U.S. Isolated As Allies Join China's New Coal Bank (Global Warming Policy Forum)

Obama Isolated As U.S. Allies Join China's New Coal Bank US Losing Allies & Global Influence Over Obama’s Green Obsession

Source: The Global Warming Policy Forum, Director Benny Beiser http://www.thegwpf.com/

Beijing on Wednesday is officially announcing the founding members of its Asia Infrastructure Investment Bank, which will use initial capital of $50 billion — and eventually $100 billion — to invest in infrastructure projects across Asia. The U.S. has lobbied against the new institution, and to the surprise and embarrassment of the Obama administration, the list of participating nations includes nearly every major economy, except for the U.S. and Japan. --Don Lee, Los Ageles Times, 15 April 2015 Page 1

American diplomats are upset that dozens of countries — including Nepal, Cambodia and Bangladesh — have flocked to join China’s new infrastructure investment bank, a potential rival to the World Bank and other financial institutions backed by the United States. The reason for the defiance is not hard to find: The West’s environmental priorities are blocking their access to energy. This conflict is not merely playing out in the strategic maneuvering of the United States and China as they engage in a struggle for influence on the global stage. --Eduardo Porter, The New York Times, 14 April 2015

The Australian Cabinet has moved closer to Australia joining the Chinaled Asian Infrastructure Investment Bank, despite US concerns about the Chinese using loans to extend their global influence and to cut across USled lending policies limiting loans for clean-coal technology. On Monday, cabinet further discussed Australia joining the bank with 35 other nations after the Prime Minister changed his position on the matter, no longer accepting warnings from the US about the dangers of China’s influence and “excessive accommodation of China”. Mr Obama’s administration has been tightening international funding for coal-fired generation but the Asia Infrastructure Investment Bank is likely to be more sympathetic to the pleas of developing nations. --Dennis Shanahan, The Australian, 25 March 2015

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1) US America Losing Allies & Global Influence Over Obama’s Green Energy Obsession -The New York Times, 14 April 2015 2) Key U.S. Allies Join China-Led Asia Infrastructure & Energy Bank Los Ageles Times,15 April 2015 3) Australia Joins China’s Energy Investment Bank - The Australian, 25 March 2015 4) Political Climate Change: Former UN Climate Chief Says Coal Is ‘Essential’ - Daily Caller, 14 April 2015 5) German Backlash Grows Against Coal Power Clampdown - The Guardian, 15 April 2015 6) Benny Peiser: EU’s Green Energy Debacle Shows Futility Of Unilateral Climate Policies - Financial Post, 14 April 2015 Australia has joined forces with Japan in international forums to resist the US campaign of limiting lending to developing nations seeking more efficient coal-fired generation. The technology offers the promise of cheaper power. The moves follow Mr Obama’s climate change speech at the G20 summit in Brisbane last November. The US President’s remarks, which embarrassed Mr Abbott and angered his ministers, were seen as an attempt to push the administration’s climate change policies in Mr Obama’s final year in office. --Dennis Shanahan, The Australian, 25 March 2015

With environmentalists calling for divestment from fossil fuels, the former United Nations climate chief has gone against the grain and defended using the “Green Climate Fund” to finance coal projects. Yvo De Boer, the former head of the UN Framework Convention on Climate Change, is not for no restrictions on carbon dioxide emissions from coal.

He said that countries should impose a carbon tax on emissions to fight Page 3

global warming, but also to not unfairly ban any single fuel source. -Michael Bastasch, Daily Caller, 14 April 2015

Coal [is] an essential part of the energy mix for many developing countries for decades to come. There are massive challenges in terms of poverty eradication where coal is a logical choice from a cost effectiveness point of view, and you really have to be in a position to offer those countries an economically viable alternative before you begin to rule out coal. It’s strange for me as a climate person to say that, but it’s an honest answer. --Yvo de Boer, former head of the UN Framework Convention on Climate Change, Responding to Climate Change, 11 April 2015

German energy companies say that construction of over half the country’s planned power plants could be scuppered if the country goes ahead with a leaked plan to set emissions budgets for the country’s biggest polluters.

