Alternate Energy Investments up, But May Go Way Down

Alternate Energy Investments up, But May Go Way Down

“Renewable Power Trumps Fossils for First Time as UN Talks Stall” headlined a article of November 24. (Alex Morales)

The good news for greens was that last year [presumably calendar year 2010] green energies of wind, sun, waves, and biomass received $187 billion in vestments while conventional energy sources of natural gas, oil, and coal only received $157 billion.

The bad news for greens is that green-energy investments may decline severely in 2012. The article noted two interlocking issues, economic crisis and stalled climate negotiations. One good economic crisis was that billions of dollars of green-energy subsidies drove prices down; good for consumers but tough on fledgling companies. However, economic problems in many countries may drastically lower energy investments in the next several years.

At the same time, a political issue is looming ever closer. The Kyoto Protocol, by which many countries agreed to reduce production of global warming gases, will expire at the end of December 2012. The Durban, South Africa climate conference starting November 28, 2011 (tomorrow) is the last feeble chance to replace the Kyoto Protocol.

Chances of success at Durban are slim. The United States did not ratify the Kyoto Protocol under Republican President Bush. Even when the more internationalist Democrats of President Obama had a strong majority in the U.S. Congress, the United States did not ratify Kyoto. In the 2010 election the Republicans took back most of the majority, and they may get their own majority in 2012. Thus, American ratification is highly doubtful.

Meanwhile, treaty signers Russia, Canada, and Japan said that they will not agree to any new emission targets after 2012 unless there are limits on the three biggest warming sources, China, the United States, and India. As noted, the United States never ratified Kyoto. China and India ratified but had no emissions targets because they are developing countries.

These items of contention stymied the 2009 conference of great hopes in Copenhagen, Denmark in 2009 and the fading hopes conference in Cancun, Mexico.

Even if the Durban conference succeeded in producing a treaty, there might not be enough time for a hundred plus nations to ratify it.

Consequently, the partial global climate regime may disappear after 2012; and, consequently, values in the various carbon credits markets are collapsing. As a November 25 Bloomberg article noted, “Pollution-Curb Wrangles Send Carbon Credits Slumping: CO2 Permits Slide,” (Ewa Krukowska).

The article noted that the European Union system of carbon credits dropped by one quarter in a single week. The United Nations emission credits dropped 16 percent.

The crucial connection the articles did not make was that the carbon/emission credits have been one of the subsidies advancing green energies. Without them, investments will tend to decline, particularly if Europe drifts back into recession.


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