More on the worst corporate scandal you’ve never heard of David Steven

A month ago, I posted on the Ranbaxy drug scandal – a shocking tale of systematic fraud by one of the world’s leading manufacturers of generic drugs. After the US regulator had used a whistle blower to bring the company to some kind of justice, I wondered what regulators in other countries were doing to protect themselves from medicines that were being manufactured without any proper safeguard.

Now, thanks to the Telegraph, we have an answer for the UK. And it’s a depressing one, with the regulator repeatedly ignoring emails from  Dinesh Thakur, the executive who had seen at first hand that “lying to regulators and backdating and forgery were commonplace.”

In November 2005, he wrote: “The reason I am writing to you is to alert you that Ranbaxy is defrauding the UK government and the British public and hoping that [you] would be able to do something to stop this crime.”

He also urged the MHRA to contact the FDA’s chief investigator, who he said would be able to verify his claims.

In reply, he was thanked for “bringing this matter to our attention”.

A day later, he warned of “widespread and pervasive wrongdoing at Ranbaxy” and said he could put the MHRA in touch with a former executive at the company who could provide more evidence.

He hoped the MHRA would take action against the company which “has committed so many crimes to make a quick buck”. He wrote: “Given the past experience with this company, I am afraid that they are quite adept at the art of covering up their fraudulent practices and your inspections may or may not provide you with the conclusive evidence you seek.”

In the first half of 2006, Mr Thakur received a reply from an MHRA official that they were “evaluating data supplied to us from other regulators regarding recent inspections … I can assure you that appropriate action will be taken where necessary”.

Mr Thakur made a final attempt to rouse the agency in February 2007. “I wish the MHRA was as vigilant and protective of public health in the UK as the US FDA is in the USA,” he wrote.

As I suggested in my original post, someone should now follow up with the company’s British ex-CEO, Dr Brian Tempest,  now chair of the advisory board of Lancaster University Management School, and too busy to speak to reporters in the superb Fortune story that first exposed this sorry tale.

Let the Poor Starve (updated) David Steven

Congressman Stephen Fincher, a Republican from Tennessee, is part of an effort to cut $20 billion from food stamps, a program that helps feed nearly 50 million Americans, at a monthly cost of around $275 per person.

Fincher has collected $3.5 million in farm subsidies since 1999 (mostly for cotton), but according to Mark Bittman in the New York Times, the Congressman has a simple explanation for why he thinks spending money to feed poor families is wrong.

He quotes Paul’s second epistle to the Thessalonians.

For even when we were with you, we gave you this command: Anyone unwilling to work should not eat.

Read the whole thing and weep.

Update: Alex Evans gets it touch to point out something quite unexpected. Fincher, it seems, is in fact a communist. Lenin was a tireless advocate of the notion of no-work-no-food and made sure it was given a prominent place in the 1936 Soviet Union constitution:

In the USSR work is a duty and a matter of honor for every able-bodied citizen, in accordance with the principle: “He who does not work, neither shall he eat.”

The congressman professes that “the Constitution and the Bible are our guiding documents.” Surely it is time for him to propose an amendment finally to bring the American version in line with its sadly-defunct Soviet counterpart?

(See the comments for further theological thoughts from Alex.)

Greenpeace on shale. Really? David Steven

I have long been bemused by the politics of shale gas in the UK. It’s hard to understand why a Conservative-led government is not trying to get the stuff out of the ground as quickly as possible – there’s potential tax revenue for a cash-strapped Treasury and most believe that George Osborne’s environmental credentials are little more than skin deep (if that).

It’s easier to see why green groups have focused on peripheral issues such as water pollution or earthquakes, rather than climate impacts – it sexes things up for the public – but the addiction to cheap campaigning stunts has obscured the only really important issue:  will pumping out more domestic gas make carbon emissions harder or easier to reduce?

Look at what a mess Greenpeace has got itself into over the issue. It is resolutely opposed to fracking, of course, but, at the same time is determined to maintain that Britain has little, if any, unconventional gas that can be removed at market prices. This is absurd. If there ain’t any gas, why worry about it?

You see how boxed in Greenpeace has become in its most recent press release:

Every analyst, from Poyry, to Ernst and Young and even Cuadrilla says UK shale will have little or no impact on bills.

