#75 Japan Forced to Rethink Its Energy Policy

The red hot Indian and particularly Chinese economies are unquestionably having a major impact on the world. While discussions often rage about whether or not this is a good thing (e.g. with environmentalists pointing out the devastating effect this is having on the environment and business leaders arguing it provides for opportunities not seen in decades), there are a myriad of micro areas where the effect of their growth is clear for all to see. One such interesting area is in Japan's energy policy.

For centuries Japan has been the largest economy in Asia, as well as the dominant political player (this has more to do with their financial muscle than with actual influence exerted). Subsequently, the country experienced a hunger for natural energy resources such as gas and oil that far surpassed that of any of its neighbors. With the rapid growth of India and China, this is beginning to change. While, according to the CIA World Factbook, Japan is still the world's second largest (after the USA) importer of oil with 5.43 million barrels of oil per day, China follows closely with 3.18 million and India with 2.01 million. More interestingly, China already consumes more oil than Japan, with China's consumption standing at 6.53 million barrels per day, Japan's at 5.6 million and India's at 2.5 million (the USA is still the world's largest consumer of oil). This means an increasingly larger portion of China's oil has to come from abroad, which directly and adversely affects Japan's supply. Given the fact that Japan's demand for oil has remained and, according to projections, will continue to remain steady for the coming years, the country is justifiably worried that it is no longer as interesting a market as the rapidly growing Chinese and Indian ones are for petroleum exporting countries.

Japan imports a whopping 90% of its oil from the Middle East (Saudi Arabia is Japan's largest oil supplier, shipping 458 million barrels, or 30% of Japan’s total import; UAE second with 387 million, or 25.4%; Iran third with 176 million, or 11.5%; and Qatar fourth with 156 million, or 10.2%). Japan - the world's largest importer of liquefied natural gas (LNG) - is similarly dependent on one geographical location for its gas imports (three quarters of Japan's imports come from Australasia: Indonesia, Malaysia, Brunei Darussalam and Australia. Qatar is Japan's fourth largest supplier after Indonesia, Malaysia and Australia).

In the meanwhile, China and India have been scavenging the world - particularly Africa - for new areas from which to secure their oil supply. China has been so successful in Africa that it has even managed to create a very balanced oil importing picture (in 2006, the Middle East accounted for 45% of China's crude oil imports, Africa for 32%, the EU and the Americas for 18.3% and Asia Pacific for 4%, according to the Chinese General Administration of Customs). All the while the oil prices have been skyrocketing, allowing for countries like Russia and Venezuela to play their oil cards and flex their muscles.

Given all these worrisome facts, the Japanese government decided it was time to prioritize the securing of the country's energy supply. In May 2006, the Japanese Ministry of Economy, Trade and Industry (METI) published a revealing document entitled "The New Energy Strategy." In it (and in later documents and high level speeches even more so), we find some key shifts away from their old policy. As Jan-Hein Chrisstoffels, a Japan specialist at the Netherlands Institute of International Relations Clingendael, points out, the formerly abundant references to liberalization, globalization and the free market are nowhere to be found. The new pillars are: Strengthening of bilateral relations with oil and gas producing countries; Increasing imports from oil and gas projects that are led by Japanese firms abroad; Decreasing the use of oil in the transport sector; Using more nuclear energy; And cooperation with China in the field of energy.

Another major shift in policy is the increased role that the Japanese government seeks to play. Japan feels Chinese oil firms have an unfair advantage given a government that pumps money into seemingly economically unprofitable extraction projects simply in order to secure supply. Therefore, the Japanese government has now set out to increase subsidies to Japanese oil firms and provide more favorable loans and investment guarantees. In other words, there is to be little left of the free market policies and non interference from the government that took the overtone until now. Much like China - which woos potential oil suppliers by promising preferential loans, the building of large infrastructure projects and a policy of non-interference in internal affairs - Japan has embarked upon a quest of securing her energy supply through tit-for-tat policies. One success story can already be found in former Prime Minister Junichiro Koizumi's visit to Kazakhstan in August 2006, followed by Economy, Trade and Industry Minister Amari Akira's visit this year. They ensured that Kazakhstan's (which has the world's second-largest uranium reserves after Australia) current supplies of only 1% of Japan's uranium imports will jump to 30-40% in the near future, in exchange for Japanese expertise in uranium enrichment.