The issue is fast becoming a test of the German government’s commitment to decarbonise its economy, with German trades unions threatening mass mobilisations against a measure that they say would put 100,000 jobs at risk. --Arthur Neslen, The Guardian, 15 April 2015

As the Ontario government announces new unilateral climate policies, Canadian policymakers would be well advised to heed the lessons of Europe’s self-defeating green energy debacle. --Benny Peiser, Financial Post, 14 April 2015

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1) US America Losing Allies & Global Influence Over Obama’s Green Energy Obsession The New York Times, 14 April 2015 Eduardo Porter The average citizen of Nepal consumes about 100 kilowatt-hours of electricity in a year. Cambodians make do with 160. Bangladeshis are better off, consuming, on average, 260.

Then there is the fridge in your kitchen. A typical 20-cubic-foot refrigerator — Energy Star-certified, to fit our environmentally conscious times — runs through 300 to 600 kilowatt-hours a year.

American diplomats are upset that dozens of countries — including Nepal, Cambodia and Bangladesh — have flocked to join China’s new infrastructure investment bank, a potential rival to the World Bank and other financial institutions backed by the United States. The reason for the defiance is not hard to find: The West’s environmental priorities are Page 5

blocking their access to energy.

A typical American consumes, on average, about 13,000 kilowatt-hours of electricity a year. The citizens of poor countries — including Nepalis, Cambodians and Bangladeshis — may not aspire to that level of use, which includes a great deal of waste. But they would appreciate assistance from developed nations, and the financial institutions they control, to build up the kind of energy infrastructure that could deliver the comfort and abundance that Americans and Europeans enjoy.

Too often, the United States and its allies have said no.

The United States relies on coal, natural gas,hydroelectric and nuclear power for about 95 percent of its electricity, said Todd Moss, from the Center for Global Development. “Yet we place major restrictions on financing all four of these sources of power overseas.”

This conflict is not merely playing out in the strategic maneuvering of the United States and China as they engage in a struggle for influence on the global stage.

Of far greater consequence is the way the West’s environmental agenda undermines the very goals it professes to achieve and threatens to advance devastating climate change rather than retard it.

“It is about pragmatism, about trade-offs,” said Barry Brook, professor of environmental sustainability at the University of Tasmania in Australia.

“Most societies will not follow low-energy, low-development paths, regardless of whether they work or not to protect the environment.”

If billions of impoverished humans are not offered a shot at genuine development, the environment will not be saved. And that requires not just help in financing low-carbon energy sources, but also a lot of new energy, period. Offering a solar panel for every thatched roof is not going to cut it.

“We shouldn’t be talking about 10 villages that got power for a light bulb,” said Joyashree Roy, a professor of economics at Jadavpur University in India who was among the leaders of the Intergovernmental Page 6

Panel on Climate Change that won the 2007 Nobel Peace Prize.

“What we should be talking about,” she said, “is how the village got a power connection for a cold storage facility or an industrial park.”

Changing the conversation will not be easy. Our world of seven billion people — expected to reach 11 billion by the end of the century — will require an entirely different environmental paradigm.

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2) Key U.S. Allies Join China-Led Asia Infrastructure & Energy Bank Los Ageles Times, 15 April 2015 Don Lee As economic leaders gather here this week for meetings of the International Monetary Fund and the World Bank, China is set to kick off a rival infrastructure development lender that promises to shake up the traditional American-led global financial order.

Beijing on Wednesday is officially announcing the founding members of its Asia Infrastructure Investment Bank, which will use initial capital of $50 billion — and eventually $100 billion — to invest in roads, cellphone Page 7

towers, railways, airports and other infrastructure projects across Asia.

Experts said the new China-led bank could offer much-needed relief to a region that will need an estimated $8 trillion in infrastructure investment by 2020, far more than the World Bank or the Japan-led Asian Development Bank can provide.