“MP’s [sic] voting tomorrow on the decarbonisation of the power sector should remember that sending drilling rigs into our rural villages in a desperate hunt for gas could cost them votes. They should instead vote for clean, renewable energy that will bring bills down over time.”

This borders on the mendacious. Every analyst? Play around with Google for a few minutes and you’ll find that this claim is far from the truth. And that includes those analysts Greenpeace mentions by name. Take Poyry. It argues that just Lancashire shale could provide a fifth of the UK’s gas by 2030, reducing wholesale gas prices by £8bn a year between 2014 and 2035, and wholesale electricity prices by 2-4%.  Sounds a big deal to me.

Then there’s Ernst and Young. In a 2011 report, its analysts argued that shale gas would bring undeniable economic benefits to European countries, including by exerting downward pressure on prices (although not as dramatically as in the United States, primarily due to the prevalence of long-term gas contracts in the European market). Ernst and Young is cautious about the prospects for the UK’s shale gas, but still sees the emergent industry as a threat to higher-priced renewables, “combin[ing] the prospect of substantial financial reward for prospectors with carbon gains for regulators if coal is substituted out of the energy equation.”

As for Cuadrilla, it claims that “natural gas from shale has the potential to boost the UK’s gas production, reduce the UK’s dependency on expensive foreign energy sources and to lower gas prices.” It has also been excoriated by – yes – Greenpeace for funding a report by the Institute of Directors which argues that “growing shale gas production could play a key role in reducing potential upwards pressure on gas prices from rising demand in rapidly developing countries such as China and India.”

So that’s three out of three sources that are significantly misrepresented by Greenpeace’s claims. Now I am no geologist, but I suspect that British shale gas is worth worrying about it because there’s quite a lot that can be brought out of the ground, and at a price that will drop as extraction methods improve.

If I’m right, that’s forms part of a much bigger fossil fuel renaissance that has been driven by high energy prices since 2008. We live in a world where a LOT of ‘new carbon’ is being brought into play, just as damage to the world’s climate begins to reach critical levels. Pretending this isn’t happening may garner Greenpeace a few newspaper headlines, but – in the long term – it ain’t going to help.

Early reactions to the High-level Panel Post-2015 report David Steven

Below, you can find my summary of the High-level Panel report on what should replace the Millennium Development Goals. Here’s a summary of reaction to its publication.

Ban Ki-Moon is grateful. Sweden has won a great victory. Save the Children – it’s pretty good. Sightsavers: more comprehensive and ambitious than I dared hope. UK – let’s finish the job on poverty. ODI happy disaster risk reduction is in. President Johnson-Sirleaf: “we can be the first generation to eradicate global poverty.”

Oxfam fuming: “The Panel has failed to recognize the growing consensus that high levels of inequality are both morally repugnant and damaging for growth and stability.” “Really HLP? You *don’t* think the world needs to reduce inequality?” One Campaign welcomes specific commitment to ending poverty. Op-ed from John Podesta (plus his 5 minute take on YouTube) – American panelist:

President Barack Obama believes it. President Ellen Johnson Sirleaf of Liberia believes it. I believe it, too: By 2030, we can eradicate extreme poverty.

This is not a hollow platitude. The generations living today are the first in human history that could eliminate extreme deprivation and hunger. It is critical that all nations strive to meet this goal. Not only for our own security, though we know that a more prosperous world is more stable, but because ending extreme poverty is the right thing to do.

UN Foundation: “a particularly significant and bold contribution to the development of a new framework to succeed the Millennium Development Goals.” DFID has a snazzy infographic. Grand Challenges Canada – it’s a smorgasbord. Patricia Espinosa (Mexican panelist): “Además de completar las Metas de Desarrollo del Milenio, la nueva agenda debe crear bases para la prosperidad de las generaciones futuras.”

WaterAid: “delighted that the Panel has heard the call for a goal on universal access to water and sanitation. We will only succeed in ending poverty if ambitious targets are also agreed that by 2030 everyone everywhere has access to water, sanitation and hygiene.” IISD analysis.

BBC leads with end poverty angle, but notes failure to include goal on income inequality:

Among 12 measurable goals set out in the report are an end to child marriage and equal rights for women to open bank accounts and own property. The panel also recommends bringing together development and environmental agendas, with targets for reducing food waste, slowing deforestation and protecting ecosystems.

It also stresses the need for countries to give citizens confidence in their governments by promoting the rule of law, free speech, transparency and cracking down on corruption.