It appears India and especially China are having a major impact on the policies of other nations such as Japan, which in this case can be considered as a blow to proponents of the free market. It is even likely to extend beyond the oil and gas sectors, as this year China - the world's largest consumer of coal - for the first time became a net importer thereof. The country imported 4.7 million metric tons of coal in January, a rise of 81.1% from a year ago, according to figures from the customs bureau. Although Japan is not at all a major consumer of coal, it might very well affect other formerly free market adhering countries.

#72 Bioflation and the Global Eco-Hypocracy

Markets are moving, volatility is up, Forex markets are once again the focus of a broader public. However, instead of being swamped by a myriad of different analyst reports and outlooks, it could be beneficial to look beyond the complex parade, rank and file of charts in order to grasp what is happening under the bonnet of the world economy. Markets are essentially economic battlefields, continuously pulsing and pushing. The force majeure of the world economy - the dollar - has taken a severe beating. With it, volatility has come back into the market and subsequently also some repricing, so far psychologically more than in absolute yield spreads and valuation. All these things are nothing but distractions when put in perspective of the "real" hurricane out there, and that hurricane is a global one: Bioflation.

Bluntly put: Bioflation is what happens when food (that what we put on our dinner plates) ends up as fuel in our gas tanks. When the appetites of automobiles start competing for those of humanity as a result of ethanol/biodiesel mania, we have a problem called bioflation. When food crops such as corn, rapeseed, sunflower, sugarcane as ethanol or biodiesel have to compete with oil on global fuel markets we essentially interlink them on an unprecedented global scale. This has been instrumental in the increase in food commodities worldwide.

In the end the consumer pays the bill in the form of substantially higher prices for tortillas, cornflakes, cola, hamburgers and pizza. Bioflation may be good news for farmers, but not for regular consumers and the world's poor. As a result of bioflation, Mexicans have been rioting due to corn prices going through the roof. The culprit: corn being used as a source of ethanol rather than food. The result: the price of corn and other food substitutes on their way to record heights. The bad news: this is only the beginning.

When food crops become interchangeable as fuel, they have to compete with fuels such as oil. Simpleton economists would say that this is just a cyclical phenomenon and argue that, with food as a substitute, this creates more supply in a market that has very little cushion. But this extra fuel supply comes at a price: bioflation. Opec and other large exporters have enough flexibility to keep prices high. Furthermore, there is more than enough (and still growing) demand from rapidly developing countries such as China and India. So biofuels as substitutes and alternatives to the global petroeconomy are just farts in the wind. Biofuels such only be considered as a steam valve, as part of a transition completely away from a carbon based fuel economy.

Making biofuel from corn is really not very efficient and is turning the US (previously a net exporter of corn) into an importer. The price hike and volatility of corn on global commodity markets is affecting other crops and substitutes as well. The global hike in food commodities shows just why bioflation is not a welcome trend, unless you are a large scale corn farmer or an ethanol refiner. There are other non competitive, non food crops that should be considered if one really desires to shift towards a biofuel economy. Unless we are willing and capable to rise to that challenge, we will live in an inflationary and unstable world of food and energy substitution.

Several UN organizations have already signaled that they are unable to feed the world with the current trends in food prices (as if they were able to feed the world before). However, food prices are not expected to go down as long as they remain connected to the world's energy economy. As global oil output declines and the prospect of food for oil substitution remains an alternative, high food prices are here to stay, and with it hunger on a unprecedented scale.

The cycle is more vicious and cynical than you think: besides high gasoline prices at the pump, fuel for heating and cooking also becomes more expensive. In developing countries this results in increased wood and shrub poaching and increased deforestation. Higher food prices are also going to encourage increased encroachment on existing forests as villagers look to cultivate more land. As peasants cut down local shrubs and trees for fuel, they are also destabilizing the fertile top soils in the surrounding land. Indirectly, high energy prices will lead to increased soil erosion, drastically affecting the fertility and agricultural output of the land.

Bioflation thus leads to a vicious cycle of higher food prices, inflation and lower "real" economic growth. Furthermore, the collusion of the above factors also inherently exacerbates poverty. Therefore, by understanding the dynamics of bioflation, we need to consider the trade off between "biofueling" the economy and empty stomachs world wide. As such, by "biofueling" our mobility, we drive the most vulnerable participants of the world economy into deeper poverty and hunger.

The "inconvenient truth" is that we are heading towards a world where food prices will be held hostage by both higher energy prices as well as global warming. Additionally, in a very perverse way, the Saudis, Putin and Chavez are more capable of determining the price of a big mac than McDonalds itself. Biofuels as the corner stone for energy independence is a green myth that will lead us down to a greater state of (inter)dependence that we cannot even begin to comprehend.

