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Japan, Spain, Italy Face $33 Billion Kyoto Payments (Update1)
By Kristian Rix and Mathew Carr
http://www.bloomberg.com/apps/news?pid=20601101&sid=akEM_x0ximjk&refer=japan
Nov. 30 (Bloomberg) -- Japan, Italy and Spain face payments of as much
as $33 billion combined for failing to reduce greenhouse-gas emissions
as promised under the Kyoto treaty.
The three countries are the worst performers among 36 nations that
agreed to curb carbon dioxide gases that cause climate change. The
1997 Kyoto accord designed to slow global warming demands that
polluting nations buy credits for their excess emissions from other
industrial polluters or investors.
``They're looking at a huge bill now,'' said Mike Rosenberg,
management professor at the University of Navarra's IESE Business
School in Barcelona. ``That is because none would pay to reconvert
factories, power plants and paper mills'' to trim gases blamed for the
planet-warming ``greenhouse effect.''
Capping carbon emissions will be the focus of next week's climate
change conference on the Indonesia island of Bali, where delegates
from 190 nations will gather to start talks on a new treaty after the
Kyoto accord ends in 2012.
Penalties imposed by the Kyoto treaty have spurred emission
reductions. Spanish utility Iberdrola SA in the last five years turned
itself into the world's largest owner of wind-energy parks, cutting
CO2, or carbon dioxide, emissions per kilowatt by 15 percent this
year.
Spain, Italy and Japan are likely to miss their Kyoto commitments
because they underestimated economic growth and future emissions from
factories and utilities.
Paying Piper
Under the Kyoto Protocol to the UN Climate Change treaty, endorsed by
175 nations and organizations, countries that exceed their emission
caps must buy credits in the market. The sellers are typically
investors or industrial polluters that have accumulated a surplus of
credits, also called permits.
Spain faces a $7.8 billion cost, and Italy and Japan each may owe
about $13 billion, based on estimates by their governments and the
current price for permits.
``They were all too optimistic about mitigation measures,'' Milo
Sjardin, a senior associate at London-based New Carbon Finance, an
emissions research firm, said in an interview. ``They're going to have
to go out and buy credits for the excess.''
Ireland may have to buy $1.3 billion in credits, while the U.K. and
Germany are set to meet their emission goals.
Under Kyoto, governments create a limited number of permits they grant
freely to industrial polluters. If the CO2 created is more than the
amount the nation pledged not to exceed, the country must buy permits
to make up the difference -- essentially a penalty for discharging too
much.
U.K., German Goals
The cost of a permit to spew a ton of CO2 into the skies surged this
year after evidence of global warming mounted and European states
reacted by restricting the supply of allowances. The price for a 2008
certified emission-reduction credit rose 14 percent in the three
months through Nov. 27 to a record 18.20 euros ($26.85) to release a
ton of CO2, according to Nord Pool ASA power exchange prices on
Bloomberg.
At that price, the three nations are poised to pay about 22.4 billion
euros ($33 billion) to meet treaty obligations after the end of a
2008-2012 measurement period when a country's emissions will be
calculated. Some governments and companies are buying permits early,
locking in their price.
``We expect most governments to buy their permits around 2010,''
almost half-way through the measurement period, Bjarne Schieldrop,
director of risk services at Oslo-based emissions research firm Point
Carbon, said at a Madrid conference Oct. 16.
Missing Targets
Spain vowed to cap emissions growth at 15 percent above the 1990
level, and its government now forecasts 37 percent growth. Italy
agreed to a 6.5 percent cut and may increase by 11 percent. Japan
promised a 6 percent drop and estimates a 1.6 percent gain.
As a group, nations with Kyoto targets are headed to trim 11 percent
during the measurement period from 1990 levels, beating their goal to
cut by 5 percent, the United Nations said Nov. 20.
Italy, Japan and Spain are the worst-positioned for achieving Kyoto
goals, according to government estimates compiled by New Carbon
Finance. Canada is even further from its target, though it backed away
from Kyoto to avoid clean-up costs. U.S. President George W. Bush
rejected the treaty.