The question from the beginning is: Will this bank be an arm of China's foreign policy and strategy, or will this be an international bank? This remains to be seen.- But the U.S. has lobbied against the new institution, and to the surprise and embarrassment of the Obama administration, the list of participating nations includes nearly every major economy, except for the U.S. and Japan.

In a geopolitical coup for China, even stalwart American allies such as Britain, Australia and South Korea are lining up to join the new institution, first proposed by Chinese President Xi Jinping in October 2013.

"This has been a diplomatic success for China, not for the U.S.," said Domenico Lombardi, director of the Global Economy program at the Centre for International Governance Innovation in Ontario, Canada.

U.S. officials have voiced concerns about whether the new institution will abide by rigorous international standards on banking, labor and the environment. But Washington also fears that Beijing will use the bank to assert itself as a global player and diminish U.S. influence in Asia and elsewhere.

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3) Australia Joins China’s Energy Investment Bank The Australian, 25 March 2015 Dennis Shanahan Australia is expected to join China’s massive development bank as Page 8

early as this week, with Tony Abbott to personally explain the nation’s position to US President Barack Obama before a final decision is made.

Cabinet has moved closer to Australia joining the China-led Asian Infrastructure Investment Bank, despite US concerns about the Chinese using loans to extend their global influence and to cut across US-led lending policies limiting loans for clean-coal technology.

On Monday, cabinet further discussed Australia joining the bank with 35 other nations after the Prime Minister changed his position on the matter, no longer accepting warnings from the US about the dangers of China’s influence and “excessive accommodation of China”.

Cabinet concerns about joining the bank — and providing credit to be used to stimulate growth in Asia through infrastructure construction estimated to be worth $730 billion over the next four years — centred on governance and transparency issues, but these have now been addressed.

It is possible an announcement will be made this week, but that will depend on Mr Abbott being able to speak to US and regional leaders about Australia’s commitment, which could be between $300 million and $3bn.

US opposition to the bank — and attempts by the Obama administration to limit credit via the World Bank, International Monetary Fund and OECD for developing nations to use on new-generation coal-fired electricity generation — have caused friction among the countries wanting to join the bank, which is on target to double available credit to $100bn.

While Australia, Japan, South Korea and Britain have been cautious and aware of the US criticism, all are moving towards joining. Japanese industrialists keen to sell “ultra-super-critical coal-fired” electricity generators to India for more efficient use of brown coal are pushing for Tokyo to sign up.

Mr Obama’s administration has been tightening international funding for coal-fired generation but the Asia Infrastructure Investment Bank is likely to be more sympathetic to the pleas of developing nations.

The expansion of coal-fired power generation is a boon to Australia’s coal Page 9

exporters and represents a boost to the flagging Japanese economy.

While the coal consideration has been not a major issue in the discussions so far, officials involved in the negotiations see it as “a silver lining” for Australia and Japan.

Australia has joined forces with Japan in international forums to resist the US campaign of limiting lending to developing nations seeking more efficient coal-fired generation. The technology offers the promise of cheaper power.

The moves follow Mr Obama’s climate change speech at the G20 summit in Brisbane last November. The US President’s remarks, which embarrassed Mr Abbott and angered his ministers, were seen as an attempt to push the administration’s climate change policies in Mr Obama’s final year in office.

Australia’s decision to join the Asian Infrastructure Investment Bank follows a reversal of policy, revealed in The Australian this month, based on strategic arguments about China. The change followed a reassessment within government and intense talks within the G7 group of finance ministers and central bank governors.

Full story

4) Political Climate Change: Former UN Climate Chief Says Coal Is ‘Essential’ Daily Caller, 14 April 2015 Michael Bastasch With environmentalists calling for divestment from fossil fuels, the former United Nations climate chief has gone against the grain and defended using the “Green Climate Fund” to finance coal projects.

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“There are massive challenges in terms of poverty eradication where coal is a logical choice from a cost effectiveness point of view, and you really have to be in a position to offer those countries an economically viable alternative before you begin to rule out coal,” Yvo de Boer, the former head of the UN Framework Convention on Climate Change, told the news site Responding to Climate Change (RCC).