Economist: towards the end of poverty (not always with us). Guardian focuses on lack of inequality:

Nice goals, but the elephant in the post-2015 room is inequality,” said Andy Sumner, a development economist at King’s College London. “We find in our number-crunching that poverty can only be ended if inequality falls so one should ask: where’s the inequality goal? Something resembling that elephant in the room [– on data disaggregation –] is in annex 1 of the report, but will anyone remember an annex note in 2030?

Claire Melamed – missed opportunity on global partnerships:

While getting global agreement on much of this agenda is notoriously difficult and the report can’t change that, the panel could have helped the politics along by linking the most difficult issues to specific outcomes – improved trade rules to job creation and equitable growth, for example, or financing commitments to outcomes in health or education (so, rather than a generic commitment to spend 0.7% of gross national income on aid, commitments to provide financing to meet specific objectives in other goals).

WRI – a major breakthrough on sustainability. UNFPA – welcomes goal to end child marriage. WWF: “there is finally recognition that poverty cannot be eradicated and the well-being of people across the globe cannot be secured without addressing the grave pressures on the environment and the natural systems that support human life on this planet.”

Reuters:

Among the recommendations, the 69-page report says large businesses should be obliged to report social and environmental impacts, in addition to their financial accounts.

Mark Leon Goldberg: important proposal for Global Partnership on Development Data. Charles Kenny:

The biggest positive of the report is the example it sets for the formal negotiations on post-2015.  The panel was a group 27 people including three heads of state and numerous others with very close ties to or roles in different national governments.  If they can agree twelve ‘indicative’ goals that are reasonably coherent, somewhat selective, and involve a lot of targets that are important, compelling, time bound and measurable, maybe (maybe) the UN General Assembly can manage something similar.

And Tearfund – making probably the most important point of all: “It’ll be interesting to see how quickly we can work together globally to break the political deadlock which has so far prevented this vision from becoming reality.” (more…)

After 2015 – the High Level Panel reports David Steven

The Secretary General’s High Level Panel has published its report (download here) on the post-2015 development agenda – here’s quick review of what it’s come up with.

The heart of the Panel’s recommendations are easy to grasp. First, it calls for an end to absolute poverty by 2030. This shift from poverty reduction to poverty eradication would be a big deal if taken seriously. It would set a global social floor – placing a powerful obligation on governments and the international community to ensure everyone gains basic rights and economic opportunities.

However, it also creates a huge strategic challenge. It’s already proving heart to get health, education, income etc. to the poorest of the poor, those live in the toughest environments and face the greatest obstacles to a better life for them and their families. Business-as-usual is not going to bring this group out of poverty – nor is the market magically going to ride to the rescue (although it can help).

Delivering zero-based poverty goals (and ones with a great emphasis on quality of outcome as well) requires a fundamental rethink of how development is delivered.

The Panel then adds three more sets of objectives, each of which is more ambitious and complex than the core poverty agenda that dominated the Millennium Development Goals.

It sets out a vision for an economic transformation that would deliver growth that is more widespread and, above all, delivers more and better jobs, especially in regions such as Africa where work forces are growing fastest, but also across a world that is gripped by an endemic jobs crisis.

Then it wants to change the direction of that growth to make it more sustainable – transforming the way we use energy, eat, travel etc. in order to stabilize the climate and protect other natural systems. This is the Rio+20 agenda revisited.

And finally it addresses the enablers needed to support prosperity, arguing that we need to do more to tackle the conflict and insecurity that makes development impossible, while building the robust institutions and governance capable of responding to the challenges of an increasingly complex world.

The nub of the report, however, is in the Panel’s fifth ‘transformative shift’ – building  a global partnership that can deliver change:

A renewed global partnership will require a new spirit from national leaders, but also – no less important – it will require many others to adopt new mind-sets and change their behaviour. These changes will not happen overnight. But we must move beyond business-as-usual – and we must start today.

The new global partnership should encourage everyone to alter their worldview, profoundly and dramatically. It should lead all countries to move willingly towards merging the environmental and development agendas, and tackling poverty’s symptoms and causes in a unified and universal way.

This is easier said than done, of course. On poverty, the way ahead is far from clear, but at least there is the beginning of a debate on what it will take to end poverty by 2030. It’s less clear that we know how to solve the global jobs crisis, that we want to shift to a green growth trajectory, or that outsiders can help build stronger institutions in the world’s weakest states.

