Author: Nicole Allan

Paul Krugman has a virtuoso piece about the economics of climate change in this weekend’s New York Times Magazine. He methodically disassembles climate skeptic arguments and builds a case for a cap-and-trade approach to cutting emissions. Action should be taken immediately and aggressively, he argues, due to the possibility of a “doomsday scenario” for future generations.

Whichever side of the climate change and cap-and-trade debate you’re on, it’s worth reading. It’s also quite long, so here’s a summary of Krugman’s main points:

1. Climate Change: It’s happening. It’s time to trust the scientists, drown out the naysaying, and tackle the problem using economic incentives.

2. Cap-and-Trade: It’s the best option for a market-based solution, which is the only viable way to address greenhouse gases. An emissions tax is less flexible.

3. Cost: Cap-and-trade will slow economic growth, but only by a very small amount.

4. Conservatives: Their obstinate resistance to the science of climate change and the economic tools for tackling it does not mesh with the rest of their worldview. Whatever happened to Reagan’s “magic of the marketplace?” The Republican Party’s attempt to convince Americans that we can’t afford to put a price on carbon is “a political ploy rather than a reasoned economic judgment.”

5. China: If the world’s biggest greenhouse gas emitter refuses to participate in emissions reductions, the U.S. and the E.U. should resort to carbon tariffs. Corralling global participation will be tough, but with a few key players on board, it will be doable.  

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Just a year ago, California was heralded as a leader on green energy and one of the most forward-thinking states on environmental issues. But now a new ballot initiative threatens to stall the state’s cap-and-trade plan until its economy improves.

Mounting economic pressure has combined with California’s voter-friendly policies and  brutal budget crunch to create a backlash against cap-and-trade. The state’s plan, the first economy-wide version in the country, is set to take effect in 2012.  

The ballot measure’s supporters cite studies — some discredited — that predict rising household expenses and widespread job losses once the law goes into effect. To combat these effects, the proposition would prevent the state from implementing the law until unemployment stabilizes at or below 5.5 percent for at least a year. Californians haven’t been employed at those levels since 2007; the state’s current jobless rate is 12.5 percent.

Both supporters and opponents of the measure believe it will have no trouble attaining the 434,000 signatures it needs to get on the ballot.

Governor Schwarzenegger, who once seemed to travel exclusively by Hummer, became an unlikely environmental warrior after he took office in 2003. In the past seven years, he has pushed California to the forefront of renewable energy and emissions reductions, even challenging the federal government on its reluctance to increase fuel efficiency standards. But the cap-and-trade measure, which passed in 2006, is the emerald in his crown. The law aims to cut greenhouse gas emissions to 1990 levels by 2020 — a much more ambitious cut than the one proposed in last year’s House bill — and to cement California’s role as a leader in the green energy economy.

Though Schwarzenegger has recently proposed loosening specifics of the legislation, he remains committed to seeing cap-and-trade through. Even if the ballot measure fails, Schwarzenegger’s successor could suspend his vision with a single signature, as Republican frontrunner Meg Whitman has vowed to do on her first day in office.  

Investigators have yet to uncover the source of the explosion at West Virginia’s Upper Big Branch coal mine, which has killed 25 miners and left four still missing. But the blast takes place after the mine logged hundreds of safety violations in the past year.

Upper Big Branch is owned by Massey Energy, one of the nation’s biggest coal companies, and operated by Performance Coal, a Massey subsidiary. Massey is run by Don Blankenship, a CEO Rolling Stone pegged
as “a villain ripped straight from the comic books: a jowly,
mustache-sporting, union-busting coal baron who uses his fortune to
bend politics to his will.”

Blankenship has helmed Massey through an accumulation of safety and water pollution violations as well as disastrous toxic coal spills. One of the country’s most recent major disasters occurred at Massey’s Aracoma mine, also located in West Virginia. A group of miners were trapped in a fire and two did not survive.

Between 2003 and 2006, the New York Times reported, Blankenship spent over $6 million in an attempt to boost Republican representation in West Virginia, a state traditionally dominated by Democratic and labor interests. In 2008, photos surfaced of Blankenship carousing in the French Riviera with a West Virginia Supreme Court justice who was trying a case against Massey. A year later, the justice voted in Blankenship’s favor. 

