On the web: Lehman’s legacy, the Irish referendum on Lisbon, transatlantic trends and more…

- With the anniversary of Lehman Brother’s demise, the FT recalls the events of that fateful weekend last September. The NYT has reflections of three former Lehman employees, while a Guardian roundtable asks what lessons, if any, we’ve learned from the bank’s fall. Niall Ferguson, meanwhile, rails against those who argue “if only Lehman had been saved”. He suggests:

Like the executed British admiral in Voltaire’s famous phrase, Lehman had to die pour encourager les autres – to convince the other banks that they needed injections of public capital, and to convince the legislature to approve them.

- Sticking with matters financial and economic, Der Spiegel has an interview with the head of the IMF, Dominique Strauss-Kahn, on the Fund’s actions during the crisis and the potential for a new role for the institution going forward. Former MPC member, David Blanchflower, meanwhile, offers a telling insight into the inner workings of the Bank of England’s decision-making as financial meltdown ensued.

- Elsewhere, the WSJ reports on President Sarkozy’s call to broaden indicators of economic performance and social progress beyond traditional GDP, following the findings of the Stiglitz Commission. Richard Layard, expert on the economics of happiness, offers his take here, arguing that “[w]e desparately need a social norm in which the good of others figures more prominently in our personal goals”.

- Wolfgang Münchau, meanwhile, assesses the implications of an Irish  “No” vote in the upcoming referendum on the Lisbon Treaty.  “There is an intrinsic problem for the Yes campaign in Ireland”, he suggests, “which is that the core of the treaty was negotiated seven years ago. This is a pre-crisis treaty for a post-crisis world… If we had to reinvent the treaty from scratch, we would probably produce a very different text”.

- Finally, last week saw the German Marshall Fund of the US publish its Transatlantic Trends survey for 2009. Unsurprisingly, a majority of Europeans (77%) support Barack Obama’s foreign policy compared to the 2008 finding for George W. Bush (19%); though the “Obama bounce” was less keenly felt in Central and Eastern Europe than Western Europe. A multitude of other interesting stats – on attitudes to Russia, Afghanistan, Iran, the economic crisis, and climate change –  can be found here (pdf).

Who will point out that the CDM emperor has no clothes?

From yesterday’s Sunday Times, more news that all is not well with the Clean Development Mechanism:

The legitimacy of the $100 billion (£60 billion) carbon-trading market has been called into question after the world’s largest auditor of clean-energy projects was suspended by United Nations inspectors. SGS UK had its accreditation suspended last week after it was unable to prove its staff had properly vetted projects that were then approved for the carbon-trading scheme, or even that they were qualified to do so.

It is a source of never-ending frustration to me that this dog of a policy mechanism was ever set up. The CDM, in case you haven’t had the delight of making its acquaintance, is a mechanism that’s supposed to allow developing countries to benefit from emissions trading – without having emissions targets.

If you’re wondering how that’s supposed to work, then join the queue. This is the other kind of emissions trading, the one that isn’t cap-and-trade. It’s called baseline-and-credit. What happens is that you look at (say) a factory where you’re about to install spanking new energy efficiency equipment. The idea is that you get issued with emission permits adding up to the level of emissions you’re saving by installing said technology. The problem, though, is that in order to do that, someone has to work out what the emissions would have been without it. And who the hell knows – really?

Back when the government set up the UK Emissions Trading Scheme in 2001 / 2002 (before it was superseded by the EUETS), I spent four surreal months as an official seconded in to Defra – where I was in charge of developing the baseline-and-credit part of the Scheme.  It was abundantly clear that it wouldn’t result in real emissions reductions. But companies loved it – as well they might. And as for the consultants charged with designing and accrediting the projects: it was Christmas.

Now, with the Clean Development Mechanism (CDM), it’s all gone global – and the same basic design problems are still, unavoidably, built in. So who has an incentive to say that the emperor wears no clothes?

