something, if his salary depends on his not understanding it.”

The whole of the Capitalist Economy rests on the unsure foundation of the dirt cheap and readily available supply of Fossil Fuels.

Economic Growth is founded almost entirely on this underpriced Energy.

For product-inventing, profit-making, profit-taking corporate bodies, those who have imposed their systems of trade and exchange on the rest of us; they cannot be made to see the problem of Energy.

How Energy will need to become gradually more expensive to reflect its true environmental cost. How Energy supplies are in freefall because of Peak Oil and peak Economy. How a Carbon Price will take the steam out of every profit-making venture. How Economic Growth is doomed.

Of course business leaders don’t understand these things. They believe that eternal growth is not only possible, it is a prerequisite for continued business. After all, they’ve sold shares in their companies, so they are duty-bound to make a profit, that is, continue to grow.

But the whole thing’s broken, and there ain’t no fixing it. Economic Growth requires added value coming into the system from somewhere, whether that be cheaper and cheaper commodities, cheaper and cheaper labour, cheaper and cheaper production costs.

Well, cheap labour has hit the buffers, despite the Gospel of Globalisation having been preached throughout the world. Why can there not be an expansion of cheap labour, when the people in cheap labour countries continue to spawn uncontrolledly ? Because Climate Change is having an impact on native environments to be able to host so many people.

Commodities are all experiencing upward pricing trends : coffee, tea, cocoa, gold, silver, copper, wheat…Those who had stocks in property are converting to stocks in commodities, because that’s where the profit trends lie. So, commodities in the regular trading systems are experiencing anti-cheapening forces. But Climate Change adds to the stress on costs of commodities through poor harvests, new Energy technology requirements, failures in the rest of the Economy.

And cheaper and cheaper production costs ? Well, when you’ve outsourced to the max, and made all your machines Energy-efficient, and driven down your First World labour costs by union-busting, and lobbied for successful subsidies, bailouts and deregulation (non-taxable status), then where else can production costs be made any cheaper ? As an example, processed foodstuffs converted from expensive oils to Palm Oil several years ago, but now palm oil is under price stress too.

And then, you have to take into account the fact that the Great Assumption about Virtually Free Energy is about to get popped too, and your estimates for production costs must inevitably rise.

Whether Energy costs are increased by fixed-floor Carbon pricing (Kyoto2, Lord Adair Turner today’s news), or by rationing, sooner or later Energy costs will affect production costs, and bang goes the chances for an Economic recovery, forever.

Face the truth : there are Limits to Growth. The Earth system cannot support continued increases, an acceleration in fact, of Carbon Emissions, and the thin crust of the Earth only holds so much crude oil. There has to come a time when Virtually Free Energy becomes quite expensive, really. There’s no escaping this. And it will take down Capitalism with it, I’m sorry to say. But on the other side of the collapse of “the dollar economy”, there will be a brighter, more sane future of trade.…

Industry leaders denying climate change, says UK science minister

[ Senior figures in the manufacturing industry do not accept that human activities are driving global warming, Lord Drayson says ]

Lord Drayson says there is an urgent need to restate the scientific evidence for global warming and calls for companies to focus on their environmental obligations

Ian Sample, science correspondent, Wednesday 4 March 2009 17.40 GMT

Senior figures in the manufacturing industry do not accept that human activities are driving global warming or that action needs to be taken to prepare for its effects, the UK government’s science minister saidtoday .

Lord Drayson said recent discussions with leaders in the car industry and other businesses had left him “shocked” at the number of climate change deniers among senior industrialists. Of those who acknowledged that global temperatures were rising, many blamed it on variations in the sun’s activity.

Speaking in London to mark the launch of a new centre that will gather information from satellites to improve understanding of how the Earth’s environment is changing, Lord Drayson said there was an urgent need to restate the scientific evidence for global warming and called for companies to focus on their environmental obligations despite the pressures of the economic downturn.

“There is a significant minority of senior managers who do not accept the evidence for climate change and don’t see the need to take action,” Drayson said. “It really shocked me that those views are held, and it’s not limited to the car industry.”

“The industrialists are faced with a very difficult challenge, which is huge infrastructure investment in existing ways of doing business and very difficult global economic circumstances.