Massey curries no favor with environmentalists. It is the industry leader in the environmentally devastating and recently restricted mountaintop removal mining method. Blankenship has also lent his mustachioed jowls to the climate denial fight from his seat on the board of the Chamber of Commerce, where he has helped direct the lobbying group in its well-coordinated and lavishly funded assault on climate science

Blankenship’s Twitter account is a pithy log of his climate denying sentiments — “skeptical” would be too gentle a word — including the tongue-in-cheek Tweet, “We must demand that more coal be burned to save the Earth from global cooling.”

He has yet to Tweet anything about the mine explosion.

In the parched moonscape of the Abu Dhabi desert, plans for the world’s first carbon-neutral city are disintegrating. Masdar City was the centerpiece in Abu Dhabi’s attempt to transform itself from oil powerhouse to the Silicon Valley of renewable energy. Global financial woes, however, are undermining the project’s ambitious scope and putting its 2016 completion target in doubt. Developers are now planning to test-drive a portion of the city in 2013 and base further development on commercial response.

The original city plans were a dream for sustainable design nerds, which perhaps should have been the first warning. Walled and carless, it was to have relied on the region’s biggest solar farm for power. In answer to the perennial Middle Eastern water problem, Masdar City was designed to house a desalination plant 80 percent more efficient than existing plants, quenching the thirst of 50,000 residents. The most futuristic tidbit — and a tell-tale sign of an unobtainable urban utopia — involved an underground network of sensor-driven “podcars.”

Now, the only certain part of the development is the Masdar Institute of Science and Technology, a science and engineering university with a focus on alternative energy and sustainability. The institute’s funding and governance is separate from the city’s, though the two entities were intended to be closely linked. MIT has been a partner in the Institute from the beginning, and the head of its work with Masdar told the New York Times that students are still slated to move in this August.

Abu Dhabi’s race for green-tech prominence is a smart strategy, even for a country with almost a tenth of the world’s oil reserves. Few other nations have the ability to funnel billions of government funds into high-tech experimentation. Despite the lamentable lack of podcars, Abu Dhabi’s newly modest ambitions of boosting green research should help make the Emirate’s pursuit of this pipe dream worthwhile in the end. 

The EPA has set new limits on water pollution caused by coal mining, only days after President Obama angered environmentalists by opening up huge swaths of coastline to offshore drilling. The drilling story received louder coverage, but the mining announcement should have a far larger impact on America’s energy future.

Offshore drilling will take many years to study and set up, and may not even be economically viable along the East Coast. Coal, on the other hand, is the most

abundant energy source in the United States, which has a quarter of
the world’s reserves and generates 45 percent of its electricity from
coal-fired plants.

At issue is a controversial mining practice called mountaintop removal, which literally blasts the tops off mountains to get at the coal underneath, with disastrous environmental consequences. The EPA has zeroed in on water pollution in Appalachia caused by companies that dump blasted sediment into nearby rivers and streams, decimating ecosystems and dirtying local water supplies. By curtailing water pollution, the new requirements will inherently limit the mountaintop removal method.

Coal companies have predictably issued enraged statements about pending
damage to the Appalachian economy, but it’s worth remembering that one
of the business perks of mountaintop removal is how little labor it
requires compared to older mining techniques. By turning to explosives,
coal companies eliminated
thousands of jobs in Appalachia as well as contaminating water
supplies and causing “elevated rates of mortality, lung cancer, and
chronic heart, lung and kidney disease in coal producing communities,”
according to a recent article
in Science.

In a nod to the coal lobby, Senators Kerry, Graham, and Lieberman have included funding for “clean coal” technology in a draft of their climate bill. The White House, for its part, is balancing multiple interests and agendas with this week’s raft of energy announcements, which also included raising average fuel efficiency standards to 35.5 mpg by 2016.  

But if you balance offshore drilling — which could take 10 years to get started, or never happen at all — against the immediate
devastation that is currently caused by mountaintop removal, the environmental lobby may end up counting this week as a win.

