Sunday, 13 December 2009

As reported by Reuters - with a slight correction: The head of the Asian Development Bank (ADP), Haruhiko Kuroda, warned governments that a failure to reach a climate deal in Copenhagen could lead to a collapse of the carbon market, which would hit efforts to deal with climate changemake carbon traders very rich.

It helps of course to know that Mr Kuroda is best known ingreenie circles for setting up the ADB Advisory Group on Climate Change – chaired by millionaire businessman Rajendra K. Pachauri, part-time chairman of the IPCC.

An interesting member of that Group is Dr Klaus Toepfer, Founding Director, Institute for Advanced Studies Climate, Earth System and Sustainability Sciences and former executive director of the United Nations Environment Programme (UNEP). And it was UNEP, of course, which set up the IPCC - which now has as its part-time chairman millionaire businessman Rajendra K. Pachauri.

One other member is professor Hironori Hamanaka, Chair, Board of Directors, Institute of Global Environmental Strategies (IGES). The IGES claims to be "a research institute that conducts pragmatic and innovative strategic policy research to support sustainable development in the Asia-Pacific region." It will come as no surprise, therefore, to learn that the organisation works very closely with TERI, whose Director-General is millionaire businessman Rajendra K. Pachauri.

Yet another is Ms Huguette Labelle, also a Board Member of the UN Global Compact organisation, the very same UN to which millionaire businessman Rajendra K. Pachauri belongs. Hilariously, Ms Labelle is Chair of Transparency International, the global civil society organisation "leading the fight against corruption." TI's mission "is to create change towards a world free of corruption."

The Board also includes professor Jeffrey D. Sachs, Director, The Earth Institute at Columbia University. This is the same Earth Institute which set up the Climate-Risk Center, inviting millionaire businessman Rajendra K. Pachauri to become its first Board Chairman.

One other interesting character is Dr. Emil Salim, an adviser to Indonesia's President on environment and sustainable development issues. But he is also a member of APFED - the Asia-Pacific Forum for Environment and Development. One of its major activities is sponsoring the "Partnership Initiatives for Knowledge Network and Capacity Building" – in conjunction with TERI as a major partner, the Director General of which is millionaire businessman Rajendra K. Pachauri.

And last but not least is Professor Dadi Zhou, Director General (Emeritus) of the Energy Research Institute, which of course is otherwise known as TERI, the Director General of which is millionaire businessman Rajendra K. Pachauri.

No longer, it seems, does Rome hold a pre-eminent position. In this brave new world of climate change and sustainable development, all roads lead to Rajendra K. Pachauri.


It gets worse ...

The Indian government has approved more than 1,400 projects as part of the Clean Development Mechanism (CDM) that could attract around £3.7 billion (Rs 28,000 crore) into the country by 2012 through sale of Certified Emission Reduction (CER) certificates, according to Environment and Forests minister Jairam Ramesh.

From the Indian Business Standard. How much of that goes into Tata's sticky pockets?


Although it was reported in the Indian Media that the UK government could recover unused carbon credits from the Corus Redcar plant, as subsequent report from Reuters confirmed that this is not the case.

Thus, the essence of our report – which was based on a knowledge of the EU rules – has been proved correct. The Department of Energy and Climate Change (DECC) had indeed said on the Wednesday that the surplus carbon permits - could be auctioned with proceeds going to government coffers. But, as so often, the civil servants had failed to understand the rules.

They were thus forced to issue a humiliating retraction, a DECC spokeswoman writing in a later e-mail to Reuters stating: "We have to follow the legally binding rules under the EU Emissions Trading System (ETS). In this instance, it is not clear that all the ETS activities at the Corus Teesside plant have closed."

And, although the government is only admitting that it will have to give Corus free credits for 2010, this is being a tad disingenuous. Under the amendment to Directive 2003/87/EC, the current allocation round covers the five years from 2008 to 2012. Thus, as the Reuters report concedes, "The Teesside plant is due to receive a further 14 million for 2011 and 2012 if the site's ETS activities continue."

The reference to the "further 14 million" is interesting, as there we have made our one error. We estimated the allowance at 6 million per annum, but in fact it is 7 million. Therefore, over term, Corus will get 21 million EUAs (carbon credits), entirely free of charge.

Reuters values the annual 7 million allowance at €100 million ($147 million), but that is at the current carbon price of just over €14 per ton. There is nothing to compel Corus to sell forward and if as anticipated, the carbon price rises to between £30-40 per ton, then the annual value of the allocation is in the order of £250 million rather than our estimate of £200 million.