Furthermore, the effects of "bioflation" are not experienced in homogeneously. The effects, although generally detrimental to all, will be different for low income families as opposed to higher income families across different economies and geographical regions. For example, a Mexican laborer just above the poverty line may find him or herself quickly below the poverty line as wage rises don't stay in check with food prices. Bioflation will impact developed economies and families in a higher socio-economic strata as well. On a macro level this will imply lower spending on durable goods which in the long term can shift the global economy itself. For that reason the quest for cheap alternative energy is the most direct challenge of the 21st century, for it determines the fate and prosperity of mankind.

note
* non-food commodity based plants such as jatropha do offer a viable solution as biofuels because they do not directly compete as foodbased output or as food substitutes
* the author is NOT an anti-environmentalist nor a climate change denier

#69 Climate Change as Political Dogma

Contrary to the last few G8 summits, one of the main subjects of the recent meeting between the world’s top leaders in Heiligendamm, Germany, was Climate Change. In fact, it was the only environmental issue handled during the summit. In the summary of the summit it is stated that the leaders recognised that global warming is largely the result of human activity and only by limiting CO2 emissions will it be possible to stop global warming, concluding that “it is absolutely essential that global warming be limited to 1.5 to 2.5°C.” This is certainly a strong statement and it implies that we (humanity) know exactly what needs to be done. But do we really know? Do we really understand why the climate is changing? Do we understand the consequences of the change? And do we understand the consequences of channelling large amounts of resources towards curbing CO2 emissions?

If one were to trust politics and the press, then these would be rhetorical questions. After all, according to them, everybody knows the facts, discussion is closed and it is now time to act! But things are never that simple. Sure, the fact that there is global warming is known and agreed upon. But this is the only statement that enjoys consensus. The reasons behind the warming and its consequences are far from agreed upon. Roughly speaking, there are two camps. One camp is a believer in the conclusions of the Intergovernmental Panel on Climate Change (IPCC) that have been adopted by mainstream politics and states that global warming is man-made and, unless urgent action is taken to reduce the increase of CO2 in the air, the world is heading towards a horrible catastrophe. The other camp believes that science is still far from able to understand global warming and its likely effects. The warming could be nothing more than a normal phenomenon caused by the same natural forces that make climate to be volatile and has nothing - or at least insignificantly little - to do with the additional emission of CO2 by humans. Moreover, the effect of warming is not necessarily negative. The picture of the calamity that the mainstream camp is painting is not based on any facts. So, if this is the case, spending so many resources to fight CO2 emissions cannot be justified.

The discussion between the two camps has passed from a pure factual discussion to a stage of dogma. Those in the camp that opposes the official opinion of the IPCC are called deniers, having even been compared to Holocaust deniers (though they prefer the label sceptics). It is true that there are more scientists on the side of the official camp, but that on its own is not so strange, given that it is the mainstream opinion. However, there are sufficient scientists on the other side as well and enough facts exist in order not to dispose of the opinion of the sceptics. Both sides have very convincing arguments and special sites to spread the word and defend their faith while combating the opponents (If you are interested, here are two sites to start you on your quest:
mainstream - environment.newscientist.com/channel/earth/climate-change/dn11462 & deniers - www.friendsofscience.org/). And, as is appropriate for a faith, each has their followers that fight each other with, very often, quite offending words.

Based on the existing knowledge, it is very difficult to claim that there is a scientific consensus on this issue. Nevertheless, politics decided that it is worthwhile to follow the advice of IPCC and elevate the climate change issue to the top of the agenda. The real question is why? It is difficult to believe that suddenly all members of the G8 decided to save the world. Politics in the modern world has a short term horizon. What will happen 100 years from now is not usually a relevant factor in political decisions. It seems more reasonable that this fits other goals they may have.

One reason could be that combating climate change is a way in which the various ‘green’ parties and pressure groups could be pacified without the need for handling less convenient problems. But the main reason is probably the painful dependence of the G8 countries on oil. Pushing the industry to find other energy sources could ease this dependency and by forcing all countries to participate, none of them should be too severely handicapped. If the money is used appropriately, we could perhaps see a breakthrough in alternative energy generation; which would be a major milestone in human development. What it most probably will not achieve, however, is a slowing of the temperature increase in a significant manner.