The next couple of years will show whether there is political will to crack these conundrums – and what levers the international system has to drive change.

As you thumb through the report, there are two pages to look out for. On page 19, you’ll find the Panel’s estimate of the potential impact of full implementation. Some big numbers are thrown around:

1.2 billion fewer people hungry and in extreme poverty. 100 million more kids alive and 4.4 million women who survive pregnancy and childbirth. 470 million more good jobs. 1.2 billion more people with electricity to 2° C.  Governments more accountable for the $30 trillion they spend.

And then there’s the goals themselves, which can be found in a couple of fat appendices that start on page 29 onwards (yep the main report itself is commendably short). There was a big debate about how specific the Panel should be in proposing concrete goals and targets, and the result is compromise – we get illustrative goals (a dozen of them) and targets (nearly 60) that are intended to act as “as examples that can be used to promote continued deliberation and debate.”

I’d put the chances of anyone listening to that injunction at slightly less than zero, as constituencies howl about areas that have or haven’t been goaled. So here’s the list for you start arguing with:

(1) end poverty; (2) empower girls and women and achieve gender equality; (3) provide quality education and lifelong learning; (4) ensure healthy lives; (5) ensure food security and good nutrition; (6) achieve universal access to water and sanitation; (7) secure sustainable energy; (8) create jobs, sustainable livelihoods and equitable growth; (9) manage natural resources and assets sustainably; (10) ensure good governance and effective institutions; (11) ensure stable and peaceful societies; (12) create a global enabling environment and catalyze long-term finance.

More on the reaction to the report as it rolls in, but I think this is a good start: a clear and simple contribution to a debate that has been dominated by waffle and wishful thinking. Some vision there too.

But remember: this is just the opening shots in a debate that is going to take two years or more to unfold. This is the end of the beginning, not the beginning of the end.

Obama – inevitable lame duck David Steven

Tweet on election night:

Pundits: get ahead of the game. Make a start on your “Obama’s a lame duck now” column.

— David Steven (@davidsteven) November 6, 2012

It took a few months but the Guardian is finally on it today:

It is not a comparison that many people thought would ever get much traction.

But, assailed this week by multiple scandals and at the mercy of a furious press, President Obama has endured a legion of pundits wondering if he is the 21st-century Richard Nixon – and whether his second term is already a lame-duck disaster.

The worst corporate scandal you never heard of David Steven

Like many people, I have grown blasé about the successive waves of corporate scandal that have broken since the financial meltdown of 2008, but Fortune’s account of the crimes of Indian generic drug maker, Ranbaxy, is quite astonishing.

Ranbaxy boasts that it ”is a research based international pharmaceutical company serving customers in over 150 countries… providing high quality, affordable medicines trusted by healthcare professionals and patients across geographies.” Its business is conducted with the “highest standards of professional integrity and ethical behavior,” it says.

What a joke.

According to Fortune, Ranbaxy deliberately and systematically faked quality tests in order to gets its products licensed across the world. Here’s what a new Ranbaxy employee, Dinesh Thakur, found when he investigated his employer’s fraudulent behaviour:

The company manipulated almost every aspect of its manufacturing process to quickly produce impressive-looking data that would bolster its bottom line. “This was not something that was concealed,” Thakur says. It was “common knowledge among senior managers of the company, heads of research and development, people responsible for formulation to the clinical people.”

Lying to regulators and backdating and forgery were commonplace, he says. The company even forged its own standard operating procedures, which FDA inspectors rely on to assess whether a company is following its own policies. Thakur’s team was told of one instance in which company officials forged and backdated a standard operating procedure related to how patient data are stored, then aged the document in a “steam room” overnight to fool regulators.

Company scientists told Thakur’s staff that they were directed to substitute cheaper, lower-quality ingredients in place of better ingredients, to manipulate test parameters to accommodate higher impurities, and even to substitute brand-name drugs in lieu of their own generics in bioequivalence tests to produce better results.

Thakur reported his findings to the company’s bosses, who took no action. Another executive – Kathy Spreen – found that Ranbaxy was submitting patented drugs – the ones it was copying – for testing, not its own. She too reported her concerns:

In a conference call with a dozen company executives, one brushed aside her fears about the quality of the AIDS medicine Ranbaxy was supplying for Africa. “Who cares?” he said, according to Spreen. “It’s just blacks dying.”

