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COP17: The ‘party on’ agenda

Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets.

If the promise of “green jobs” was realistic, the private sector would have been way out ahead of the party-goers and meeting-havers in Durban. Fortunately, not everyone shares their delusions.

It’s the 17th Conference of the Parties, and the 7th Meeting of the Parties. The first refers to the United Nations Framework Convention on Climate Change, and the second to the Kyoto Protocol. I think. Together, the name of Durban’s climate party fairly rolls off the tongue: COP17/CMP7.

Don’t worry if you don’t speak eco-bureaucratese. Just think of them as “parties”. After all, parties are the most important reason anyone would want to be in Durban this week.

You really don’t need to care about the official excuse, other than that they’re burning your tax money and hoping they’ll get to restrict productive wealth-generation and force capital by government decree towards their pet special interests. Mostly funded by taxpayers who think they’re getting unbiased scientific research for their money or donors who think they’re modern-day messiahs saving the planet, thousands of party-goers are spending millions to travel to lovely holiday resorts like Bali, Cancun and Durbs by the sea.

This year, they do so knowing full well that the chances of achieving anything at all in pursuit of their impoverishment agenda are slim to zero. If it was their own money, they’d save it. But it isn’t, so party on, folks!

The adults, political heavyweights such as Russia, Japan and Canada, have already said they’re not having any more of this Kyoto nonsense. It may not have occurred to the activists and academics who’ve never had to earn an honest buck in a free market in their lives, but the economy is in rather a mess at present. One may safely assume Durban’s party-goers don’t often read the finance pages, which presuppose in the reader a modicum of economic literacy, but the financial crisis hasn’t exactly been kept a secret.

The economic collapse grew out of the mistaken belief that government technocrats, armed with the monetary and fiscal “tools” created by Lord Keynes in his “General Theory”, would make great central planners. Politicians believed they had the power to save inefficient companies by punishing efficient ones, enrich poor people by impoverishing the rich and counteract the natural movement of prices they didn’t like. As it turns out, keeping billions of subjects under the dead hand of bureaucracy was too much for the technocrats, despite all the legislative power they wield. So now they’re frantically printing money to save their tottering debt-funded welfare states, desperate to avoid the humiliation of seeing productive countries like Germany and China take over the world.

While the rich world pleads poverty, big emerging markets like China and India are happy to continue with their own industrialisation – not to mention their own more cost-effective pollution mitigation measures, which both their foreign customers and their increasingly prosperous domestic citizens desire.

However, they are not budging on international climate commitments without big promises from developed countries. What would sway them? Well, underneath all the technical buzzwordery about carbon credit markets, clean development mechanisms, adaptation and mitigation finance, border taxes and new market mechanisms, the simple answer is money. They’ll sell anything the rich world wants, including climate indulgences, provided the rich world pays for it.

Everyone and his uncle with a “green” business is after subsidies in Durban.

Whether it’s developing countries shaming the developed world into subsidising their own development, solar panel and wind turbine makers hoping to get fat from taxpayer-funded boondoggles, or consultants who’re hoping to profit from irrational guilt complexes by selling so-called carbon offsets, it’s all the same.

The objective of the Durban conference is what economists call “regulatory capture” and “rent seeking”. Most of us will recognise it as crony capitalism, corporate lobbying or the “pigs at the trough” phenomenon.

This is the process by which you hijack the legislative and fiscal power of the state to enrich your own special interests and it is as old as politics itself. Merchants once sought the favour of Roman emperors. Rail-road pioneers bribed politicians to sell rights-of-way and raise massive “public investments”. Inefficient companies lobby for competition law to launch anti-competitive assaults against more efficient competitors. EU farmers lobby for subsidies and strict food regulations to keep out competition from Africa and South America. US miners and manufacturers clamour for “anti-dumping” protection whenever an Asian firm produces materials at lower cost than they can do themselves.

