Home' Trinidad and Tobago Guardian : December 13th 2015 Contents SBG16 INTERNATIONAL
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt DECEMBER 13 • 2015
The world economy stumbled in 2015, with
growth estimated at just 2.4 per cent this year
following a nearly 60 per cent drop in oil prices
and an over 20 per cent fall in commodity
prices in the last 18 months, according to a
UN report released Thursday.
The report on the World Economic Situation
and Prospects 2016 said many developing and
former Soviet bloc countries suffered a broad
slowdown to the weakest pace since the global
financial crisis in 2008. The growth rate com-
pares with 2.6 per cent in 2014.
"Weak global growth continues to hurt labor
markets," UN Assistant Secretary-General for
Economic Development Lenni Montiel said
at a news conference." Unemployment is on
the rise in some regions, or remains stubbornly
high in some countries. At the same time, job
insecurity is becoming more entrenched amid
the shift from salaried work to self-employ-
One of the striking features is a sharp decline
in investment across a large set of countries,
said Hamid Rashid, chief of the global eco-
nomic monitoring unit at the UN Department
of Economic and Social Affairs. All but five
of the 20 largest developing countries observed
a decline in investment over the last 18 months,
There was one positive statistic with impli-
cations for efforts to combat climate change:
There was no growth in energy-related carbon
emissions in 2014. It was only the second time
that has happened in the past 20 years. The
first was in 2009 when the global economy
"This suggests that the world may start to
see some de-linking between economic growth
and carbon emission growth," Monteil said.
Looking ahead, Monteil said "we expect
only modest improvement in the global econ-
omy during the next two years." The report
forecasts that global growth will reach 2.9 per
cent in 2016 and 3.2 per cent in 2017.
Rashid said oil prices have dropped signif-
icantly because there is " huge oversupply in
the market." The UN expects this excess supply
to dissipate and oil prices to go up from around
US$45 a barrel now to about US$63 a barrel
He cautioned that it is very difficult to fore-
cast commodity prices, but " we are reasonably
optimistic that this has bottomed out."
Rashid said demand for commodities includ-
ing iron ore and metals should increase as
excess supplies are used up. He said demand
has picked up in India and other countries
that are doing well.
"But we don't expect a major rebound by
any means," Rashid said. AP
The gas produced by hog
manure at farms across the US
punches holes in the ozone
layer, overheats the planet, and
angers neighbors with its
peculiar odor, a mix of rotten
egg and ammonia.
All that's needed to clear the air is to cover
the manure with a system of tarps that captures
the gas, but many farms don't do it because
it's too expensive.
"If you don't give people incentives to come
up with solutions, they're not going to do it,"
says Rudi Roeslein, a wealthy entrepreneur
who thinks he's found a fix.
His plan: Raise money to help pay for the
tarp systems through a greenhouse gas trading
market in California, where companies can
pay others who are helping the environment
so that they can continue to pollute.
Widely derided by politicians on the left
and the right, once thought dead even by its
supporters, the idea of allowing companies to
buy and sell pollution "rights" like stocks is
now at the fore again as 151 heads of state and
government at the Paris climate conference
grope for ways to avert environmental havoc.
Under such "cap-and-trade" systems, pol-
luters are required to keep emissions below a
certain level or hand over money to polluters
that have managed to fall below theirs and
have surplus pollution permits to sell. To cut
greenhouse gases, the statewide level, or "cap,"
is gradually lowered, forcing companies to fig-
ure out new ways of running their businesses
to cut emissions.
If all goes well, Roeslein, an Austrian immi-
grant who made a fortune building metal can
factories around the world, hopes to eventually
capture gases from nine hog farms in Missouri
that, left to rise in the atmosphere, would have
done the same damage as releasing 850,000
tonnes of carbon dioxide every year. His project
will be like taking 180,000 cars off the road.
Roeslein is so convinced the idea will work,
maybe enough to turn a profit, he's putting
US$25 million of his own money behind the
California Governor Jerry Brown, who's cre-
ated a bit of stir at the Paris talks scheduled
to conclude Friday, has been touting his state's
emissions trading market as a model to help
solve the global climate crisis. One study, from
the non-profit Environmental Defense Fund,
says emissions from companies in the market
fell 11 per cent below the "cap" allowed in
2013, according to the latest data available,
while economic growth doesn't appear to have
"It has got nothing to do with do-gooders.
It's about the almighty dollar," says Lenny
Hochschild, managing director of emissions
broker Evolution Markets. "It's about incen-
There are deep concerns about whether
these pollution trading systems can cut emis-
sions as much as scientists say is needed, or
even if they can work at all.
First proposed by economists in the 1960s,
a pollution permit market remained mostly
an academic idea until President George H W
Bush championed it as a way of getting power
plants to cut emissions of sulfur dioxide, which
leads to acid rain.
Annual emissions plunged, at much less
cost than expected, and the program is widely
considered a success.
The European Union followed with a carbon
dioxide trading program in 2005. In addition
to buying surplus permits from cleaner pol-
luters, power plants and factories emitting
more than their limit could buy permits from
"offsets" around the world, projects capturing
methane fumes from hogs, for instance, or
chlorofluorocarbons used in refrigeration,
another ozone killer.
But critics complained some projects got
money that didn't appear to help the envi-
ronment much. In China, companies ramped
up chlorofluorocarbon emissions after per-
mits began to trade, leading to accusation
"They were pumping out more just for
the sake of destroying them," says Jeff Cohen,
founder of EOS Climate, which helps offset
projects involving refrigerants in the US "It
was bizarre, upside down."
What's more, the European trading system
allowed too many permits at the outset,
which had the effect of pushing the price
to pollute down sharply. Then the global
recession hit in 2008 and polluters didn't
need as many permits because they were
producing less. With supply and demand
out of whack, prices to pollute plunged to
One result: Utilities kept running their coal-
fired power plants instead of switching to clean-
er burning gas-fired ones.
But two newer carbon trading schemes in
the US, the one in California and another in
the Northeast that launched in 2009, learned
from some of Europe's mistakes and seem to
be working so well they may soon be expand-
ed.The Northeast programme, covering nine
states, sold permits at an auction rather than
give them away. That, plus a few other improve-
ments, appears to have helped. Emissions have
fallen 40 per cent over 2005 levels.
For its trading system launched three years
ago, California made even more tweaks, set-
ting a floor and ceiling for buying permits,
Many expect that as US states are forced
to comply with a new Environmental Pro-
tection Agency regulation aimed at reducing
emissions from power plants they will join
these programmes, leading the US closer to
a nationwide carbon trading system.
Still, some economists have doubts. They
note that heavy regulations and other factors,
like plunging gas prices, may explain the
drop in emissions in California and elsewhere
more than the pollution trading.
"Most of the emission cuts from the power
sector has come from switching from coal
to natural gas because gas prices are incred-
ibly low," says David G Victor, an economist
at the School of International Relations and
Pacific Studies at the University of California,
San Diego. He says the pollution markets
aren't providing much of a push to change
how companies behave.
For Roeslein, it's clearly helped, though.
Roeslein, whose company will start trading
permits next month, figures he can generate
as much as US$7 million a year from selling
in the California market. Add in money from
sales of methane produced by the manure,
and maybe he makes enough of a profit to
convince others to try their hand at similar
"It has to be profitable to be repeatable,
for other people to follow this model," he
UN: World economy stumbled in 2015, with 2.4 per cent growth
This photo provided by
Roeslein Alternative Energy
shows a membrane
installed by Roeslein over a
lagoon to harvest biogas at
a hog farm near St Joseph,
Missouri. Widely derided by
politicians on the left and
the right, once thought
dead even by its
supporters, the idea of
allowing companies to buy
and sell pollution "rights"
like stocks is now at the
fore again as 151 heads of
state and government at
the Paris climate conference
grope for ways to avert
environmental havoc. AP
Trading pollution like stocks
...Can this help fight climate change?
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