Author: Richard Tol

McDonald in Nature

The Environment Editor of the Irish Times, Frank McDonald, has written in Nature.

It is interesting to compare some of the notions of journalistic neutrality (Wikipedia and Irish Times; Nature‘s mission statement is surprisingly silent on impartiality) to McDonald’s choice of words, such as “dark forces”.

McDonald uses language that is more usually associated with activists to describe the alleged threats of climate change, and attributes events in sub-Saharan Africa to climatic change in a way that is unsupported by any science.

Werner Kraus has a different take.

Durban: Jobs and climate

The UNFCCC Job Creation Program once more demonstrated its awesome force. Some 20,000 people met in Durban for 2 weeks. If you add travel, preparation and debriefing, that is easily 1,000 person-years.

What did we get for this? The final documents have yet to be published, but here is what seems to be reasonably accurate summary. There were three agreements.

First, further details were added to the mechanisms through which rich countries would transfer money to poor (and not-so-poor) countries for (a) reducing emissions and (b) helping them cope with climate change. The latter is an imperfect form of liability and compensation (we emit most, they suffer most). The former is an imperfect form of arbitrage (emission reduction is dear here, cheap there). This is progress of sorts, but the money to be transferred has yet to materialize (and no one seems to have much to spare at the moment).

Second, the Kyoto targets were extended to 2015. This creates the diplomatic illusion of having saved the Kyoto Protocol, but all countries that are bound by Kyoto had already adopted unilateral targets that are more stringent. Well, the EU has, and Canada, Japan, and Russia have already indicated that they will not take seriously this part of Durban agreement.

Third, the Durban Platform was established. The Platform pledges an agreement by 2015. It replaces the Bali Roadmap, which pledged an agreement by 2009. Once more, the countries of the world agreed to agree at a later stage.

Nothing much to show for those 1,000 person-years of work. And this was the 17th Conference of the Parties. One wonders whether there really are no better investments of the time and effort.

Gormanston, Tarbert and regulation

The Examiner has a story on the proposed LNG terminal at Tarbert in the Shannon estuary. This is a privately funded project and a welcome stimulus for North Kerry. As long as the developers play within the rules, public policy analysts should have no opinion on such matters. But as the gas market is so heavily regulated, private actors affect the public good. The LNG terminal would, for instance, improve the security of supply, which is very valuable.

Minister Rabbitte argues that Shannon LNG would increase the price of gas. This is absurd at first sight. Increased competition should reduce the price. The minister is right, though. To see why, we need to consider the gas interconnector from Scotland that lands in Gormanston in Co Meath, or rather the way in which its price is regulated: The annual cost of the pipe is distributed over the gas it carries.

The interconnector is a competitor’s wet dream. If you capture a small part of the gas market, the interconnector will increase its price — because its annual cost is distributed over a smaller volume. You can then increase your price to just below that of the interconnector and gain yet more market share. And the interconnector will raise its price again.

The solution surely is to change the regulation of the interconnector rather than to block the LNG terminal. The current regulation, which may date back to the days of Minister Woods or Fahey, is a neat example of something that makes sense in the short run only.

Note the separation of powers. Minister Rabbitte is the executive branch of government and an influential part of the legislative, he appoints and controls the budget of the regulator, and he is the trustee for the shareholders (us) of the dominant company in the market.

Guilder reintroduced

Seriously.

The exchange rate is 1:1 Euro:Guilder. That’s a lot better than the 1:2.2 fixed in 1999.

So far, the new/old currency is accepted in a few localities only.

Environment news roundup

With all eyes on the euro, the budget, the Middle East, some remarkable, smaller stories emerged.

Irish roads are now among the safest in the OECD. I guess the main reason is that much traffic has shifted to the new roads.

The 2010 Drinking Water Quality Report is out. Water quality is getting better, but slowly. Biological contamination is down and trihalomethanes (which result from improper chemical treatment) are down too.

Construct Ireland reports on an unpublished SEAI study (the leak is easily identified) that shows that building standards were not enforced. This is not surprising in itself, but the scale is. Sean O’Rourke’s interview with Gerry Wardell is worth a listen, and SEAI’s response is intriguing.

The EU is putting pressure on Ireland to hurry up with water charges. Ireland is obliged to fully recover the costs of water services. This implies an average charge of 500 euro per household per year, 5 times what is expected to be announced in next week’s budget.

The carbon tax is likely to go up. Initially, the carbon tax was tied to the ETS permit price, which has gone down. The market is least distorted when permit price and carbon tax are equal. Coal and peat, the fuels that emit most carbon dioxide, are still exempt from the carbon tax and there is no sign of the commencement order.

Dublin is considering a fire call-out charge. This would be wrong. Fire is an emergency. One should never hesitate to call for help.