President Obama will be at the Copenhagen environmental conference that starts shortly. But his plans changed for him to appear towards the end of the event as opposed to the beginning.
Expectations have been elevated that something substantive will come out of the affair or else why would he show up when conclusions are expected to be announced. The NY Times editorialized Monday, though, that while "Nobody should expect a planet saving agreement..there is a good chance of an interim deal."
Remember the Kyoto Protocol was overwhelmingly voted down by the US Senate 95-0 (even Al Gore voted against it). It is unclear if world leaders can come to any agreement that is more than a set of voluntary guidelines.
The White House expects a "meaningful" deal at the summit meeting that might, say observers, include a provision for richer nations to commit to $10 billion a year by 2012 to help developing countries address climate change.
There are those who think that would be just a drop in the bucket.
Richard K. Lester wrote an op-ed piece in last Saturday's Journal (The High Cost of Copenhagen.). Professor Lester is the head of the department of nuclear science and engineering at MIT. That doesn't mean he is right by any means, but he had some interesting thoughts. He addresses the idea that the US will need to reduce its carbon emissions 83% by 2050 which has been mentioned as a goal.
For that to happen, says Lester, 30,000 megawatts of new wind power would have to be added every year between now and 2050. That would be "four times what was added in 2008, a record year." Another 35,000 megawatts of solar photovoltaic capacity would need to be added every year and that is "100 times what was added last year - a record year for solar too." The nuclear reactor fleet would have to multiply "fivefold" and all coal fired plants would have to be retrofitted with "carbon capture and storage technology" which has yet to be demonstrated effective on a large scale. Could it be done? "Perhaps" says Lester, "though not without enormous effort."
Paul Krugman writing in the New York Times is decidedly more optimistic. The Princeton professor and Times columnist feels "cutting greenhouse gases is affordable and essential." He references "serious studies" that say we can "achieve sharp reductions in emissions with only a small impact on the economy's growth." He feels a "cap and trade" program will encourage businesses to increase their profits by burning less carbon. James Hanson, head of the NASA Goddard Institute for Space Studies, would take major issue with Krugman. Writing in the same paper Hanson says that "because cap and trade is enforced through the selling and trading of permits, it actually perpetuates the pollution it is supposed to eliminate."
Further, the "carbon cap would also encourage 'offsets' - alternatives to emission reductions like planting trees on degraded land" which Hansen thinks is ineffective. And if that "isn't bad enough, Wall Street (oh gee - here it comes) is poised to make billions of dollars in the 'trade part' of the cap and trade" and the profits "would be extracted from the public via increased energy prices."
Here are three pretty smart guys, or at least three guys with impressive credentials that can't agree.
What is it going to be like at Copenhagen with 100 countries that have 100 different agendas? President Obama would be well served to try to under promise and over deliver.
US business leaders, though, are far more focused on the Environmental Protection Agency where an "endangerment" finding is likely, says Monday's Wall Street Journal, to "formally declare carbon dioxide a dangerous pollutant." That could pave the way for the government to "require businesses that emit carbon dioxide and five other greenhouse gases to make costly changes to reduce emissions - even if Congress doesn't pass pending climate change legislation." The EPA has not said when it will issue its finding but it makes some sense for the President to have something to show world leaders on December 18 in Copenhagen if he wants to be in a leadership position on climate change. Electricity generation, transportation and industry (is there much else?) are the largest greenhouse gas emitters and the lobbyists are working overtime to soften the blow on their industries.
Vincent Farrell, Jr. is chief investment officer at Soleil Securities Group and a regular contributor to CNBC.