- This article was written for and provided to the Weekend Economist by Tamara Fai

#59 Divisive Ethanol

Ethanol has become the new "it" thing in terms of energy fashion. Whether you are a proponent of expanding ethanol production for energy use, believe it would be a disaster to do so, or if you could not care less about the topic, one thing is for sure: you have something to say about it. The scope of discussion on the topic extends far beyond merely energy, encompassing a wide array of sectors such as food, agriculture, energy, trade and the environment. No matter in what context ethanol is debated, it has become a particularly divisive topic.

The environmental field is one such area. High profile politicians, scientists and lobby groups such as the Renewable Fuels Association - the largest Washington ethanol lobby group - are touting it as a 'green' alternative to the heavy pollutant, gasoline. Others, such as Stanford University civil and environmental engineering professor Mark Jacobson, loudly dispute this claim. Jacobson conducted a study analyzing the environmental effects of switching to ethanol and concluded "It's not green in terms of air pollution...If you want to use ethanol, fine, but don't do it based on health grounds. It's no better than gasoline, apparently slightly worse." Green or not, ethanol has set the stage for a tough debate worthy of competing with the ever contentious notion of Global Warming.

At the top of the world's political echelons, ethanol has garnered a prominent and cosy space for itself as well. Venezuelan President Hugo Chavez, following the words of Cuban President Fidel Castro, has issued a stark warning against the use of ethanol as a main source of energy, warning there is a lack of arable land and arguing it will lead to food prices skyrocketing, subsequently causing mass starvation among the world's poor. Bush, on the other hand, has hailed ethanol as a fitting alternative to the American addiction to foreign oil, sealing a bilateral deal with the world's largest ethanol producer, Brazil. The fact that these two leaders disagree on something is far from surprising, of course. What is noteworthy, however, is the effect that ethanol is having on Chavez's relationship with Brazilian President Luiz Inacio Lula da Silva (Lula), who Chavez considers to be a close ally.

At a Venezuelan hosted energy summit involving eight Latin American nations, Lula responded to Chavez's comments regarding massive production of ethanol in an unprecedentedly stark manner, saying “The truth is that biofuel is a way out for the poor countries of the world...Obviously there is no possibility of competition between food production and biofuel production...No one is going to stop planting rice to plant biofuels. The problem of food in the world now is not lack of production of food. It's a lack of income for people to buy food.” Chavez was seemingly taken aback by these statements, softening his position afterwards by insisting that his real objection is to the U.S. corn-based variety of the biofuel – not Brazilian ethanol produced with sugar cane. Nevertheless, ethanol has managed to become the first topic to create public disagreement between the two leaders.

Let's just hope that either the proponents of ethanol as a substitute or additive for oil are correct, or that other, cheaper, cleaner and less divisive methods will be found in the meanwhile. Divisive ethanol must not become a distraction for the real reasons - which are a plenty - that we are seeking alternatives to oil.

#41 Making Money From Hot Air

Ever since the implementation of phase one of the Kyoto Protocol, the right to release CO2 into the air has become commodified. In Europe alone, there were 24 billion dollars worth of CO2 deals; indicating a booming trend.

Traditional banks and brokerages have been relatively quick to follow suit, albeit with mixed success. For one, the dynamics of the CO2 market are not as straightforward as they are in other markets. CO2 prices have been volatile, arguably for the reason that these markets are not by definition efficient and mature. One major factor in CO2 pricing is weather; when the cold sets in, energy consumption goes up, and with it the need for emission rights.

The mild winter resulted in lower energy consumption, which in turn resulted in both lower energy and CO2 emission prices. CO2 prices are actually fairly correlated to a basket of fuel indexes such as Coal, Oil, Gas, etc. The relationship between coal consumption and CO2 is one of the strongest, as it produces the most CO2, thus requiring more emission rights. With Kyoto in place, there is finally a financial incentive to move towards reducing CO2 emissions. Furthermore, with CO2 pricing, there is a benchmark that can be used to calculate returns on investing in alternatives that reduce the overall CO2 emissions exposure.

There remain some issues to be worked out; notably the pricing of emission contracts remains a tricky endeavor. Part of the problem lies in the fact that the CO2 trading platform remains a young market in its adolescence, meaning there remain considerable arbitrage opportunities. Academically and professionally there is no real simple uniform pricing model for CO2 emission in the way that the financial world has embraced the Black & Scholes option pricing model or the Capital Asset Pricing Model.

Other factors bringing uncertainty to the whole affair (excluding energy dynamics) are the different political organs and processes that determine the emission ceilings of different countries. When emission ceilings move arbitrarily - for the most part downward - this creates much volatility in the market. With CO2 allowances set to tighten in Europe as we move towards phase 2 of the Kyoto Protocol, it is expected that prices are set to rise once again. Looking at the future, there is definitively money to made from hot air and, in doing so, arguably stemming global warming.