2010 has been a good year for nuclear power, with funding for new plants cropping up in President Obama’s budget as well as in the stalled Senate climate bill. Bill Gates recently lent his star power to the industry by advocating for small-scale nuclear reactors produced by TerraPower, an energy start-up he partially funds. The Wall Street Journal reports that TerraPower is in talks with Toshiba to collaborate on nuclear technology, a partnership that would jumpstart the very expensive process of developing these smaller reactors.

Also in the Journal today is an editorial by Energy Secretary Steven Chu that heralds the promise of small modular reactors (SMRs), which avoid many of the obstacles full-scale reactors face. Traditional power plants are expensive and complicated, requiring massive start-up loans. Communities are also reluctant to host new reactors due to safety and waste disposal concerns. SMRs, however, are less than a third the size of traditional plants. They could be manufactured off site, transported by truck or train, and would be ready for action upon arrival. They would also be cheaper and quicker to build, even potentially running on their own waste. According to Chu, SMRs are about ten years away from functionality.

Private innovation from both start-ups and established forces like Toshiba will spur this process along, as would a carbon-pricing mechanism to drive green investment. The Senate climate bill Kerry, Lieberman, and Graham are crafting could do more on the carbon-pricing front — its cap-and-trade scheme will be limited to utilities — but it is reported to include $54 billion in new nuclear loan guarantees to ease the construction of new plants.

Nuclear investment is proving to be a crowd-pleaser, with a new Gallup poll showing public support for nuclear energy at more than 60 percent. This support is more prevalent among Republicans than Democrats, as has traditionally been the case, though a majority of both parties now endorse nuclear power.

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If Congress fails to pass a national cap-and-trade bill, as looks increasingly likely, states are preparing to pick up the slack. Some of the more innovative policies they crafted during the at-best stagnant, at-worst hostile environmental reign of the Bush administration were regional carbon markets. Of the three existing groups — the Regional Greenhouse Gas Initiative, the Midwestern Greenhouse Gas Reduction Accord, and the Western Climate Initiative — only the East Coast’s RGGI has a market that’s currently up and running.

Representatives of the Western Climate Initiative said this week that its cap-and-trade system will begin trading carbon in January, 2012. The initiative launched in 2007 with five U.S. member states, but political pressures and economic worries have narrowed the pool of likely traders down to California and New Mexico plus the Canadian provinces of British Columbia, Ontario, and Quebec. Including Ontario and Quebec in a Western regional block is a stretch, but after Arizona dropped out and Utah and Montana failed to secure legislative approval, the group can’t be too geographically choosy.

The total amount of carbon traded on this market — which would be mandatory for certain companies operating in the participating states and provinces — would be equivalent to about a tenth of U.S. emissions. Depending on how high member states choose to set the price of carbon, they could make a significant dent in North American emissions.  

The eastern cap-and-trade system, which focuses on utilities, has been trading carbon at record lows of $2.05 and $1.86 thanks to a glut of permits on the market and the uncertainty of national cap-and-trade legislation. European prices, which have also been falling, hovered between €20 to €25 throughout most of 2008 and apply across a much broader range of industries. Experts have argued that prices would have to be at least €100 to significantly drive green investment.

Reuters cites a 2008 analysis that found a broad cap-and-trade system in the western U.S. could sustain a price of $24 per ton. The prospective participants in this system plan to start off trading power plant emissions and expand to the transportation sector by 2015.

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As the first national election following the Supreme Court’s Citizens United ruling approaches, keep an eye out for corporate ads attacking climate bill supporters.

Reuters reports that the environmental lobby is preparing for an onslaught of ads funded by corporations wishing to slow down climate legislation. The bill already faces long odds, with Senator Lindsey Graham recently declaring cap-and-trade “dead” and carbon traders hunting for new professions. The Court’s ground rules for political
ads, however, could provide a mortal blow to cap-and-trade — if not a bill in general.

Even before the Supreme Court’s ruling, which allows corporations and unions to spend money directly to
help elect or defeat candidates for office, the energy industry spent ten times more on political donations than environmental interests — including the
Service Employees International Union, which supports cap-and-trade as a
generator of green jobs.