The U.S. this year may be replaced by China as the world's top emitter
of greenhouse gases. Neither will be forced to buy permits. China also
doesn't have a Kyoto cap.
Spain will pass 40 percent of the cost for the extra emissions on to
businesses, Secretary of State for Energy Ignasi Nieto told
journalists in Madrid July 31. The rest will come from taxes.
Endesa, Cepsa Impact
The penalties will hit local utilities including Endesa SA and
refiners such as Compania Espanola de Petroleos SA, or Cepsa. ``Our
negotiators didn't have a clue what they were getting into'' at Kyoto,
Cepsa Chairman Carlos Perez de Bricio said at a conference in Madrid
June 8.
In Italy, taxpayers will foot 75 percent of the bill for extra
permits. ``Italy's behind, and we need to keep cutting emissions,''
said Environment Minister Alfonso Pecoraro Scanio on Sept. 13 in Rome.
Japanese taxpayers will pay for two-thirds of that nation's excess,
New Carbon Finance estimated, based on the current sharing between
state funding and industry.
The government of Japan has begun buying credits. It may consider
introducing daylight saving time and emissions trading. Emissions were
1.341 billion metric tons in the year ended March, up 6.4 percent from
1990 levels, a preliminary report released on Nov. 5 by the
environment ministry showed.
Japan is missing milestones because road-transport emissions jumped 23
percent since 1990, and power and heat production gained almost as
much, the Paris-based International Energy Agency data shows. The
country was ``overly optimistic'' on potential benefits from nuclear
generation and forestry to curb CO2, Sjardin said.
--
The object of life is not to be on the side of the majority but to
escape finding oneself in the ranks of the insane. -- Marcus Aurelius
"...the whole world, including the United States, including all that
we have known and cared for, will sink into the abyss of a new Dark
Age, made more sinister, and perhaps more protracted, by the lights
of perverted science." -- Sir Winston Churchill
Joseph R. Darancette
daranc@NOSPAMcharter.net
By Kristian Rix and Mathew Carr
http://www.bloomberg.com/apps/news?pid=20601101&sid=akEM_x0ximjk&refer=japan
Nov. 30 (Bloomberg) -- Japan, Italy and Spain face payments of as much
as $33 billion combined for failing to reduce greenhouse-gas emissions
as promised under the Kyoto treaty.
The three countries are the worst performers among 36 nations that
agreed to curb carbon dioxide gases that cause climate change. The
1997 Kyoto accord designed to slow global warming demands that
polluting nations buy credits for their excess emissions from other
industrial polluters or investors.
``They're looking at a huge bill now,'' said Mike Rosenberg,
management professor at the University of Navarra's IESE Business
School in Barcelona. ``That is because none would pay to reconvert
factories, power plants and paper mills'' to trim gases blamed for the
planet-warming ``greenhouse effect.''
Capping carbon emissions will be the focus of next week's climate
change conference on the Indonesia island of Bali, where delegates
from 190 nations will gather to start talks on a new treaty after the
Kyoto accord ends in 2012.
Penalties imposed by the Kyoto treaty have spurred emission
reductions. Spanish utility Iberdrola SA in the last five years turned
itself into the world's largest owner of wind-energy parks, cutting
CO2, or carbon dioxide, emissions per kilowatt by 15 percent this
year.
Spain, Italy and Japan are likely to miss their Kyoto commitments
because they underestimated economic growth and future emissions from
factories and utilities.
Paying Piper
Under the Kyoto Protocol to the UN Climate Change treaty, endorsed by
175 nations and organizations, countries that exceed their emission
caps must buy credits in the market. The sellers are typically
investors or industrial polluters that have accumulated a surplus of
credits, also called permits.
Spain faces a $7.8 billion cost, and Italy and Japan each may owe
about $13 billion, based on estimates by their governments and the
current price for permits.