Kyoto opponents, for whatever reason or motivation, may laugh at the whole "pseudo" CO2 market phenomenon. Nevertheless, its significance (aside from scientific debate on global warming) can by no means be ignored. Non-Kyoto signatory countries are going to face significant pressure in the near future. French President Chirac was already bold enough to suggest putting an import tax on countries that have not signed Kyoto. This sends a clear message to the U.S., Australia and China, who, even without signing and accepting environmental responsibility, will face a steep price to pay for their environmental desecration.

#38 Road (Pricing) Rage

It sometimes seems as if things could not get any worse for poor Tony Blair; an endless quagmire in Iraq, embarrassing police interviews, John Prescott (need I elaborate?) and now, yet again, the British public have voiced there disapproval: over 1.65 million people have signed an online e-petition to ‘scrap the planned vehicle tracking and road pricing policy.’

The Great British Motorist, whose rage was last expressed rather visibly in the national fuel protests in 2000, is something of a civil institution in the UK to be roundly whipped into a frenzy by various tabloid and/or political forces, as and when deemed necessary. We, unlike other Europeans, have had a long history of being rather unwilling to accept that motoring and fuel prices should in fact reflect the true socio-ecological costs of the activity itself. Perhaps we feel short changed in the ‘Blood for Oil’ War, with so little to show for it at the pumps.

What startled me most, however, was to receive from my mother one of the multitude of emails urging people to sign the petition. Far from being merely the bugbear of suburban bourgeois motorists (and the Conservative Party), this policy seems to have riled the nation up and down the land – either on the grounds of cost or privacy (as Peter Roberts, author of the petition, has stated, “the idea of tracking every vehicle at all times is sinister and wrong…Road pricing is already here with the high level of taxation on fuel. The more you travel, the more tax you pay”).

The rage was perhaps inevitable. But then again, maybe the shortsightedness and intellectual papacy underpinning it was also to be expected. Yes, there are serious privacy considerations inherent with the proposal, such as who will have access to the data? How will it be regulated? What safe guards will be in place? On closer inspection, however, the fact that the overwhelming majority of people in Britain are ready to accept ID cards, phone tapping, curfews, electronic tagging, the opening of private mail and extensions to detention without charge to fight the rather ethereal threat from the Al-Qaeda bogeyman proves just how hollow this argument is in reality.

Still, bloggers screamed a call to arms, demanding answers to questions like “are we prepared to be taxed for the privilege of going about our business? At what point do we turn round and say that something is a basic right rather than a privilege, and as such not something we expect to be taxed for?” In the process, of course, such outspoken opposition actually illustrated the very reasons why such a policy must, in fact, be implemented. Motoring, at least as it has been historically conceived, really is a privilege, not a right.

Without some kind of action, congestion on Britain’s roads is set to increase by 25% in less than a decade, in a country that has already seen road transport grow by a shocking 81% since 1980. We face a major transportation crisis, made all the more significant by the Stern Report last year that underscored the very grave financial (let alone human, social and environmental) costs of unrestrained global warming - of which transport accounts for 1/5th of all CO2 emitted. The transport study, led by Sir Rod Eddington, recommended a road pricing of around £1.28 per mile in direct recognition of this fact. According to the study, the world needs to "face up to the reality of climate change, and that implies learning to live within a carbon-constrained future.” People need to "feel the consequences of their decisions" and this is, contrary to rage-blinded motorists, neither patronizing nor authoritarian. The European Carbon Trading Scheme is already in place, and it is only a matter of time before this is extended to private individuals in the form of carbon credits.

It is, quite frankly, ridiculous to assert, as Austin Williams did in the Telegraph, that transport policy should follow a ‘predict and provide’ approach. Endlessly expanding the road system is not a sustainable solution. Nor is it morally or intellectually honest to dismiss Eddington’s conclusion that “some of the best projects are small-scale, such as walking and cycling.” Indeed, such changes in habits – requiring as they do first and foremost a change in mentality – will only be achieved with both the carrot and the financial stick. As the Prime Minister's official spokesman pointed out, whilst “people did feel strongly about this issue, feeling strongly was not a substitute for coming up with practical proposals.”

