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World Leaders Agree to End Fossil-Fuel Subsidies to Slow Global Warming

By September 28, 2009

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At the Group of 20 (G20) meeting in Pittsburgh last week, the world's largest economies agreed to end subsidies for oil, coal and other fossil fuels that produce greenhouse gases and contribute to global warming, but failed to move ahead on offering financial aid to developing countries that are already feeling the effects of climate change.

The $300 billion spent every year on subsidies worldwide actually accelerates global warming by keeping prices artificially low and increasing demand for fossil fuels. Phasing out the subsidies between now and 2020, as the G20 nations intend, would decrease global greenhouse gas emissions 10 percent by 2050.

By punting temporarily on providing "climate change" money to poor countries, the G20 leaders renewed concerns that they may lack the commitment to achieve a meaningful international pact to slow global warming when they meet with other nations at the United Nations Copenhagen climate conference in December. Yet, in a joint statement, the G20 leaders pledged to increase their efforts to reach an agreement this year. They also asked their finance ministers to develop a variety of climate-related financial aid strategies for them to consider at their next meeting.

The subsidy decision was seen as a victory for U.S. President Barack Obama, who had urged the other G20 leaders to drop the billions of dollars in tax breaks, low-interest loans and other subsidies many nations offer to energy companies. Naturally, the president had good things to say about the new strategy.

"This reform will increase our energy security ... and it will help us combat the threat posed by climate change," Obama told reporters after the two-day summit. "All nations have a responsibility to meet this challenge, and together we have taken a substantial step forward in meeting that responsibility."

Energy producers reacted as though ending fossil-fuel subsidies would also end life as we know it, leading to both higher prices and higher taxes. On the other hand, environmental groups offered qualified praise for the move, warning that world leaders should not allow the positive step of lowering greenhouse gas emissions by eliminating oil subsidies to distract them from helping poor countries that are struggling to mitigate the effects of global warming.

The mixed outcome of the G20 meeting on climate issues was perhaps best summarized by European Commission President Jose Manuel Barroso: "I do not hide my concern at the slow rate of progress. Negotiations cannot be an open-ended process. It's time to get serious now, not later."

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Comments

September 28, 2009 at 3:20 am
(1) HSR0601 says:

1. The Need For Change In Energy Platform :

A. About two thirds of deficit in the U.S. accrue from oil import.

B. Over $1 trillion and 4,346 dead as the Iraq war is winding down. By converting this excessive military budget into a constructive foundation of 21st energy and health care, world can live in harmony for good.

C. Tremendous trade deficit with China. The most expensive premiums of health care driving buyers into Wal-Mart .

2. The Cost Of Inaction :

As with “Inaction” cost, $9trillion over the next decade in Medicare, Medicaid and Social Security, supposedly the same is of inaction on the 21st energy bill to determine war & peace, catastrophe & prosperity.

In this economy, fuel price is hovering around $65 to $75 a barrel, which underscores the actual value might be much the same as $145 per barrel of the peak price. Last year, the petrol price jumped from about $60 to $145 per barrel in quite a short period.

I think energy market also needs competition between sustainable and conventional one to bend the cost curve, otherwise, the global economy stays flat for some time and is plummeting into another great depression as the international stimulus package can’t last long.

3. The Root Of Recession :

My sense is that this great recession is ascribed to excessively higher price of petrol in recent years. This price spelled about higher consumer prices and the continued hike in mortgage rates as a way to slow inflation, which wound up with crash in financial and construction markets. In an attempt to circumvent the censure of two petrol wars, the mainstream economists put focus on the both markets, and it postponed the prompt action on the long and long overdue contemporary energy needs.

Looking to worthless, painful and wasteful oil wars, to waste time bickering over meaningless things and drag feet on a defining energy bill are sure to shake the embryonic effect of stimulus package that is an interim measure for build-out of a new foundation.