Major carbon emitters in the oil and gas industires have long had a strong presence on the Hill via trade associations like the American Petroleum Institute and the U.S. Chamber of Commerce. Senators Graham, Kerry, and Lieberman met with these coalitions and others on Tuesday in their attempt to craft a Senate climate bill.

As election season approaches, oil and coal companies could fund attack ads on vulnerable legislators who have supported emissions reductions or cap-and-trade. However, such a move could carry its own risks. 

“Nobody wants to wander out alienating the public
and legislators and making things worse, and that risk is out there for
companies who move too aggressively,” Josh Zeib, a lawyer and lobbyist with the firm
Bracewell and Giuliani, which handles energy industry clients, told Reuters.

Whether or not these companies choose this approach, the mere possibility of their doing so may convince waffling politicians not to jeopardize their seats by voting for a climate bill. Since the Supreme Court has given corporations a big stick, all they may need to do is speak softly.

Of Washington’s innumerable agencies, EPA has a bit of a killjoy reputation. Businesses dread its regulatory grip, legislators decry its plodding, bureaucratic approach, and environmental advocates prefer well-crafted legislation to many its clumsy regulations. But with a climate bill, much less a well-crafted one, far from the horizon, EPA is taking seriously its role as a last line of defense against emissions and climate change.

The agency is releasing a new raft of greenhouse gas emission regulations this month, and some observers are wondering whether administrators have plans to exercise a last-ditch option: using the Clean Air Act to skirt Congress and institute an EPA cap-and-trade program for carbon dioxide.

One of the most versatile environmental laws in the U.S., the Clean Air Act has been amended and revised throughout the years to adjust to shifting environmental threats. In the 1990s, regulators used the act to set up a pollutant trading system to combat acid rain, a strategy that was considered quite successful. When EPA asked for $7.5 million to look into “market-oriented” greenhouse gas reduction mechanisms in its 2011 budget request, the agency prompted speculation that it was planning on implementing its own cap-and-trade system if a Congressional version fell through.

Such an approach could face political difficulties, since Congress must approve EPA’s budget, and would surely be challenged in court. Georgetown Law professor Lisa Heinzerling predicts that justifying a cap-and-trade system under the Clean Air Act as it currently stands would require “a good bit of interpretive creativity.” EPA administrators have attempted to downplay speculation, claiming that the request was intended to investigate regulation of “specific industries” rather than “economy-wide approaches or systems.” At a National Press Club lunch yesterday, EPA chief Lisa Jackson denied plans for a “cap-and-trade regime” all together.

Don’t assume that the option is officially off the table, however. “Market-oriented mechanisms” could mean many things, and EPA is well aware of the power of market incentives to curb emissions. The agency does not want to attract undue attention while it battles high-profile senatorial challenges to its new regulations, but Jackson’s EPA has established itself as a regulatory force to be reckoned with. If there’s a way to wrangle cap-and-trade out of the Clean Air Act, rest assured she’s considering doing it.

Though the science behind climate change projections has been taking a beating recently, one important institution is preparing for the worst. The International Monetary Fund is proposing a global climate adaptation fund as insurance for countries facing the disastrous consequences of a warming climate.

While the IMF has not historically crafted environmental policies, it has long been worrying about
and planning for the macroeconomic and fiscal consequences of climate
change. Temperature fluctuations could severely inhibit productivity,
natural disasters could demand huge cash infusions, and permanent
economic adaptation could require large up-front investment — all
developments that would involve the IMF.

In a paper that will be released later this week, the IMF models its scheme upon its own system of assigning member nations a quota based on their economic profiles. This quota determines countries’ contributions, voting power, and access to financing. (Quota assignations were recently revised in order to better represent low-income countries and emerging markets.)

The World Bank predicts that adapting to climate change will cost $75 to $100 billion annually between 2010 and 2050. Much of this sum will be needed to help developing nations mitigate the droughts, floods, and famines that are expected to accompany higher global temperatures. In Copenhagen this December, a group of large nations floated a $100 billion annual fund by 2020 that would help poor countries manage these consequences. The IMF’s proposal will provide much needed details to achieve this goal.