“It’s strange for me as a climate person to say that, but it’s an honest answer,” he said.

Japan recently came under fire from environmentalists for using money from the UN’s Green Climate Fund to finance coal projects. The current UNFCCC head, Christiana Figueres, said there “is no argument for that,” adding that “unabated coal has no room in the future energy system.”

But de Boer disagreed, saying that coal would be an “essential part of the energy mix for many developing countries for decades to come.”

Especially for Japan which has been hesitant to restart its nuclear fleet after the 2011 Fukushima disaster. While officials are open to restarting the country’s nuclear plants, a Japanese court Tuesdaydelayed reopening Page 11

a pair of reactors.

“So you need to be a bit careful you don’t cut off your nose to spite your face, so not investing in a technology that might actually be essential to the future of your country,” de Boer said after RCC pressed him on using green funding to finance coal projects.

“It’s a very difficult question that you’re asking,” de Boer added. “Do you say as a green climate fund, ‘I am not going to invest in coal,’ with probably as a consequence that a country will go to the Asian Infrastructure Investment Bank for financing.”

If you’re concerned about the environment, going to the the UN for finance would ensure a much higher standard than going to Asia’s development bank, or the one being proposed by Russia and others.

De Boer, however, is not for no restrictions on carbon dioxide emissions from coal. He said that countries should impose a carbon tax on emissions to fight global warming, but also to not unfairly ban any single fuel source.

Full story

5) German Backlash Grows Against Coal Power Clampdown The Guardian, 15 April 2015 Arthur Neslen German energy companies say that construction of over half the country’s planned power plants could be scuppered if the country goes ahead with a leaked plan to set emissions budgets for the country’s Page 12

biggest polluters.

The proposed law would impose stiff financial penalties for the oldest and most inefficient coal and lignite plants, to be paid in the form of emissions trading certificates.

Clean energy industries and environmentalists see the plan, which would be phased in from 2017, as an essential step to meeting the government’s energiewende blueprint for a 40% cut in carbon output by 2020.

But a German energy industry association survey found that 53% of investors in power plants scheduled to come online in the next decade had frozen their involvement in the projects because of political uncertainty.

“If politicians carry on as they do now then there will be no new, modern power stations. There are no incentives whatsoever for investments, despite politicians emphasising all the time that they aim to change this,” BDEW’s managing director said in a statement on Monday. “It is also likely that further closures will follow.”

The issue is fast becoming a test of the German government’s commitment to decarbonise its economy, with German trades unions threatening mass mobilisations against a measure that they say would put 100,000 jobs at risk.

A spokesman for the European Trades Union Confederation told the Guardian that they would support unions wanting to ensure that climate action was taken in a way that preserved workers’ jobs and communities.

“We call for a just transition to a low carbon economy,” Julian Scola said.

“This means that the energy revolution has got to be fair and workers and communities cannot simply be left behind. There have to be negotiations with trades unions and plans must be put in place to assist workers to Page 13

upgrade their skills and move from high carbon to low carbon industries.”

Opposition to the plan has been concentrated in the east German regions of North Rhine Westphalia and Saxony, which would be most affected.

Many politicians from Angela Merkel’s governing coalition of Christian Democrats (CDU) and Social Democrats (SPD) have protested the new carbon limits.

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6) Benny Peiser: EU’s Green Energy Debacle Shows Futility Of Unilateral Climate Policies Financial Post, 14 April 2015 As the Ontario government announces new unilateral climate policies, Canadian policymakers would be well advised to heed the lessons of Europe’s self-defeating green energy debacle.

The European Union has long been committed to unilateral efforts to tackle climate change. For the last 20 years, Europe has felt a duty to set an example through radical climate policy-making at home. Political leaders were convinced that the development of a low-carbon economy based on renewables would give Europe a competitive advantage.