The supreme irony, of course, was in accusing Eddington of ‘Stalinist’ penny pinching, asking “since when have we ever reduced politics to such simple fiscal equations?” Williams himself articulated the crassest form of financial selfishness on behalf of the British Motorist, urging them to “downplay the so-called harm that carbon does” and, despite all the scientific evidence available, stress that global warming is a “potential problem.” Whilst that approach may save many motorists money and, sure, quite possibly a significant amount thereof, it is tantamount to mortgaging our future and gambling with the very sustainability and prosperity of our children, for they are the ones who will have to deal with our legacy of an infatuation with boundless mobility and endless consumption.

“We can't solve problems by using the same kind of thinking we used when we created them.”
Albert Einstein

- This article was written for and provided to the Weekend Economist by Stuart Reeve

#33 The Green Avalanche

It is impossible to escape the issue of climate change in the media today. Green issues central to political and cultural debate are everywhere now, in a way so vast and banal, it has almost escaped comment. Al Gore has been transformed into an international star with An Inconvenient Truth; David Cameron of the Conservative Party in the UK has made green issues a central plank of the Party’s manifesto, and has even changed the party symbol to reflect it; the recent Paris conference on climate change has clearly laid the blame at man’s feet, and President Chirac has demanded that the world pick up the gauntlet. Even President Bush has finally acknowledged both the reality and seriousness of climate change in the State of the Union address, whilst celebrities clamour over one another to demonstrate their green credentials. Following the tough, no nonsense Stern Report on the huge costs of inaction on climate change, the Economist recently reported that it is now global businesses leaders who are the ones demanding that action be taken, and fast, for hard nosed financial reasons. Unbelievable as it is, Arnie the Governator stands as an unlikely green champion with his initiatives on emissions and solar panels.

This is a remarkable change from even just one year ago. Of course, there has been plenty of doom and gloom too - meaning that many have effortlessly crossed from denial to hopeless resignation, and hence conveniently squaring the circle to write off any guilt for inaction or a sway some lingering sense of social responsibility whilst they blithely continue their carbon heavy lives. Even though Americans may be the ‘least concerned’ about climate change in the world (according to AcNielsen, just 42% considered it ‘very serious’), an amazing 91% of 25,000 people globally surveyed considered it a ‘very serious’ or ‘serious’ problem. With 1.5 billion people and growth projections indicating it will overtake the US as the world’s top CO2 emitter by 2009, the fact that China considers the problem both very serous and clearly man made counts for a lot, and cannot be ignored.

What is more, let us contemplate just one single momentous fact – whoever wins the US Presidential elections in 2008, from either party, they will almost certainly push America to take global leadership in tackling climate change. The forerunners, McCain, Obama and Clinton, have all pledged to bring the issue to the centre of their policies. And that’s not even touching on the impressive environmental measures that the newly Democratic controlled Houses have launched, starting with the repeal of Big Oil’s massive tax breaks (with the money going to a green fuels fund), and the Waxman investigation into Bush administration manipulation and suppression of scientific information on climate change. Even Dick Cheney’s own fund manager says he is "certain" that "oil substitution, energy conservation, and related environment issues will be the biggest investment issue of at least the next several decades," in a letter in which he blasted 20 years of political cowardice, inaction and greed in the face of mounting energy problems in the US.

The writing is on the wall, and people are finally starting to read it. How on earth did we reach this apparent tipping point so rapidly? A host of immediate issues spring to mind: the devastation of Hurricane Katrina; the looming conflict with Iran; the price of oil; the unsettling and disturbing weather patterns across the Northern Hemisphere; celebrity sound bites and tabloid hysteria; not to mention of course the mountains of solid scientific data. All have played a part. And yet, the current debate and momentum for rapid, dramatic change has snowballed so fast, that it is clearly far greater than the sum of these parts alone.

For, underlying these immediate causal factors, I suspect, lies a much deeper driving force – the maturing and development of the information revolution, the much vaulted ‘Web 2.0.’ Whilst hype is dangerous (Dot Com bubble anyone), and although one can legitimately question Time’s choice of ‘you’ as person of the year, something really significant has happened – and it isn’t so simple as the labels ‘user driven content,’ ‘amateur journalism’ or ‘new media’ imply. This is because these things are only facets of a much more profound democratising change that is occurring in the nature of information, and our relationship with it. The evidence, acceptance and debate on the reality of climate change (and the profoundly negative consequences associated with it) has spread and become commonplace in a grassroots virtual exchange that illustrates the fundamental dynamism of information. Data, in all its multifarious forms, has an independent, boundless and relentless desire to replicate and spread itself as far and as wide as possible. This is what we really need to be looking at to understand this rapid, complex weaving together of factors and forces.

