How can we reduce fossil fuel use and make the switch to clean energy? Debates on fossil fuel dependence and its consequences for the environment have reached a crescendo as COP15 nears its deadline. But did you know that governments still subsidize the use of fossil fuels? Helen Mountford of the OECD Environment Directorate, Peter Wooders of the IISD and Dr. Fatih Birol of the IEA explain the importance of dealing with these contradictory policies.
Trillions of taxpayers’ dollars were needed to save the very institutions that provoked the worst financial crisis in 60 years. The bailouts seem to have succeeded, but to stop the same thing happening again, the structure of the global financial system has to be rethought, notably to deal with the risks linked to counterparty failure and contagion.
Writing in the Wall Street Journal, Adrian Blundell-Wignall of the OECD puts forward a proposal to contain risk by addressing what banks actually do. The proposal does not require draconian Glass-Steagall divestment of securities businesses from commercial banks. But it does require some important structural changes for banking conglomerates to make sure that the failure of one does not mean trouble for all.
Useful links: The Financial Crisis: Reform and Exit Strategies
In OECD Insights: Sustainable Development, chapter 5 on production and consumption mentions a report on food waste published by UK government advisory agency WRAP. The latest WRAP report also includes wasted liquids. It estimates that UK households generate 8.3 million tonnes of food and drink waste a year. That makes 330 kg (726 lbs) per year for each household on average, or just over 6 kg (13 lbs) per household per week. The figure would no doubt be much higher if food processing and catering were included.
5.3 million tonnes of this waste is avoidable. The rest is split equally between “unavoidable” and “possibly avoidable” waste.
Of the avoidable food and drink waste, 2.2 million tonnes is left over after cooking, preparing or serving, and 2.9 million tonnes is not used in time.
For the average household, the retail price of the avoidable food and drink waste is £40 ($65) per month. Given that the average household spends £260 ($424) a month on food and drink, avoidable waste accounts for around 15% of the shopping budget.
It’s not just the budget that suffers. The average household generates 210 kg of avoidable food and drink waste per year. This translates into roughly the equivalent of 0.8 tonnes of CO2. That doesn’t sound much compared with the 33 tonnes CO2 equivalent per household per year, but it is the equivalent of all members of a household taking an annual return flight from London to Vienna, or a quarter of the annual mileage driven by the members of that household. See the full report here
What does our energy use look like for now? How much energy does a Kenyan use compared to an Australian? How much does it take to produce goods and services in China compared to India? How much pollution is all this causing?
What images come to mind when we hear “Copenhagen”? Ministers sitting around a table and protesters waving banners? COP15 is also analysts, scientists, businesses and civil society representatives working together on climate-related initiatives…OECD Analyst Christa Clapp tells us what she is doing at COP15:
“While in Copenhagen, I will be speaking at an event sponsored by Eneco, a Dutch energy company. Eneco is supporting the Luz Verde programme to distribute 30 million compact fluorescent light bulbs in Mexico. This is one of the first “programmatic” Clean Development Mechanism (CDM) projects to be approved. It groups similar disbursed projects together to lower transaction costs to access the carbon market and earn carbon credits. Such projects are a first step towards scaling-up carbon market mechanisms. The OECD is working together with the International Energy Agency to support the Annex I Expert Group, which is a group of climate negotiators, on carbon market issues. Our recent papers focus on the strengths and weaknesses of project-based carbon market mechanisms and scaled-up sector-based approaches.
More than 30 countries are already trading in carbon markets, either at a national or sub-national level. Additional countries are discussing how to design new market instruments and potentially link emission trading systems. Decisions taken in Copenhagen may impact the reach of these carbon markets and how they function. At OECD we are actively exploring how carbon markets might evolve post-Copenhagen, building on our recent Economics of Climate Change Mitigation work, which analyzes how carbon market instruments can be used to build up a global carbon market.
To further explore how carbon markets are expanding and evolving, we are bringing together experts and policy-makers for an OECD Workshop on Carbon Markets in April 2010. This workshop will offer an early post-Copenhagen opportunity to investigate these key questions:
- How can we build up a global carbon market, for example by increasing the number of countries participating, and through direct linking of emissions trading schemes?
- How will decisions taken in Copenhagen impact incentives for developing country engagement in carbon markets, including the design of “offset” mechanisms?
- Under what conditions can cities and sub-national actors access carbon market financing for local low-emission projects?
- How might voluntary markets evolve as compliance markets grow?
Climate change has stirred controversy since scientists first started debating it. Cop15 seems to signal a new consensus – or at least the beginnings of one. But many big questions remain : How will climate change actually affect people’s daily lives? What’s the best way to attack the problem ? Who should pay the bill?
Agreeing that climate change is a world problem requiring world cooperation is only the first step, and many of us watching the summit wonder what real solutions will emerge.
As political leaders settle in to negotiate an agreement, we should be aware of a basic economic fact: the costs of tackling climate change are moderate provided that we start lowering emissions now. OECD calculations show that the longer we wait, the more expensive the bill.
J.P. Morgan saved the financial system twice. In 1895, following the Panic of 1893, the Federal Treasury had almost no gold left, following a run on the gold supply. Morgan came to the rescue, heading a syndicate that loaned enough gold to finance a bond issue that restored the Treasury’s surplus. He saved the day once again in the Panic of 1907, persuading New York bankers to follow his example by pledging money to consolidate the banking system.
So it’s ironic that the bank he founded was in some ways at the root of the current crisis. That may sound surprising, given the usual suspects (Lehman’s, AIG, Bear Sterns…). Yet, as Gillian Tett of the Financial Times explains in Fool’s Gold, a team from J.P. Morgan invented a product called Bistro (Broad Index Secured Trust offering) that helped to fuel the massive expansion of the credit derivatives market.