None of these lobbyists has ever had the interests of ordinary consumers at heart. All were entirely self-interested. None was ever motivated by reducing poverty or raising the general prosperity. All sought to harness the legislative power of the state for their own greedy ends. That’s why corporate lobbying ought to be resisted by politicians, and protested by citizens.

The global warming movement is no different. Green technology investors like Generation Investment Management, founded by failed US presidential candidate Al Gore and David Blood, a veteran of the flagship of crony-capitalist banking, Goldman Sachs, are lobbying hard for rules and regulations, taxes and treaties, that enrich them and impoverish their competitors.

The irony is that while all this lobbying is going on, the ordinary, efficient, non-green energy sector is experiencing somewhat of a boom.

The Wall Street Journal recently reported that the oil and gas industry has created hundreds of thousands of jobs since 2003, accounting for one in five new jobs in the economy. In North Dakota, home of the Bakken gas shale fields, there are 16,000 job openings, the WSJ says, and the unemployment rate is a mere 3.5%. In Pennsylvania, 18,000 new jobs were created in the first half of 2011, according to official US department of labor numbers.
Meanwhile, The Washington Post reports that despite a loan guarantee programme worth almost $40 billion, only about 3,500 “green jobs” were created in the last two years. If you guarantee me $11 million a job, I’ll create 3,500 jobs for you by next Monday. I’ll even make sure they’re fun and easy to do.

Among the recipients of all this largesse? Solar panel maker Solyndra, whose directors and investors are apparently monthly visitors to the White House. It accepted a half-a-billion-dollar government guarantee for a loan, still needed to get it from the US treasury instead of an ordinary bank, and then promptly burnt it all. It was acting on the very expensive advice of what it calls its “exclusive financial adviser” – none other than those wily old crony-consultants, Goldman Sachs.

South Africa’s government too is being heavily lobbied by the green industry to build what will be the world’s biggest solar power plant, because we’re awesome and rich like that. The plans were boosted by the Clinton Climate Initiative. Yes, that Clinton. The one who used to be Al Gore’s boss, and whose wife is now in charge of the US state department.

Eskom struggled to secure funding for such renewable energy projects because, it said, its partners want a high return, which it cannot offer. Naturally.

In the real world, this would have been a problem, and the solution would be not to fund what looks like a bad investment. But we live in a world of climate lobbying and guess who came to the party? The ultimate lobby slush fund, the World Bank, offered funding for a solar plant in Upington and a wind farm north of Cape Town to give the turbine builders some government fat too. They’re only a tenth of the size of what the Clinton lobby had envisaged, but some swill is better than an empty trough.

You’ll see South Africa parading its grand new vanity projects in Durban. When you do, recall that the inventors of windmills, the Dutch, are going sour on the idea. Wind farms, especially offshore, are just too expensive to keep subsidising. As the real cost of “renewable” energy becomes evident, even subsidy-seeking investors like General Electric and United Technologies Corporation, two of the biggest wind turbine manufacturers, are scaling back their ambitions.

It’s time someone told the renewable energy lobby and peak oil alarmists that rare earth metals are not renewable, and are called “rare” for a reason.

While South Africa mulls over its energy future, it would do well to ask itself why private companies appear so eager to invest in the exploration of the country’s shale gas riches, without demanding any taxpayer funding even to kick-start development.

South Africa’s rich natural resources promise a wealth of readily available energy to fuel the country’s economic development. This would be sufficient reason to grab the opportunity, even ignoring the many added benefits such as more jobs, more government revenue and much cleaner energy to boot.

If the partiers in Durban were honest about reducing pollution and enabling economic growth, they’d be lobbying for gas drilling in the Karoo. Instead, they’ll be trying to get countries to sign on to a new global treaty to throttle efficient energy that produces economic growth, in favour of crony-capitalist special interests that can only perpetuate poverty and unemployment.

I’m not holding my breath waiting for a pro-fracking communiqué. But at least we can rest assured that their grand objective – anti-prosperity, anti-progressive and illiberal that it is – will likely get no further.
Party on, Durbs. DM


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