European governments have advanced the most expensive forms of energy generation at the expense of the least expensive kinds. No other major emitter has followed the EU’s aggressive climate policy and targets. As a result, electricity prices in Europe are now more than double those in North America and Europe’s remaining and struggling manufacturers are rapidly losing ground to international competition.

European companies and investors are pouring money into the U.S., where energy prices have fallen to less than half those in the EU, thanks Page 14

to the shale gas revolution.

Although EU policy has managed to reduce CO2 emissions domestically, this was only achieved by shifting energy-intensive industries to overseas locations without stringent emission limits, where energy and labour is cheap and which are now growing much faster than the EU. Most products consumed in the EU today are imported from countries without binding CO2 targets. While the EU’s domestic CO2 emissions have fallen, if you factor in CO2 emissions embedded in goods imported into EU, the figure remains substantially higher.

Of all the unintended consequences of EU climate policy perhaps the most bizarre is the detrimental effect of wind and solar schemes on the price of electricity generated by natural gas. Many gas power plants can no longer operate enough hours. They incur big costs as they have to be switched on and off to back-up renewables.

This week, Germany’s energy industry association warned that more than half of all power plants in planning are about to fold: Even the most efficient gas-fired power plants can no longer be operated profitably.

Every 10 new units worth of wind power installation has to be backed up with some eight units worth of fossil fuel generation. This is because fossil fuel plants have to power up suddenly to meet the deficiencies of intermittent renewables. In short, renewables do not provide an escape route from fossil fuel use without which they are unsustainable.

Gas-fired power generation has become uneconomic in the EU, even for some of the most efficient and least carbon-intensive plants. At the end of 2013, 14 per cent of the EU’s installed gas-fired plants stood still, had closed or were at risk of closure. If all gas plants currently under review were to close, this would amount to 28 per cent of current capacity by 2016. Almost 20 per cent of gas power plants in Germany have already become unprofitable and face shutdown as renewables flood the Page 15

electricity grid with preferential energy.

To avoid blackouts, the government has to subsidize uneconomic gas and coal power plants. Already half of the 28 EU countries have in place or are planning to subsidize fossil fuel power plants to keep the lights on.

Germany’s renewable energy levy, which subsidizes green energy production, rose from 14 billion euros to 20 billion euros in just one year as a result of the fierce expansion of wind and solar power projects. Since the introduction of the levy in 2000, the electricity bill of the typical German consumer has doubled.

As wealthy homeowners and business owners install wind turbines on their land and solar panels on their homes and commercial buildings, lowincome families all over Europe have had to foot the skyrocketing electric bills. Many can no longer afford to pay, so the utilities are cutting off their power. The German Association of Energy Consumers estimates that up to 800,000 Germans have had their power cut off because they were unable to pay the country’s rising electricity bills.

The EU’s unilateral climate policy is absurd. First consumers are forced to pay ever increasing subsidies for wind and solar energy; secondly they are asked to subsidize nuclear energy too; thirdly, they are forced to pay for increasingly uneconomic coal and gas plants to back up power needed by intermittent wind and solar energy; fourthly, consumers are additionally hit by multi-billion subsidies that become necessary to upgrade the national grids; fifthly, the cost of power is made even more expensive by adding a unilateral Emissions Trading Scheme. Finally, because Europe has created such a foolish scheme that is crippling its heavy industries, consumers are forced to pay even more billions in subsidizing almost the entire manufacturing sector.

In the last few years, major economies such as Canada, Australia and Japan have begun to realize the futility of going it alone and have Page 16

retreated from unilateral policies and targets. Now even the EU has decided to walk away and has adopted a conditional climate pledge. It has burdened European taxpayers and businesses with astronomical costs while shifting its heavy industry and CO2 emissions to other parts of the world. Europe’s climate policy failure demonstrates beyond doubt that its unilateralism has been a complete fiasco. The lessons of this selfdefeating debacle are clear: Don’t make the same mistakes or you will face the same fiasco.

Benny Peiser is the director of the London-based Global Warming Policy Forum. The text is based on written evidence he gave to the Committee on Environment and Public Works of the U.S. Senate.

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