Over the three years, that actually makes a potential £750 million for Tara - for not producing steel at the Redcar plant.

However, barring Booker, all of the media reports (and there have only been a few of them) have missed out on the other half of the equation. With a rising steel market and national inventories exhausted, the steel has to be made somewhere.

As we know, Tata (aka Corus) intends to offshore the production to India, where it will be able to claim the Clean Development Mechanism (CDM) allowances for producing steel to exactly the same emission standards as the UK plant it displaces.

By claiming that the plant replaces production in India with higher emission levels – which is not difficult to do as Tata is undergoing a modernisation programme and closing down its less efficient plants (plus one of its own companies runs the approval system) – it can claim the difference, as "Certified Emission Reductions" – more commonly known as "carbon credits", which it can then sell on the open market.

Since Tata's older plants produce roughly twice the emissions of comparable plants in the UK, and the replacement plant will roughly match UK levels, producing the steel in India rather than in Redcar will deliver roughly the same amount of carbon credits as Redcar is able to claim – i.e., about 7 million. That – depending on the prevailing carbon price – gives Tata a bonus of anywhere up to £1.5 billion over three years.

As to who is going to pay this money – the answer is simple. We are. The main enterprises having to pay for their carbon credits are the electricity generators.

Currently, the industry produces over 200 million tons of carbon dioxide and, with the British government looking for at least a 20 percent reduction, it is going to cut the number of credits it sells. The industry will, therefore, will have to look elsewhere for its credits in order to keep the lights on. And that is where the Tata credits come in. They will be sold to the electricity generators and we will pay for them through our electricity bills.

That this is not a major, front-page scandal should be a source of amazement. We are paying an electricity "tax" of the order of £1.5 billion to an Indian steelmaker, for the privilege of have the production in the UK closed down and the work transferred to India.

With a loss of about 5,000 jobs (or more when suppliers, etc., are taken into account) the loss to the UK economy is probably in the order of £500 million a year, plus the tax losses and dole payments will further burden the public purse.

This is economic madness of the highest order, made even crazier by the fact that there will be no overall drop in CO2 emissions as a result of the Corus closure.


Brilliant-ish piece from The Mail on Sunday this week ... but it just can't bring itself to call it "Climategate".


What, asks Christopher Booker, in his column today, links the Copenhagen conference with the steelworks closing in Redcar?

The connection is Dr Rajendra Pachauri, the Indian railway engineer millionaire businessman, who also happens to be the chairman of the UN's IPCC, which is holding its slugfest in Copenhagen at the moment. Before he became thus elevated, Pachauri was made in April 2001 Director-General of the Tata Energy Research Institute (TERI), after having become its Director and head in 1981.

As its name might imply, there is a link between the Institute and the Tata Group. But it is no casual link. TERI was actually set up by a consortium of Tata Group companies, initially operating from the Tata Group headquarters. That firm, incidentally, can trace its origins back to 1868, when its founder, Jamsetji Nusserwanji Tata, established a trading company in Bombay, dealing in opium.

But from its humble if profitable beginnings as an opium trader, the Tata group, of course, is now owner of Corus Steel, which two weeks ago mothballed the steelworks in Redcar, throwing 1,700 workers on the dole.

This is also the same Corus which, as we reported last week, potentially stands to make £1.2 billion over the next three years by cashing in on now surplus EU carbon credits given to the firm, plus cash paid through the Clean Development Mechanism (CDM), gained by transferring Redcar's steel production to India.

Tata stands to gain from the CDM from being allocated credits for notional carbon "savings"gained from investing in a new steel plant in the Indian province of Orissa. Coincidentally, this will initially produce 3 million tons of hot rolled steel – exactly the capacity of the mothballed Redcar plant.

In another "strange but true" coincidence, the CDM scheme – which was set up to implement the 1997 Kyoto Protocol - is administered by the UN, of which Pachauri is a senior official. He is also one of the main cheer-leaders for the carbon trading scheme represented by the CDM.

Of course there is absolutely no posiible suggestion – as Booker makes clear - that Pachauri benefits personally in any possible way from Tata's exploitation of the various carbon trading schemes set up, even if it is the IPCC which provides the recommendations which drive those schemes. That is just a coincidence.