As the overall oil reserve in Middle East, let alone the rest of oil-producing areas, is on the decline more than known, the region blessed with affluent sun rays also needs to lay a new groundwork, particularly in this context UAE is beginning to concentrate on future energy and Iranian EV is rolling out recently, the countries in the region will never stand still on the occupation, that means no matter what the result is, the repetitious mistake at the cost of invaluable lives and gigantic spending will end up with an irreversible tragedy later on.

4. Hope For Better Change & Job Boost :

As a major driver, IT industry stalled and stranded in a game industry for the lack of 21st energy policy over the stretch of two wars needs to expand into the all but indefinite energy, medical, and academic industry where the investors are eagerly waiting for policy-makers to act now, which I guess is why the far-reaching and long overdue health care and 21st energy bill have come into focus.

Thankfully and interestingly enough, 100s of Companies (with $13 Trillion) Are Demanding Strong Climate Deal in Copenhagen just like environmental activists, a coalition of more than 500 Global Businesses is also demanding ambitious new climate deal, and the report by Blair and the Climate Group, a London-based nonprofit organization, found a climate-change accord among all countries would spur economic growth and create as many as 10 million jobs by 2020.

Beyond the report, according to a new report published by the Global Climate Network of think tanks, “A Global Green New Deal” could create tens of millions of new jobs by agreeing to invest in low carbon technologies.

This research shows that while jobs will be lost in conventional, carbon-intensive sectors, more jobs will be created than lost provided that policies to promote sustainable industry are ambitious enough and it is one of the most effective means of handling rising unemployment.
It concludes that measures to creating markets for low carbon technologies will serve the dual purpose of creating extra jobs in renewable energy, information technology and service sectors, as well as helping reduce greenhouse gas emissions.

5. Funding For Hopeful Change :

A. Converting the excessive and destructive military budget into constructive financing for the 21st energy.

B. Phasing out subsidies for carbon-intensive industries, and taxing carbon emissions.

C. For the most part, the poor regions ranging from Africa to South Asia severely affected by climate change are abundant in sun rays, and the compensation by way of placement of large solar plants as well as the other measures could generate enormous effects.

D. Cost considerably less than 1% of GDP per year in the long term, or up to $175 per household in 2020. (Thatís about the cost of one postage stamp per household per day.)

Currently, a 21st energy bill has passed the House and is making its way through Senate. According to CBO, this bill would trim budget deficit by $24.4 billion of a net gain.

6. Promising And Enough Tech In The Work :

In brief, only technology and innovation can meet the challenge, and the world of science has potential enough to get past this turbulence and for all over the globe to go along in harmony. Recently, GM and Reva that achieved a fantastic innovation of “wireless electricity”/ “instant remote recharge” have joined hands to develop Electric Vehicles.

In the near term, improving energy efficiency needs some up-front investments, though, in the long term, it promises much better future, and the current tech is sure to do better enough.

Thank You !

September 28, 2009 at 8:08 am
(2) guidoLaMoto says:

Close, but no cigar, HSR. You’ve brought up the classic “guns or butter” debate. Without the guns, there could be no butter. The $1 triilion spent on our recent problem represents only 1% of our GNP over the last decade. BFD.
-The recent recession is complex, of course. Among the reasons: normal business cycles (one doesn’t buy a car or a house every year), unsustainable lending practices caused by govt medling in the free market, and yes, increased fuel prices. Watch for that to get worse as fuel supplies deplete. Imposing taxes on CO2 will only bring on economic collapse sooner.
-Nobody could meet the demands of Kyoto, so why not make a grandstand play and agree to more stringent goals? Nobody will comply again anyways.
-Economics studies have shown that regulations on energy in Europe cost 2.5 jobs for every “green job” created. Poor trade off, wouldn’t you agree?

-The real problem is not that there aren’t enough jobs, but that there’s too many people for the number of jobs available. Nature has a way of dealing with these problems, and we’re not the gunna like it.

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