“The temptation is to say we’ll get round to dealing with climate change once we’ve fixed all this other stuff. We need to present them with the evidence to say this can’t wait, we need to fix both,” he added.

The new centre will receive £33m over the next five years and will coordinate research using Earth-observing satellite data at 26 British universities and institutions. Known as the National Centre for Earth Observation, it will focus on ways to improve climate change models, sea level rise estimates, flooding forecasts and ways to predict earthquakes and volcanic eruptions. It also hopes to develop improved weather forecasting software ahead of the London Olympics in 2012.

A major task for the centre will be to use real-time measurements of sea ice melting, droughts and atmospheric conditions to hone computer models that climate scientists use to predict future warming and its effects.

“Earth-orbiting satellites are revolutionising our understanding of planet Earth, in terms of how it works and what forces work against it, not least from climate change. But in order to get more from that data, to get climate information on 10 year scales, and on regional scales, we’ve got to iron out some significant issues we have with the computer models,” said Alan O’Neill, director of the centre.

Some environmental processes are so poorly understood that they hinder the ability of climate models to make accurate predictions. The amount of carbon released into the atmosphere from deforestation in the tropics is so uncertain that estimates range from 0.7 to 2.6bn tonnes a year. Other scientists say that some feedback processes in the atmosphere are so unclear they do not even know if they will speed up global warming or slow it down.

The centre was due to take data from Nasa’s ill-fated Orbiting Carbon Observatory satellite, which crashed into the ocean near Antarctica shortly after take-off last month. The satellite was designed to bolster understanding of climate change by mapping levels of CO² in the atmosphere.

Three new Earth observing satellites are scheduled to launch this year, including the European Space Agency’s Goce probe, which by mapping the Earth’s gravity field will reveal details of changes in ocean currents. Another satellite, Smos, will measure soil moisture and ocean salinity, with the third, cryosat-2, monitoring the thickness of continental ice sheets and sea ice cover.…

Turner adds voice to calls for a ‘floor price’ on carbon permits

Chairman of the UK’s Committee on Climate Change adds an influential voice to calls for a minimum price for carbon pollution permits

Juliette Jowit, Wednesday 4 March 2009 17.15 GMT

A minimum price for carbon pollution permits should be considered to stop current low trading prices scaring off investment in cutting emissions, the government’s top climate change adviser urged today .

The steep drop in the price of carbon under the European Emissions Trading Scheme (ETS) – from about €30 (£26.75) a tonne last summer to €8 (£7.13) last month – has recently prompted calls for a “floor” price.

Today, Lord Turner, the chairman of the Committee on Climate Change, added an influential voice to calls for the move to be considered, though the committee said more evidence was needed to be sure if current low prices would continue. The recent prices compare poorly to an projected price of £40 per tonne of carbon dioxide in a report by Turner’s committee last year, which led to the UK committing to cut greenhouse gas emissions by 80% by 2050.

“We have concerns [that] if the carbon price continued at its present level it would not send the signals which are required [to investors],” Turner told MPs on the energy and climate change select committee. “I’d think, given the fall in the carbon price this year, that’s something that should be considered. It would, of course, need to be considered at European level.”

In January the European commission appeared to rule out intervening to prop up the falling price of carbon, and Ed Miliband, the UK climate change secretary, told the Financial Times he was “not convinced that a floor is particularly necessary”.

Carbon trading is a key mechanism by which countries will seek to reduce emissions in a global climate deal to be negotiated in Copenhagen in December.

Concerns about a price floor in the ETS include the threat to EU businesses competing against rivals outside the trading scheme, and that it would make it more difficult to link the European system to other markets around the world, something high on the agenda for the Copenhagen talks.

A planned-for reduction in the allocation of carbon credits under the next phase of the European scheme, reducing by 1.7% each year from 2013 to 2020, would push up the price of carbon and so mean a floor was “not needed”, said Endre Tvinnereim, a senior analyst for Point Carbon, independent experts in energy and carbon markets.

However Richard Gledhill, head of carbon market services for PriceWaterhouseCoopers, said there was growing interest in the issue: “Given where carbon prices are, and the scale of the challenge, I think we should look at this very seriously.”

Today, the ETS price recovered to nearly €12 during morning trading.

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