Blogs, podcasts, video phones, YouTube, Google, P2P and all the rest, are all forming the infrastructure and tools to articulate this inherent dynamic of information to expand, replicate, network and generate. The Green Avalanche is just one byproduct of this new era we are moving towards. The information on climate change is ‘out there,’ in this new virtual civic space, and it wants to get out, irrespective of politics or business. The truth has a boundless desire to be set free, to operate in the market place of ideas, and Web 2.0 will increasingly make that manifestation real. Where does this end? A radical rethinking of just about everything from ownership, equality, relationships, intellectual property rights, are only a few things that come to mind…

- This article was written for and provided to the Weekend Economist by Stuart Reeve

#30 Predictable Failures of Global Warming

Future generations will not remember us for what we did for them; rather they will remember us for what we failed to do for ourselves.

Have we achieved a moral high ground and cultural superiority that has allowed us to concern ourselves not with our problems, but with the potential problems of the future? Are we so inclined to believe that future generations will be incapable of helping themselves to the point that we must sacrifice our weak, our poor and our disadvantaged today in order to “save” the future? With our selective amnesia we have relegated ourselves to ignoring the real problems that face our planet and instead focusing our time and resources on the “potential” problems of the future.

Global warming theorists, and those who follow their lead, are in the inevitable position of being the most likely to promote the continued death of the underprivileged and underrepresented societies. They are the most willing to believe in the fallacy and incompetence of man, and are most likely to conclude that man will, by the very nature of existence, destroy the planet.

The premise behind global warming is that in the future, due to human lifestyles and consumption rates now, we will irrevocably harm the earth. The assumption is the brainchild of global warming theorists who maintain that the future of the world is doomed because of the burning of fossil fuels, which is leading to a rise in CO2 emissions, which is causing a rise in global temperatures. These theorists believe that the warming of the globe will ultimately cause a catastrophic climate change that will lead to hundreds of thousands, perhaps millions of people, suffering the consequences. We are our own messengers and the message is loud and clear: we are going to destroy the globe because of our reckless lifestyle. These are the doomsday warnings that the global warming theorists are bringing to the rest of us.

Why am I under the impression that these global warming theorists are hastening the destruction of the planet? Is it not their hysteria that has alarmed the rest of the world to the dangers of human consumption? Or, as they would like us to believe, are they in fact providing a tremendous service to mankind by alarming us to the dangers of global warming and therefore helping us to overcome the inevitable dangers? In a perfect world, perhaps yes, but have the global warming theorists conveniently forgotten about the true perils facing our world today? Have they forgotten about the 10 million children who die yearly of preventable diseases? Have they forgotten about the global scourge of HIV/AIDS and its 40 million sufferers? I maintain that they have--but have you?

If we are placing “global warming,” and the unsubstantiated fears at the top of the list, then we have in fact forgotten about them. We have given up on the unglamorous and challenging task of facing these problems, and instead shifted our attention to wasting precious resources in a vain attempt to solve an imagined problem. In the process, we are left only to hope that our efforts will afford us the pains and guilt of failing to prevent the real disasters that are unfolding on a daily basis.

Which touches on a sensitive topic: Who is actually worried about global warming? Certainly a child in sub-Saharan Africa who has lost both her parents to disease--and will herself eventually succumb to AIDS--is not worrying about global warming. Similarly, are the wealthy nations with their vast resources and innovative technologies really concerned about their future generations? Are they not confident in the resourcefulness and wealth afforded to their off-spring? In fact, global warming theorists are, ironically enough, more concerned with their impact as wealthy nations on the poor, developing world of the future.

It is not only our responsibility to save and protect future generations, but our responsibility and moral duty to save and protect our current generation.

Global warming theorists will have you believe that the problems facing the world today are by no means comparable to the eventual problems that global warming might bring. Unfortunately, their insistence has paid off, and public opinion has shifted, making the fight against global warming a top priority. The money, resources, and international public opinion needed in the fight against the real problems facing the world will slowly be reallocated to the imaginary problem of global warming. The consequences of these actions will have severe and long lasting affects on the disadvantaged societies of the world. These callous and insouciant attitudes represent a failure of mankind akin to the atrocities committed by the most tyrannical despots and sadistic leaders.