Not developed country governments: they love the fact that it helps them to achieve their emissions targets cheaply (as you can see from the fact that a fifth of EUETS permits are from the CDM, or from the huge reliance on the CDM built into Waxman-Markey in the US). Not developing country governments: China and a couple of others are making money out of it, and the gripe you hear from the rest of them is not that the system is bust, but that they’re not getting a piece of the action. And certainly not the UNFCCC Secretariat (who are supposed to be impartial in all this): their little secret is that a levy on CDM transactions funds a lot of of jobs at their HQ in Bonn.

Which might leave you wondering why the NGOs don’t make more of a fuss.  Alas, it’s the same old story: their long-standing inability to decide what to think about the thorny issue of developing country participation in climate mitigation. Hamstrung by a rigid interpretation of what constitutes ‘equity’ for developing countries, none of them are willing to touch the question of quantified emission targets for poor nations. With targets out of the picture, they need some alternative storyline on how developing countries are supposed to reduce emissions and get access to clean technology – and so they end up cheerleading for the CDM, and persisting in the fiction that a few tweaks will be enough to resolve the fundamental design faults with the scheme.

So with no-one out there calling time on the CDM, Copenhagen will doubtless agree another ten years for this broken mechanism that delivers neither real emissions reductions nor real finance for development.

The tragedy here is that all the while, a far better solution to these challenges has been staring us in the face: get all countries involved in quantified targets, and deal with the equity issue by sharing them out on an equal per capita basis.  Presto: massive new source of finance for development, plus safely stabilised climate. But the longer we wait to do this, the more of a safe ‘emissions budget’ gets used up – and the less remains to be shared with developing countries when a worsening climate means it’s no longer avoidable for them to take on targets.

The CDM represents a collective unwillingness to face up to difficult issues in the hope that they’ll get easier with time.  Alas, the opposite is the case.

David Cameron: “I f**king hate politicians”

As UK political party leaders vie with each other in the wake of the expenses scandal to crack down on the cushy life that MPs are perceived to enjoy, Tom Harris MP learns that David Cameron’s widely-trailed plans to cut ministerial pay and eliminate subsidised food in Parliament are just the thin end of the wedge:

Cameron: “I f**king hate politicians”

Thursday, September 10th, 2009

POLITICIANS will rue the day they were born if the Conservatives get their way, David Cameron promised yesterday.

Announcing a series of reforms to be implemented by a future Tory government, Mr Cameron said that MPs were “the lowest form of life known to man” and “utter scum”.

The Tory leader said that his government would not only cut the number of MPs by “at least” 100 per cent, but would also make sure their salaries were cut radically, forcing them “to depend on their trust funds like ordinary people”. He also promised to raise the cost of food and drink in the Palace of Westminster and suggested that staff might want to spit in MPs’ tea, “just to remind them who’s boss”.

“I’m so glad I never went into politics,” Mr Cameron told a  room packed full of journalists and a scary-looking bloke in an anorak and clutching a thermos flask who said he was from the Tax-Payers’ Alliance.

Asked what qualities he hated most in politicians, Mr Cameron replied: “Cynicism and populism.”

Support for suicide bombing in freefall among Muslim publics

From the Pew Global Attitudes project:

Eight years after the September 11 terrorist attacks on the World Trade Center and the Pentagon, the Pew Global Attitudes Project finds that support for Osama bin Laden has declined considerably among Muslim publics in recent years. Moreover, majorities or pluralities among eight of the nine Muslim publics surveyed this year say that suicide bombing and other forms of violence against civilians can never be justified to defend Islam; only in the Palestinian territories does a majority endorse such attacks.

The drop in support for bin Laden has been most dramatic in Indonesia, Pakistan and Jordan. Currently, about one-quarter of Muslims in Jordan (28%) and Indonesia (25%) express confidence in the al Qaeda leader to do the right thing regarding world affairs; in 2003, majorities in each country agreed (56% and 59%, respectively).

Down with collapse!