At The Atlantic‘s Food Summit on Thursday, Food Channel editor Corby Kummer hosted a panel called “The Way We Eat.” As academic and corporate panelists discussed various measures to counter the obesity epidemic, they kept returning to an article Tom Frieden, director of the Centers for Disease Control and Prevention, recently published in Health Affairs. Corby called the article “provocative” and “controversial” for its extended comparison of America’s obesity problem today to its smoking problem ten or twenty years ago.

Frieden’s use of this analogy is not surprising given his background.
As New York City health commissioner from 2002 to 2009, he launched an
anti-smoking campaign that drew fire at the time but is now credited
with reducing the city’s smoking rate by 19 percent.
Frieden hiked up tobacco taxes, banned smoking from restaurants and
bars, and ran aggressive anti-tobacco ads. Toward the end of his tenure
in New York, he banned trans-fats, required chain restaurants to post
calorie counts, and launched a sodium reduction initiative.

In
his obesity article, Frieden proposes taxing junk food, citing the
success of tobacco taxes in reducing smoking. A penny tax on each ounce
of sugary beverages — the much-debated “soda tax”
— “would be likely to be the single most effective measure to reverse
the obesity epidemic,” he argues. That’s a strong statement not
everyone on the panel agreed with, as some members worried it could
serve as a “gateway” for taxes on all other kinds of less-than-ideal
foods.

Frieden also suggests “counter-advertising,” a strategy
he employed during his tobacco-fighting days. If his paper makes an
impact, expect more ads like New York’s notorious images
of soda morphing into fat as it’s poured into a glass: “Hard-hitting
anti-tobacco ads that graphically show the human impact of
tobacco-related disease are most effective in reducing tobacco use,”
Frieden explains.   

While the newly minted CDC head is certainly not popular among the libertarian crowd, his ideas are picking up steam among policy and lawmakers. Obama expressed interest in a soda tax last summer, the Senate Finance Committee proposed the tax as one way to help pay for health care reform, and a handful of states have already implemented soft drink taxes on their own.
 

Virgin Galactic, Richard Branson’s commercial space flight venture, has announced
that it will run test flights of its rocket-powered spaceship by 2011.
Will Whitehorn, the company’s president, claimed that Virgin had
secured funding for its “spaceline” operations and would be turning a
profit in as little as two years after launching its first commercial
flight.

$200,000 tickets on the spaceship have sold to over 300 eager space tourists, whose deposits have plunked a good $45 million in Virgin’s coffers. Another $280 million from an Abu Dhabi-backed investment firm that purchased a 32 percent stake in the company differentiates Virgin Galactic from other commercial space ventures that are still scrounging for funding.

Abu Dhabi hopes its investment in Virgin’s spaceline will transform the sheikdom into a hub for space tourism. Though Abu Dhabi has plans to build its own spaceport, New Mexico is currently Virgin’s launching pad of choice.

While Branson’s space efforts have drawn attention thanks to his flashy reputation, other companies are progressing toward commercial space operations as well. NASA recently granted millions of dollars to five U.S. firms that, as a result of Obama’s proposed budget cuts, will assume much of the space agency’s historic human space flight mission. Virgin Galactic’s focus on space tourism and its mix of private and government funding, however, sets the company apart. 

In the department of dramatic lobbying defections, a Nature Conservancy bigwig has fled into the arms of the American Petroleum Institute. Deryck Spooner, who had led the Nature Conservancy’s lobbying for climate legislation since 2007, is now spearheading API’s grassroots outreach program.

Spooner’s move has sparked fears that, double-agent-style, he will use his inside knowledge of the environmental lobby to hobble its push for a climate bill. But in a rhetorical feat that may or may not have been featured in Thank You For Smoking, Spooner explained away any cognitive dissonance: “The bottom line is it’s all about advocacy, that’s what I’m passionate about. Mobilizing and organizing people to influence the public process and public policy is what I truly love to do.” Finding a solution to climate change involves “engaging many voices,” he told Greenwire, and moving to API gives him “the opportunity to further that conversation.”