- This article was written for and provided to the Weekend Economist by Westbrook Sullivan

#26 Food for Oil: The Greening of America

There was a time when, if you would talk about reducing oil consumption, you would be branded a leftist, tree-hugging liberal. These days, reducing energy consumption is slowly coming to be seen as the patriotic duty of every American. Even President Bush seems to have awakened from his comatose anti-environmentalism when, in his recent State of the Union Address, he said

"We must continue changing the way America generates electric power, by even greater use of clean coal technology, solar and wind energy, and clean, safe nuclear power. We need to press on with battery research for plug-in and hybrid vehicles, and expand the use of clean diesel vehicles and biodiesel fuel. We must continue investing in new methods of producing ethanol, using everything from wood chips to grasses, to agricultural wastes...let us build on the work we've done and reduce gasoline usage in the United States by 20 percent in the next 10 years...America is on the verge of technological breakthroughs that will enable us to live our lives less dependent on oil. And these technologies will help us be better stewards of the environment, and they will help us to confront the serious challenge of global climate change."

The drive for oil independence is not a new one; those who are old enough may remember the oil crises of the 1970's. Back then President Nixon was singing the same tune as Bush when he called for drastic measures to curb America's addiction to foreign oil. Sadly for the Unites States, Nixon's big words never amounted to anything. The same story risks unfolding once again, unless the US undergoes a fundamental political and cultural shift.

America consumes upwards of 50 million barrels of oil per day. Reducing this number does not only require fundamental technological innovation and implementation, but also a whole new cultural mindset. Bioethanol is heralded as the new miracle drug capable of curbing America's addition to foreign oil. Bioethanol is a fuel that can be derived from corn, sugar and other various crops. It is also a significantly cleaner fuel, and in that respect bioethanol can help in the greening of America's oil economy and give a viable boost to the American heartland.

However, as crops become part of a fuel economy, commodity food prices are destined to become evermore interlinked. Besides food prices going up as food crops are turned into bio-fuels, the volatility of the energy market as a whole is going to rub off on the commodity market. This is bad news for consumers and industry alike, not to mention the poor. This in turn will, and already has, affected the self sufficiency of crop production: the USA used to be one of the largest exporters of soy, but has now become of the largest importers thereof. There is a very real threat that ‘fuelification’ of food crops could inherently exacerbate that trend to other crops such as grain, sugar and corn.

As mentioned before, America needs to undergo a cultural revolution in order to change its ways. More specifically, she requires an urban revolution based on the de-suburbanization of the country. The expansion of public transport: metros, buses, trams, and yes, trains. In a nutshell; a European, if not Dutch approach towards tackling transport, the environment and oil dependency. Only then can America begin to curb its addiction to foreign oil.

#24 A Cough Too Far

When we think about China, images of its current success story come to mind: the land of opportunity, near double digit growth, the world's factory, etc. There is, however, another face to China; one that is devastating to the health of not only its own inhabitants, but also for the people residing in neighboring countries.

China has become the worst polluter in the world. It is estimated that there are nearly 400,000 pollution related deaths per year. In addition, China is now believed to be the largest source of non natural emissions of mercury - another toxic substance. With environmental damage costs estimated to be between 8 and 15 percent of GDP, this problem has come to extend beyond being merely a regional issue to becoming of global concern.

The surge of industrialization is much to blame for its impact on the environment. The health of millions of Chinese citizens is affected. The source of much of China's pollution comes from its heavy industrial basis. Coal fired power plants are at the heart of China's industrial machine. Coal based electrical generation is one of the dirtiest forms of electricity generation. With little or no regulation or pollution controls, the air in many of China's industrial areas is beginning to resemble a parking lot at a Lada convention.

Not only the air is poisoned. Another grave problem is the poisoning of much of China's water sources. Industrial toxins such as sulfuric acid, lead, and mercury are poisoning China's ground water supplies. Ground water is to a nation what the placenta is to a baby. The very fact that water consumption is a health hazard should serve as a wake-up call: evidently polluted areas are reporting a 30 fold increase of cancer cases. Even factories have to close due to the lack of safe water. The costs of these shutdowns are calculated at 14 billion of lost output annually.

By not claiming responsibility, China faces fronting the costs of pollution to those that can ill afford. The costs of cancer and respiratory illnesses are far beyond what the Chinese poor can afford. China is not a free society and citizen activism is not encouraged. Activists are threatened with jail terms. Without free press in China, much of the weight of the issue is expected to be stuffed under the carpet.

World leaders need to unite on the issue of pollution. After all, clean air is a global good inhaled by everyone. The problem of China's pollution monster is thus a global one. And for that reason it needs a global solution. Ratifying the Kyoto treaty on CO2 could be a healthy first step to a cleaner and safer mode of industrial production. Not only China, but also the US and Australia must be made aware that the time to act is now, not tomorrow.