Both ended up resigning.

In recent years, USA regulators have made some attempts to pursue Ranbaxy and while no individual has yet been prosecuted (how can that be?), the company recently agreed to pay a huge fine ($500m or so), with Thakur receiving in excess of $48m as a whistle-blower. Ranbaxy is still in business, however, and is strengthening its position in drugs markets around the world.

Why hasn’t this been a bigger story? The BBC gave it a couple of hundred words. I think the Guardian may have briefly carried the wire story but, if so, it’s now gone from its website. The FT managed a blog post which focused mainly on whether the settlement would be good for the company’s share price. In the grand scheme of things, that’s diddly-squat.

Two reasons for the radio silence, I think. The current media narrative focuses heavily on the myriad of sins of Western companies – if this had been GlaxoSmithKline, you can be sure it would have dominated the front pages. There’s much less interest in how lax regulation elsewhere in the world is corrupting globalisation.

Second, many – me included – are heavily invested in generic drugs as a vital weapon in the battle to improve health standards in the poorest countries. In 2004, the Guardian carried an interview with Dr Brian Tempest, a Brit who was then Ranbaxy’s CEO (and who Fortune puts at the heart of the company’s reckless cover-up). For the generics industry, AIDS drugs were a route to respectability, with Ranbaxy swiftly becoming an aid industry favourite.

“We don’t make a lot of money out of selling our Aids treatments cheaply. I tell all the analysts that this is really out of social responsibility because we are based in the developing world and have all its issues on our doorstep.”

We can’t be sure that Tempest knew his company’s drugs were dirty when he gave the Guardian that quote, but later that year, Fortune reports that he attended a meeting of its scientific committee and heard that “the company had simply not tested the drugs and had invented all the data” for entire markets, including Brazil, Kenya, Ethiopia, Uganda, Egypt,  and Thailand.

Perhaps it is time for Randeep Ramesh, the Guardian’s social affairs editor, who talked to Tempest in 2004, to follow up on his story. After all:

1. Ranbaxy’s drugs continue to be consumed by British patients – in just twelve months, the NHS saved £350m by using a generic cholesterol-reducing drug it buys from the Indian firm. Last year, it was forced to admit that it had shipped batches of the drug contaminated by fragments of glass.
2. The British regulator seems to have taken barely any action against Ranbaxy when compared to its American counterpart. Parliament has also ignored the scandal, although ministers have met regularly with Ranbaxy both in the UK and in India.
3. The American investigation tells us nothing about the standard of drugs sent to Africa and other developing countries, including those funded by the British taxpayer. In 2011, for example, DFID lauded Ranbaxy for its “leadership and foresight” in driving down the price of anti-AIDS drugs for the poor. Can we be sure the generic drugs it is now buying are safe?
4. We also don’t know whether this is a one-off or other generic manufacturers have indulged in similar behaviour. The pattern in banking and other industries, however, suggests that if one company can evade regulation, then others will also have been up to the same tricks. That’s extremely worrying, given that the generic drug industry is expected to be worth $169bn in 2014.
5. It would be good to hear more about Tempest – dubbed the ‘benign buccaneer’ in the Guardian profile. He was with Ranbaxy until 2008 and now holds a string of non-executive directorships. He is still involved with Ranbaxy’s founding family, serving on the board of Fortis Healthcare, which is chaired by Malvinder Mohan Singh, one of India’s richest men, who sold out his Ranbaxy shareholding to a Japanese drug-maker as scandal engulfed the company. He also chairs the advisory board of Lancaster University Management School. Tempest was too busy to speak to Fortune’s reporter.

Maybe the Fortune story is overblown. I hope it is. But eight Food and Drug Administration inspectors went to look at Ranbaxy factories in India. All of them came back saying they would never, ever, take a Ranbaxy drug.

Stuart Hall – The danger of anonymity for rape defendants David Steven

When the UK’s coalition government came to power, Conservatives and Liberal Democrats promised that they would increase ‘fairness in the justice system’ by providing defendants in rape cases with anonymity. This had been Lib Dem policy since 2006, while the coalition’s Justice Minister, Crispin Blunt, had supported anonymity while a Conservative backbencher.