``They were all too optimistic about mitigation measures,'' Milo
Sjardin, a senior associate at London-based New Carbon Finance, an
emissions research firm, said in an interview. ``They're going to have
to go out and buy credits for the excess.''
Ireland may have to buy $1.3 billion in credits, while the U.K. and
Germany are set to meet their emission goals.
Under Kyoto, governments create a limited number of permits they grant
freely to industrial polluters. If the CO2 created is more than the
amount the nation pledged not to exceed, the country must buy permits
to make up the difference -- essentially a penalty for discharging too
much.
U.K., German Goals
The cost of a permit to spew a ton of CO2 into the skies surged this
year after evidence of global warming mounted and European states
reacted by restricting the supply of allowances. The price for a 2008
certified emission-reduction credit rose 14 percent in the three
months through Nov. 27 to a record 18.20 euros ($26.85) to release a
ton of CO2, according to Nord Pool ASA power exchange prices on
Bloomberg.
At that price, the three nations are poised to pay about 22.4 billion
euros ($33 billion) to meet treaty obligations after the end of a
2008-2012 measurement period when a country's emissions will be
calculated. Some governments and companies are buying permits early,
locking in their price.
``We expect most governments to buy their permits around 2010,''
almost half-way through the measurement period, Bjarne Schieldrop,
director of risk services at Oslo-based emissions research firm Point
Carbon, said at a Madrid conference Oct. 16.
Missing Targets
Spain vowed to cap emissions growth at 15 percent above the 1990
level, and its government now forecasts 37 percent growth. Italy
agreed to a 6.5 percent cut and may increase by 11 percent. Japan
promised a 6 percent drop and estimates a 1.6 percent gain.
As a group, nations with Kyoto targets are headed to trim 11 percent
during the measurement period from 1990 levels, beating their goal to
cut by 5 percent, the United Nations said Nov. 20.
Italy, Japan and Spain are the worst-positioned for achieving Kyoto
goals, according to government estimates compiled by New Carbon
Finance. Canada is even further from its target, though it backed away
from Kyoto to avoid clean-up costs. U.S. President George W. Bush
rejected the treaty.
The U.S. this year may be replaced by China as the world's top emitter
of greenhouse gases. Neither will be forced to buy permits. China also
doesn't have a Kyoto cap.
Spain will pass 40 percent of the cost for the extra emissions on to
businesses, Secretary of State for Energy Ignasi Nieto told
journalists in Madrid July 31. The rest will come from taxes.
Endesa, Cepsa Impact
The penalties will hit local utilities including Endesa SA and
refiners such as Compania Espanola de Petroleos SA, or Cepsa. ``Our
negotiators didn't have a clue what they were getting into'' at Kyoto,
Cepsa Chairman Carlos Perez de Bricio said at a conference in Madrid
June 8.
In Italy, taxpayers will foot 75 percent of the bill for extra
permits. ``Italy's behind, and we need to keep cutting emissions,''
said Environment Minister Alfonso Pecoraro Scanio on Sept. 13 in Rome.
Japanese taxpayers will pay for two-thirds of that nation's excess,
New Carbon Finance estimated, based on the current sharing between
state funding and industry.
The government of Japan has begun buying credits. It may consider
introducing daylight saving time and emissions trading. Emissions were
1.341 billion metric tons in the year ended March, up 6.4 percent from
1990 levels, a preliminary report released on Nov. 5 by the
environment ministry showed.
Japan is missing milestones because road-transport emissions jumped 23
percent since 1990, and power and heat production gained almost as
much, the Paris-based International Energy Agency data shows. The
country was ``overly optimistic'' on potential benefits from nuclear
generation and forestry to curb CO2, Sjardin said.
--
The object of life is not to be on the side of the majority but to
escape finding oneself in the ranks of the insane. -- Marcus Aurelius
"...the whole world, including the United States, including all that
we have known and cared for, will sink into the abyss of a new Dark
Age, made more sinister, and perhaps more protracted, by the lights
of perverted science." -- Sir Winston Churchill
Joseph R. Darancette
daranc@NOSPAMcharter.net
