Thursday, December 21, 2006

The Chinese Use Kyoto to Outsmart Europe

Sphere: Related Content

China is a fast-growing country with serious environmental issues. They are roughly where we were in the 1950's and 60's with regard to environmental stewardship. They've decided that they need to get with the program, but it will cost serious yuan. How will they afford it? By having European nations pay for it:

QUZHOU, China — Foreign businesses have embraced an obscure United Nations-backed program as a favored approach to limiting global warming. But the early efforts have revealed some hidden problems.

Under the program, businesses in wealthier nations of Europe and in Japan help pay to reduce pollution in poorer ones as a way of staying within government limits for emitting climate-changing gases like carbon dioxide, as part of the Kyoto Protocol.

Now, imagine if the US had signed on to the Kyoto Protocols. We'd be on the hook for cleaning up China's mess. The costs look to be staggering:

Cleaning up this factory will require an incinerator that costs $5 million — far less than the cost of cleaning up so many cars, or other sources of pollution in Europe and Japan.

Yet the foreign companies will pay roughly $500 million for the incinerator — 100 times what it cost. The high price is set in a European-based market in carbon dioxide emissions. Because the waste gas has a far more powerful effect on global warming than carbon dioxide emissions, the foreign businesses must pay a premium far beyond the cost of the actual cleanup.

The cleanup will cost $5 million, the European nations will send $500 million as a requirement of Kyoto. China will pocket $495 million dollars in profit:

[...]The huge profits from that will be divided by the chemical factory’s owners, a Chinese government energy fund, and the consultants and bankers who put together the deal from a mansion in the wealthy Mayfair district of London.

So, let's recap; European and Japanese companies will pay 100 times the cost of cleanup with the Chinese making nearly a half million dollars for essentially doing what they are required to do. Note that only four nations are reaping major benefits, and they are all emerging powerhouses, while the lesser nations get nothing. Sounds exactly like a UN program to me.

As with the UN-sponsored Oil for Food program, any feel-good program that involves many goverments, people will find ways to cash in and extract money from wealthier nations. Call it global wealth redistribution or call it a scam, either way, the Kyoto signers are on the hook while businesses make money.

Another example of just how flawed the Kyoto Protocols are and highlights the foresight that the US and Australia had in not signing them.

No comments: