We are reading many headlines these days about the Copenhagen summit and the commitments that are expected to come out of it. I will not discuss the scientific findings that lead to this group of nations to meet, but would warn about the plan to create the biggest energy and financial bubble in history: a huge fund to drive CO2 through the roof.
In this summit governments will take the first global decision since the industrial revolution that is not based on an improvement in economic efficiency. It is about intervention on a global scale to promote industrial processes which are more expensive and inefficient than current technologies, and managing the global energy policy from the UN, not from markets and sovereign governments.
The interventionist governments have already created a commodity, CO2, and assigned a fabricated supply and imposed demand. This artificial commodity was allowed to trade on the markets with the goal of encouraging speculation, the same speculation that is demonized when it comes to gold or oil.
But the problem is that the prices that they had expected, €40-50/ton CO2 did not materialize; given that when markets are allowed to work they fastidiously often reflect the true dynamics of supply and demand, and prices sometimes fall. Now the CO2 (December 2010 contract) is trading around € 15/T. And the plan does not accept price falls, as they need to generate price inflation to justify the transition to expensive alternative technologies. Thus, the world’s governments are meeting this week to create a huge fund, estimated at more than 300 billion dollars, financed with our taxes, to revive the bubble, where the laws of efficiency, supply and demand are abolished in favour of a supposed climate benefits in 2050. A bargain.
The expected agreements could be summarized in three parts. First, developed countries would commit to reduce their emissions to a specified amount.
Second, developing countries would commit to reduce the “growth in emission intensity.” As the reader may have guessed, the sum of the two will not reduce emissions, but increase it. Why? Is there no commitment to save the Earth? No, because the objective is not to save anything except the mega-bubble by creating more emissions than required so countries will buy more expensive CO2.
Come to the third: They want to create the previously mentioned $300 billion fund dedicated to the transfer and technological adaptation.
Let me translate: Dear friends of developing countries… please forget about using your natural resources to grow at $ 40/bbl as we will force you to use foreign technology and increase your energy bill to $ 110/bbl or more.
In short, a fund controlled by politicians from the UN, with such a great track record as managers, that decides and orders on global industrial development with an objective that is unquantifiable in any economic or efficiency term. The UN will impose foreign and expensive technologies on developing countries at a reasonable price or free to begin with, but a very high cost subsequently, in order to increase their dependence. This is a fund that will be created through higher taxes, increasing the bill for the CO2 bubble. And the bill to purchase CO2 credits will cost Spain, for example, 3 billion Euros between 2008 and 2012, and the UK will pay around 5 billion in the same period.
I agree that CO2 emissions are a problem to solve. I am convinced that many renewable technologies will be competitive without subsidies in the short term, and I firmly believe in companies that innovate and lead the change process. But this change can not be managed by supranational agencies with no positive track record. The law of supply and demand, as well as innovative and efficient technologies should be the axis of a profitable and efficient change, but not imposed.