Subsequently, however, Blunt was forced to drop the proposal after a MoJ report found a lack of evidence on the likely impact on convictions. According to the minister:

Evidence is lacking in a number of key areas, in particular, whether the inability to publicise a person’s identity will prevent further witnesses to a known offence from coming forward, or further unknown offences by the same person from coming to light.

Today’s conviction of veteran BBC broadcaster, Stuart Hall, for 14 counts of indecent assault on young girls demonstrates this was the right decision. Hall was also accused of rape (the charge remains on file), so would have been able to keep his name away from the media.

But we now have testimony from one victim, assaulted by Hall when she was 17, that she only came forward because she heard that he was being investigated.

After the Jimmy Saville case came out, I said to family I wouldn’t be at all surprised if Stuart Hall would be next and, within three weeks, it was coming out…

Hearing it on the radio I said to my husband: “What do I do? What do you think’s best?” My husband has known for thirty-six years what happened. When I heard it on the radio, I then got in touch with the local police.

Independent statements from victims who did not know each other was vital to building a case against Hall after so many years had passed. Anonymity would have stopped that happening. While terrible for the innocent, those accused of sex offences must continue to be named.

Update: An opinion poll published today reveals strong support for anonymity:

Three out of four people believe that people accused of rape and other sexual assaults should have their identities protected until they are convicted.

A pogrom against bankers? David Steven

What an appalling quote from Ambrose Evans-Pritchard in the Telegraph:

Let us all agree that top bankers behaved very badly. Let us agree too with Vince Cable that the fraternity operated like a cartel, rewarded far beyond ability or worth to society.

That said, the global crisis would have occurred even if bankers had been saints. The roots lie in the “China effect”, the world “savings glut”, and the whole way that globalisation has worked for 20 years.

The rising powers of Asia and the oil bloc accumulated $10 trillion of reserves, flooding bond markets with money. Japan put $1 trillion into play through the carry trade. Central banks in the West played their part by running negative real interest rates. They set the price of credit too low, especially in Club Med and Ireland.

All this combined into one colossal bubble. Bankers were the agents, not the cause. The witchhunt against them gathering force in this country has a nasty edge, and it has the character of a pogrom in much of Europe. We should be careful.

At a lunch in the City of London a couple of years ago, I was astounded to learn that many of those present felt that bankers were, indeed, the primary victims of the financial crisis – harried by a citizenry that had been happy to live off their taxes in the good times. This pushes the self-pity to an astounding level though.

Wikipedia:

A pogrom is a violent mob attack generally against Jews, and often condoned by the forces of law, characterized by killings and/or destruction of homes and properties, businesses, and religious centers.

Jaw-dropping.

The United States after the Great Recession David Steven

A paper by David Steven, Joshua Meltzer and Claire Langley, published by the Brookings Institution, supported by the FutureWorld Foundation, on how the United States should respond to the aftermath of the recession in order to promote growth and sustainability in the coming years.

Download Report

Goals in a Post-2015 Development Framework David Steven

An options brief by David Steven, published by New York University’s Center on International Cooperation and funded by the UN Foundation, on the role that global goals can play after the Millennium Development Goals expire in 2015.

Download Report

Goals after 2015 David Steven

As the High Level Panel on the Post-2015 Development Agenda meets in Liberia, New York University’s Center on International Cooperation has published a new paper of mine on the role that global goals can play after the Millennium Development Goals expire in 2015. You can download it here.

The paper:

• Explores what different types of goals can (and cannot) achieve.
• Sets out options for integrating poverty and sustainable development goals.
• Clarifies the choices that must be made if the post-2015 development agenda is to end poverty within a generation.

I don’t advocate any of the options in the paper. Instead, the aim is to try and clarify what can be quite a muddy and confusing debate. Why do we need goals? Who should they be for? How can they best be constructed?

This work forms part of CIC’s broader engagement on the post-2015 process. Alex and I have published a series of papers for CIC and the Brookings Institution (1, 2, 3). For me, this goes back to a post on Global Dashboard from 2011, which offered a first sketch of a post-2015 agenda that aimed to end absolute poverty.

Many thanks to the UN Foundation for funding this work.

The Problem with Fossil Fuel ‘Subsidies’ David Steven

Like all right-thinking people, I am passionately opposed to fossil fuel subsidies. What could be worse than paying people to accelerate the rate at which we are screwing the climate?