This “conversation,” however, has not lately been much of a conversation at all. Spooner cited the presence of BP and ConocoPhillips in the U.S. Climate Action Partnership, a lobbying consortium composed of both environmental advocacy groups and large corporations. The two oil giants, however, dropped out of USCAP a few weeks ago, once it had become apparent that a strong-handed climate bill was much less of an immediate threat than they’d thought. A Senate in partisan lockdown and a growing challenge to climate science are only further eroding what fragile common ground once existed between business and environmental lobbies.   

(Photo: Wikimedia Commons)

Massive staff cuts at CBS’ and ABC’s news divisions have sparked speculation about how networks can win back viewers who are flocking to cable news. As Fox News surges to the top
of ratings lists and networks struggle to cope with a slump in
advertising, observers are looking to NBC News as a business model for the
future.

NBC News has been able to fall back on the revenues of
its cable arm, MSNBC, and continue to turn a profit. The network also
downsized significantly in 2006, reducing its news staff by 5 percent.
Is this combination of streamlined newsgathering and cable partnership
a solution for beleaguered networks?

Possibly, though handing
out severance packages isn’t going to cut it. Networks need to rethink
the way they use newsgatherers and begin retraining staff to work
across formats and media. They should mimic the BBC, whose reporters
work in small production teams and often file online, radio, and TV
versions of the same piece. With 61 percent of Americans reading news online and 54 percent
listening to radio news, networks would also be smart to invest in a
three-legged approach to news dissemination. CNN’s and Fox News’
websites are among the most trafficked news sites in the world, a factor that has become vital to their brand value.

Her political future may be questionable, but with each public fracas, tea party keynote, and overseas speech,
Sarah Palin’s fortune is growing. From her book deal to her Fox News
commentator gig, Palin is raking in payments that make it hard to
remember the time when she earned a mere $125,000 a year as governor of Alaska.

The Associated Press calculated
that her total assets for 2007 totaled $1.2 million. That was based on
$230,000 in joint income, including Todd Palin’s snowmobile winnings
and the state oil royalties that the Palins, like all Alaskans, receive
each year, plus a primary residence worth half a million, two vacation
homes, and multiple watercraft.

If those assets didn’t
already classify her as one of the “elites” she makes her living
deriding, her post-gubernatorial income certainly does. Palin’s lawyer
declined to comment and exact figures are nowhere to be found, but
we’ve taken a stab at estimating the numbers. Palin’s earnings can be
broken down into three categories, some more quantifiable than others:

1. $1.25 million to $7 million for Going Rogue. Palin’s memoir, in its twelfth week on the New York Times bestseller list, has dominated sales since its November release by Harper Collins. She acknowledged pocketing a $1.25 million advance sum in a financial disclosure forms while still in office, though industry insiders estimate the total payment was much higher, up to $7 million. If the book earns enough royalties to pay back her advance, she will reap additional ongoing payments.

2. $75,000 to $150,000 per speech.
Palin signed on with the Washington Speaker’s Bureau after resigning as
governor and is making the speaking rounds. Though rumors at first circulated
that groups were hesitant to book her due to her divisive reputation,
she’s given speeches in Pennsylvania, Alabama, Nashville, and, more
recently, Florida. She snagged $150,000 for her debut speech in Hong Kong, as reported by Newsweek, but reports peg the going rate at $100,000 per gig — which she is said to have earned for her Tea Party Convention speech last month — minus a $25,000 discount for West Coast engagements.

3. $500,000 and counting for her Fox deal. In January, Palin struck a multiyear deal with Fox News
to provide commentary on TV, web, and radio outlets. Terms were not
disclosed. David Brunner, head of television talent agency DB &
Associates, claims Fox has paid her about half a million dollars up
front and is creating a recurring feature that would make Palin a more
regular presence on its TV news shows. If this vehicle succeeds, he
says, Palin’s earnings will likely increase.

Palin and her
family, of course, aren’t the only ones benefiting from her celebrity.
Her debut on The O’Reilly Factor sent Fox’s ratings skyrocketing 22 percent, and her November interview with Oprah gave the talk show host her highest ratings in two years. Runner’s World ran an infamous summer photo spread of the scantily clad then-governor, immediately garnering a 57 percent boost in weekly pageviews. When Newsweek ran one of these photos on its cover in November, the magazine’s newsstand sales jumped by 9 percent.