Nor can the railway engineer help it if last year, on official figures, buying and selling the right to emit CO2 was worth $126 billion across the world. This market, now enriching many of our leading financial institutions (not to mention Al Gore), is growing so fast that within a few years it is predicted to be worth trillions, making carbon the most valuable traded commodity in the world. Pachauri just helps make it happen out of the kindness of his heart.

Nevertheless, Pachauri is clearly nervous of the connection between Tata and the institute it so generously established. Not only is there no mention of the connection on the institute's official web site, it is also curiously absent from Pachauri'spersonal website and his own carefully reworked cv, which can be downloaded from the site.

In fact, in yet another of those coincidences which seems to dog Pachauri, a year after he had been appointed chairman of the IPCC, the Tara Energy Research Institute was quietly renamed as The Energy Research Institute. The only overt link now is a listing of the politically safe(er) Tata Tea Limited – a wholly-owned division of the Tata Group – as one of the corporate sponsors.

Nevertheless, nothing had really changed. "We have not severed our past relationship with the Tatas. It's only (the change of name) for convenience," said communication manager Annapurna Vancheswaran back in January 2003.

However, the relabelling did leave the good doctor free to do his good works at the helm of the IPCC and TERI, without any obvious connection with Tata, thus allowing him to parade himself as a "scientist" rather than head of a multi-million dollar conglomerate set up by a multi-billion dollar conglomerate. And conglomerate TERI became. Pachauri has expanded his portfolio to become Director-General of The Energy and Resources Institute in the United States – an organisation which, through another of those curious coincidences, also bears the initials TERI.

One of the key directors of his US Board is Prof Timothy G Gregoire, who is J P Weyerhaeuser, Jr Professor of Forest Management, School of Forestry and Environmental Studies at Yale University. And in yet another of those coincidences, Dr Pachauri has just been nominated to lead the newly established Yale Climate and Energy Institute – at Yale University.

Sadly, there seems to be no end to these coincidences, as Dr Pachauri is also a trustee of another organisation, which just happens to be called TERI-Europe, with offices in Albert Grove, London.

When in London, Pachauri doubtless meets up with fellow trustee Sir John Houghton, also a member of the IPCC, former Chief Executive at the Met Office and founder of the Hadley Centre – creator alongside the CRU of the hadCRUT temperature dataset on which the IPCC relies for its doom-laden warnings. And, to keep them company, they have another doyen of the climate industry, fellow trustee Sir Crispin Tickell GCMG KCVO.

But, in one more of those entirely coincidental coincidences, we see that TERI-Europe has been quite busy completing a study which will bring warm feelings to the redundant workers of Redcar. This was a study on "Developing clean development mechanism projects for renewable energy technologies" which – in another coincidence which will have the Redcar Redundants leaping with joy – was sponsored by Mr Miliband's Foreign and Commonwealth Office.

This is, of course, terribly, terribly convenient – if not coincidental – because in 2006, British Petroleum announced it was funding TERI in India to the tune of $9.4 million to produce bio-diesel from Jatropha Curcas, a non-edible oil bearing crop – which could benefit from a renewable CDM.

The project – prop Dr Rajendra Pachauri – was expected to take 10 years and would cultivate around 8,000 hectares of land currently designated as wasteland with Jatropha and install all the equipment necessary for seed crushing, oil extraction and processing - to produce 9 million litres of bio-diesel per annum.

A mere year later, Tata Chemicals – a wholly owned division of the Tata Group - announced plansto "foray into biodiesel", disclosing that it was already in talks for securing the required raw material from "several leading plantation groups" that were engaged in growing Jatropha and pongamia plants on a commercial scale.

That, without any possible doubt, just has to be a coincidence – just as is the fact that the closure of the Redcar plant will help the UK meet the emission reduction targets that are currently being negotiated under the aegis of Dr Pachauri in Copenhagen.

And all this becomes possible because Dr Pachauri's friends have performed a miracle of our time, transforming carbon dioxide, a gas upon which all life on earth depends, into a "pollutant", worth more than diamonds, let alone oil. Forget Big Oil writes Booker. The new world power is Big Carbon. And many of those now gathered in Copenhagen are making a great deal of money out of it.

But, of course, Dr Pachauri is not one of them - absolutely not, no question of it ... quite improper even to think of the idea. Devil's Kitchen has got it totally wrong. Even if Pachauri's personal fortune (a closely-guarded secret) was well into seven figures - he is a "scientist". They have nothing to do with making money. Their only concern is with saving the planet. Believe me.