Global Governments Give Up On The Environment
by Tony Daltorio, Investment U Research
Wednesday, July 14, 2010
Whatever happened to global warming?
Judging by politicians’ actions, the matter is yesterday’s story.
Over in the United States, they suddenly don’t seem to care about burning too much oil. They’ve instead set their sights on the BP (NYSE: BP) disaster in the Gulf of Mexico.
Apparently, they can only handle one crisis at a time.
Truth is, President Obama should have used the spill as an opportunity. He should have drawn the connection between the hazards of drilling miles below the ocean floor… and America’s insatiable appetite for oil.
The United States consumes a quarter of the world’s oil. Yet it only holds a twentieth of the world’s population.
That is why the Deepwater Horizon drilling rig existed in the first place.
Those same factors come into play in the global warming debate. And both sides have to agree on one thing at least: The world’s richest nation and biggest oil consumer has to lead the way in reducing greenhouse gas emissions. If the U.S. doesn’t, few others will.
From a purely ethnocentric standpoint, reducing oil consumption would mean less deep-sea drilling and therefore less risk of another blowout. But it could also encourage other governments to follow similar paths of conservation.
Of course, the odds of the U.S. taking that step are very slim. And in its defense, many other countries seem just as unwilling to do so either.
The Pain in Spain
The financial crisis left pitfalls and pendulums for world leaders to dodge left and right. And many of them have resorted to painful public spending cuts in order to cope.
That’s especially true of Europe. With the euro and Greece worries, green policies just don’t seem to matter as much.
Mired in debt, Spain has done one particularly noticeable about face, as of late.
The country is the biggest per-capita, global, wind energy producer. It’s also home to the world’s biggest wind power operator. And it plays a large role in the solar power market.
But now it wants to double its subsidies for domestic, coal-fired power plants. Spain plans to give preferential access to the wholesale electricity market for plants that run on such.
It also wants to retroactively cut previously agreed tariffs for its €20 billion photovoltaic solar energy sector by 30%. Such a move would devastate investors in those projects.
Naturally, the Spanish electric utility sector isn’t too thrilled about the move. Neither is Iberdrola ADR (PINK: IBDRY). It will force them to use more expensive domestic supplies over cheaper imported coal.
If that sounds completely insane, just look at Spain’s awful economy. Unemployment sits at 20%. And austerity measures include public sector wage cuts and a sales tax increase.
So the government has good reason for wanting to stop electricity bills from rising. Not to mention creating domestic coal jobs.
One way or the other, the measures should pass; Spain’s prime minister, Jose Luis Rodriguez Zapatero, just happens to come from the coal-mining region of Leon.
China and the UK’s Half Hearted Environmental Concern
Other countries have proven fickle on the issue as well.
Previously, the UK decided to close certain coal-fired plants by 2014. But after intense lobbying, the coal power industry won a four-year reprieve on the matter in May.
Yet it also committed to an EU target of 15% renewable power by 2020. That includes reducing carbon emissions by 34% in the same timeline. Now under the new decision, it won’t make either.
China, too, is rapidly building up its renewables capacity. But it’s also greatly increasing the amount of coal it burns. Similarly, fossil fuel assets and overall energy consumption keep climbing as well.
That brings us full circle right back to the United States. There, politicians talk out of one side of their mouths about the “clean tech race.” But they conveniently overlook the growing consumption of highly polluting unconventional oils, such as Canada’s oil sands.
The conclusion to all of this should come as no real surprise to anybody anywhere.
Governments around the world will go to great lengths to ignore long-term problems. They much prefer to simply kick the can further down the road… and hope they’re long gone when it comes time to pay the bill.
Good investing,
Tony Daltorio
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- The Gas Turbine Market Powers Ahead
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- The Thermal Coal Market Reacts to the Japanese Disasters
- Coal’s Decreasing Role in Power Generation Begins
One Response to “Global Governments Give Up On The Environment”
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Tony, Transcanada just opened (July 1st) the keystone oil pipeline which will pump 1 million barrels a day of Canadian Tar Sands oil into the US refineries. That is how to end dependence on unfriendly oil countries. Contrary to the popular myths put out in the media modern Canadian Tar sands operations are using new techniques to get the oil out of the sand that are environmentally fairly benign. Compared to the recent fiasco in the Gulf of Mexico the Canadian Tar Sands operators look like angels. It is the single largest oil deposit outside of Saudi Arabia and will last for decades. These are the projects that will ensure US stability and benefit both our great nations.
That one pipeline alone supplies about 5% of US consumption and together with Oil from Newfoundland and other parts of Canada you have a friendly neighbour up here that will ensure you have all the oil you need.
Malcolm
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