So I was shocked to discover – courtesy of Bloomberg’s coverage of the climate talks in Doha – that:

Rich countries spend five times more on fossil-fuel subsidies than on aid to help developing nations cut their emissions and protect against the effects of climate change.

Even worse, when I tracked down the report that Bloomberg had drawn their story from, I found that the UK is one of the worst offenders.  According to the campaigning group, Oil Change International, the British taxpayer shelled out $6.6 billion in fossil fuel subsidies in 2011, but pledged only $793 million in ‘fast-start climate finance” that year.

Outrageously, for the UK, subsidies are over eight times greater than climate finance. I simply had no idea that the government of my own country was pumping so much money into oil, gas, and coal. Quite embarrassing really.

So where does this money go? Margaret Thatcher shut down the UK’s coal industry, while I’d always assumed that North Sea Oil was profitable without subsidy. Motorists, meanwhile, are always complaining about how much additional tax they pay on petrol and diesel (Daily Mail: “We’re the fuel tax capital of Europe.”)

Who then is getting 6 billion dollars a year?

(more…)

Obama’s failure on climate David Steven

In the Guardian, George Monbiot is incandescent about the failure of Obama and Romney to speak out about climate change.

The two candidates remain struck dumb. Speech fails them, action is abominable, they will not even raise their hands in self-defence. The world’s most pressing crisis, now breaking down the doors of the world’s most powerful nation, cannot be discussed.

Although Monbiot briefly refers to a lack of action, most of his article is dedicated to what the candidates have or haven’t said during the course of an interminable election campaign. Real world data, by contrast, does not get a look in.

As far back as the first Bush administration, successive presidents have been promising that they would restrain America’s carbon emissions, but have failed to deliver. Instead, emissions rose sharply during their term in office. Under Obama, they have finally hit a peak, are falling, and are expected to continue to do so.

By 2020, according to a projection published last month by Resources for the Future, US emissions will be 16% below a 2005 benchmark, in line with the Obama’s administration’s pledge under the Copenhagen Accord. (See Michael Levi for a useful discussion of the RFF study.)

As this graph shows, tighter regulation of greenhouse gases under the Clean Air Act  is playing the greatest role, with new standards kicking in in 2011. This is followed by ‘secular trends’ (higher energy prices) and action at sub-national level, mostly in California.

There are many problems with US policy at the moment. For example, the extent to which the US exports the coal it no longer needs will have a huge bearing on the net climate impact of its increased use of gas for electricity generation, for example.

However, its emissions trajectory is shifting, and this is likely to continue, and could accelerate, if Obama wins a second term today. It will also be fascinating to see how an American president deals with climate internationally if, for the first time, he walks into a negotiation with a story to tell of progress at home.

Let’s Drive a Lot More David Steven

In The Economist, Schumpeter extols the benefits of driverless cars:

When people are no longer in control of their cars they will not need driver insurance—so goodbye to motor insurers and brokers. Traffic accidents now cause about 2m hospital visits a year in America alone, so autonomous vehicles will mean much less work for emergency rooms and orthopaedic wards. Roads will need fewer signs, signals, guard rails and other features designed for the human driver; their makers will lose business too. When commuters can work, rest or play while the car steers itself, longer commutes will become more bearable, the suburbs will spread even farther and house prices in the sticks will rise. When self-driving cars can ferry children to and from school, more mothers may be freed to re-enter the workforce. The popularity of the country pub, which has been undermined by strict drink-driving laws, may be revived. And so on.

The column, however, misses a key point. If the technology gets good enough, then it will be possible for cars to be driven at higher speeds and much closer together. I imagine we’ll see ‘flocks’ of cars on motorways and freeways – moving very quickly and in tight formation, with the odd few peeling off the side at each exit.

Combine this with vehicle interiors that look quite different – a commuter would want a work station that converted into a flat bed like an airline’s business class seat – and the feasible length of journeys could become very long indeed.

I’d guess that people might be prepared to double the time they spend on their journey to work and would be able to go much further in that time (higher speeds + less congestion). Occasional overnight trips – to the holiday home in the country – would become feasible as well if you had your very own sleeper service. At the same time, other forms of transport – trains in particular – would become significantly less attractive.

And that makes the driverless car a potentially hugely important medium-term disruptor for the energy sector, for climate change, and for urban planning. I don’t think many people have woken up to this yet.