Calculating how much the media earns off of Sarah Palin is a lot harder than the other way around, but it’s also the much more interesting
figure. Having surrendered her elected office, Palin is now almost
entirely reliant upon her status as a public figure for her family’s
financial livelihood. Once (or if) her headline value begins to decline, she
will have to rethink her strategy.

The world’s leading 3,000 companies cause $2.2 trillion in annual damage to the environment, according to a UN report that will be released this spring. Based on eight years of studying a group of companies that includes the entire S&P 500, the report tracks corporate supply chains in order to place a monetary figure on greenhouse gas and particulate emissions, local pollution, water use, and various other depletions of environmental resources. 

The report, which the UN commissioned in order to educate eco-minded investors, may be the first step in a global push to factor natural resources into business costs. Environmentalists have long argued that since nature provides services — “ecosystem services,” they’re now termed — vital to doing business, placing a monetary value on these services is the best way to ensure that we do not overuse them. In some instances this extra cost would be passed on to consumers, but in others it would be absorbed by businesses.

The Clean Air Act used this method to tackle acid rain in the 1990s, creating a sulfur dioxide market that effectively controlled the substance. Similar efforts are, of course, under way with carbon, as well as with less easily quantifiable resources. The U.K. is pursuing biodiversity pricing while the U.S. is focusing on pricing systems for wetlands and forests.

The UN is vital to the monetization of environmental resources, since any pricing system would have to be global in order to keep corporations on an even playing field. This report indicates that such an effort may be on the horizon, though if the fruitless Copenhagen climate negotiations are any guide, it may be a nearly impossible sell without legislation on the part of individual nations.

Since it never hurts to be prepared, though, utility, mining, forestry, and chemical companies — the biggest offenders, according to the report — would be wise to develop contingency plans for what they would do if forced to pay for the environmentally harmful byproducts of their longstanding business models.    

Canadian officials announced a plan to use their nation’s influence as host of June’s G20 Summit to stop the momentum behind a global bank tax. British Prime Minister Gordon Brown, who has led the charge to implement a global tax on financial institutions similar to the one Obama has proposed for the biggest U.S. banks, broadcasted his confidence that the G20 would agree on the levy this June. Canada, the only G8 country that did not have to bail out its banks, has apparently been rankled by this arrogance and plans to fight the tax in favor of stronger regulation.

Though known for firm and well-coordinated financial regulation, Canada is currently led by a conservative government averse to high taxes. The country’s financial institutions have remained relatively stable while their global peers have crumpled, so it’s not surprising that they’re not keen on contributing to what could become an insurance fund for wobbly banks.

Other countries, however, are pursuing taxes of their own. The U.S. is considering a tax on balance sheets to recoup bailout expenses, while Sweden is levying bank loans to create a financial crisis fund. Another option is a “Tobin tax” on financial transactions and, of course, a tax on bonuses, which was already adopted in the U.K. and France.

Canada’s opposition to the tax could create a rift between G20 leaders that would complicate attempts to coordinate new financial regulation. A global tax would indeed have to be global
in order to put banks on a level playing field — if even one major
country opted out, it would open the floodgates to avoidance and
offshore transactions galore. Resistance from a country with as much
financial sway as Canada currently possesses might be a death knell.

The UN climate chief has jumped ship, abandoning global negotiations for the private sector. Yvo de Boer, head of the UN Framework Convention on Climate Change, announced this morning that he’ll be heading to KPMG in July. This means he won’t be leading the Cancun talks that have been scheduled for November as a follow-up to the unsatisfying summit he chaired in Copenhagen two months ago.

This defection is yet another blow for the UN’s climate effort, which has come under attack recently for errors in scientific reports issued by the Intergovernmental Panel on Climate Change. Stand by for more cheering from climate change deniers and more fretting from climate scientists and advocacy groups, who fear that a binding, intergovernmental treaty may have less than a snowball’s chance in hell — just like the Congressional climate bill.