A few weeks back, George Monbiot and Paul Kingsnorth had an intriguing debate on the Guardian’s website about prospects for the imminent demise of western civilisation. Both are firmly convinced that the world is in Very Serious Trouble, what with climate change, oil depletion and what have you.  Both think we are probably All Doomed. Where they differ, though, is whether we should even try to mount a rescue attempt.

Monbiot is definitely the more upbeat of the two, in that – cheery chap that he is – he reckons that it’s on balance a good idea to avoid the total collapse of civilisation:

I’m sure we can agree that the immediate consequences of collapse would be hideous: the breakdown of the systems that keep most of us alive; mass starvation; war. These alone surely give us sufficient reason to fight on, however faint our chances appear. But even if we were somehow able to put this out of our minds, I believe that what is likely to come out on the other side will be worse than our current settlement … I am fighting to prevent both initial collapse and the repeated catastrophe that follows. However faint the hopes of engineering a soft landing – an ordered and structured downsizing of the global economy – might be, we must keep this possibility alive.

Pah, says Kingsnorth: our current economic system can’t be tamed without collapsing - “and who wants it tamed anyway?”  – so we must grow up and let go of the idea that our predicament can be fixed (whether through clean technology, through co-ordinated interntional action, or whatever).

The challenge is not how to shore up a crumbling empire with wave machines and global summits, but to start thinking about how we are going to live through its fall, and what we can learn from its collapse.

As you might expect, all of this is deeply exciting for other collapse gurus, some of whom just can’t resist adding their own two-pennyworth. Like the Archdruid, for instance, whose blog is reliably full of (always readable) musings on our imminent demise. Rather fabulously, he dismisses both Monbiot and Kingsnorth on the basis that both of them are unduly optimistic:

Both men are proclaiming the gospel of a better future; their disagreements are simply about what form that future will take and how we will get there. Both assume that we can have, and ought to have, a future that’s even shinier than the present …

We are not going to have a future better than the present: not in our lifetimes, and not in those of our grandchildren’s grandchildren. We collectively closed the door on that possibility decades ago, and none of the rapidly narrowing range of choices still open to us now offers any way of changing that. If this sounds like fatalism, it may be worth remembering that once a car goes skidding off a mountain road into empty air, it requires neither a crystal ball nor a faith in predestination to recognize that nothing anybody can do is going to prevent a terrific crash.

One can only imagine the sort of inverse euphoria induced by spending one’s days in this kind of competitive auction of doom with other collapse gurus – perhaps this is what it’s like to take ketamine. Either way, I wish to place on record a discordant note. Continue reading

The sound of pennies dropping

It’s long been a source of frustration to me that developing countries don’t come out and demand quantified emissions targets, based on an equal per capita entitlements, since this would at a stroke (a) create the space for agreeing a global emissions budget – a prerequisite for stabilising concentrations of greenhouse gases at any defined level, and (b) set up a massive new source of finance for development, as David and I noted in our paper for DFID (pdf) on international institutions for climate change.

All the more welcome, then, to see this observation in UNCTAD’s 2009 Trade and Development report (highlights; pdf):

An international carbon market in the form of a cap-and-trade system could be a source of income for many developing countries.

If designed in a manner that takes into account the responsibility of the industrialized countries for the existing GHG concentrations in the atmosphere, on the one hand, and the need for developing countries to contribute to global climate change mitigation, on the other, such a system might go a long way towards meeting their requirements for the financing of imports of the technology and equipment necessary for GHG abatement.

For example, if population size were to be given an important weight in the initial allocation of permits across countries, many developing countries would be able to sell their emission rights because they would be allotted considerably more permits than they need to cover domestically produced emissions.

P.S. UNCTAD forgot to mention one thing: said emissions budget is currently being used up awfully fast by developed and middle income countries – which puts a rather different slant on the oft-seen spectacle of developed countries saying reassuringly that of course low income countries needn’t think about targets before 2020.

Low income countries: beware of Greeks (and other Annex 1 Parties) bearing gifts…

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