Yesterday, three major companies dropped out of the U.S. Climate Action Partnership, a coalition of business and environmental interests committed to pushing a cap-and-trade bill through Congress. The companies said they could accomplish more through their own business endeavors than through legislation. De Boer has offered a similar justification for leaving the UN for his new post as climate and sustainability adviser at KPMG: “I have always maintained that while governments provide the necessary policy framework, the real solutions must come from business.”

The UN has not yet selected a replacement, though the Financial Times speculates that de Boer’s successor will likely hail from a developing nation. His seat will be a daunting one to fill given the challenge of coordinating the world’s most powerful and most polluting nations on emissions targets, carbon markets, and aid for poorer countries. De Boer only lasted four years. 

BP, ConocoPhillips, and Caterpillar have dropped out of the U.S. Climate Action Partnership, the coalition of big business and environmental interests that launched three years ago with a dramatic letter to President Bush. USCAP was a marriage of convenience between groups like the Nature Conservancy that wanted a climate bill, and companies like Shell and DuPont that wanted to make their voices heard rather than deny the inevitable.

But now that the climate bill is looking extremely evitable, the strange bedfellows of USCAP are heading back toward separate bedrooms.

Only a few months ago, USCAP was pushing for a federal cap-and-trade program,
emissions reduction targets, and new technology incentives. But since Senate Dems have slammed cap-and-trade and Congress has ground to a halt on health care, those companies are starting to think they may not have to worry about prepping for cap-and-trade. And if a bill isn’t a sure prospect for the next few years, then why were they lobbying for one?

All three companies had conflicting interests that pulled them away from the coalition. BP and Conoco were members of the American Petroleum Institute, which fought climate legislation even as the two companies’ CEOs signed USCAP statements calling for cap-and-trade. And Caterpillar slipped clean coal provisions into USCAP’s blueprint while a member of the American Coalition for Clean Coal Electricity, which lobbied against legislation.

The beauty of USCAP was its inherent compromises, but if a climate bill is no longer a nascent reality, then companies like BP and Conoco have an obligation to shareholders to pursue their own best interests. It’s a shame Congress wasn’t able to act while it had them scared.

In a move that’s drawn fire from all sides, Obama tacked a new $36 billion of nuclear loan guarantees onto his proposed budget. This addition triples the amount reserved last year in an attempt to jumpstart the construction of new nuclear power plants.

Capital markets have continually refused to fund reactors in recent decades due to their astronomical expense and high risk factor. The Congressional Budget Office has rated the risk of default on a nuclear loan guarantee to be well above 50 percent. In 2005, as Japan, France, and other countries were heavily investing in nuclear energy, Congress authorized loan guarantees for up to six new reactors. Obama’s budgetary influx would fund an additional half-dozen and has been praised by nuclear power proponents such as Senators Lamar Alexander and Lisa Murkowski.

In a joint letter to Obama, however, two taxpayer groups plus a conservative think tank and a nonproliferation organization call the new loan guarantees “a program that could easily become the black hole for hundreds of billions” of taxpayer dollars. And the progressive blog Climate Progress worries that the initiative would provide “huge subsidies for nuclear power without securing the support of pro-nuclear senators for comprehensive, bipartisan global warming pollution reduction legislation.”

Even the Heritage Foundation, a strong supporter of nuclear power, has come out against the proposal, worrying that “a loan guarantee extension could prevent a dynamic, robust nuclear industry by reducing the need to innovate and create private sector solutions to financing.”

Corporate law blogger Stephen Bainbridge floats the idea of letting the Navy do it:

By analogy to the Army Corps of Engineering, we could create a Navy
Corps of Nuclear Engineering. It would build and operate dozens of
small nuclear power plants around the country. To address security
concerns, the first plants would be built on military bases, where the
garrison can provide security. Licensing costs would be cut because the
government would own and operate the plants.

Obama’s push for more nuclear power is a gamble. He’s betting federal coffers for green jobs and reduced emissions. But as Derek argues, a gamble that doesn’t include cap-and-trade isn’t much of a change at all: “Supported by tax credits and subsidies, our new energy policy is a lot like our old energy policy, with a different host of recipients.” This time, it’s nuclear, not oil, that’s lucking out.