Trade Leverages Carbon Caps

The recent China Trade agreement by the newly-established California China Trade Office in Shanghai illustrates why California's progress in dealing with carbon emissions - in concert with our huge Chinese business trading population in Southern California that lives part-time in China - is creating a situation where carbon emission reduction is OK with Wall Street and Main Street and an "economic formula" embedded in climate agreements is unnecessary. It's already going ahead without any of that, and the US Government is looking to California for this leadership, as my blog post from the other day talks about - using the REDD program for carbon offsets in foreign countries.

An LA Times article goes down a little further into the dynamics of this emerging relationship:

China is more open to help from California than from elsewhere, experts say.

"California is perceived in China as a leader in cleaning up the environment without any ulterior motive," said Yunshi Wang, director of the China Center for Energy and Transportation at UC Davis. "If these requests or demands come from Washington or Brussels, there's some attitude in China that it's some kind of effort to slow them down economically."

This, coming from the largest emitter of carbon dioxide on the planet.

Positioning California to attract a growing share of China’s massive foreign investment pool and bolstering California-China trade, Governor Edmund G. Brown Jr., the Bay Area Council and the Governor’s Office of Business and Economic Development (GO-Biz) opened the California-China Office of Trade and Investment. This is the official public-private program  between the State of California and China, and it follows more than a year of significant diplomatic and business exchanges between the two entities. China has been investing in California businesses and properties for years, and this agreement is a formalization of that relationship.

Outlined in the California Newswire are some of the specifics of the intent to establish non-binding carbon reduction goals:

To enhance cooperation in the area of low carbon development and based on the Memorandum of Understanding to Enhance Cooperation on Climate Change, Energy and Environment between the Government of the People’s Republic of China and the Government of the United States of America signed in July 2009, the Government of Guangdong Province and the Government of the State of California have reached the following understandings:

1. Purpose
This purpose of this Memorandum of Understanding (MOU) is to support efforts between the Parties to help each achieve its low carbon development goals. This MOU establishes a fundamental framework for the Participants to carry out pragmatic exchange and cooperation based on the principles of equality and mutual benefits and is not intended to give rise to legal binding rights or obligations.

This unique carbon-trade aspect of the trade agreement is meant to provide the means by which China can develop its clean technologies and infrastructure via a transfer of trade with the USA. The NRDC has been involved with developing this interlinked strategy for many years.

George Skelton takes issue with this relationship in The Capitol Journal, citing corruption and lack of accountability with infrastructure project in China. He doesn't feel that California should adopt their practices of steamroller development without citizen participation. I'd say we're already seeing that kind of thing here with development on the upswing and the economy in recovery. It remains to be seen how this relationship plays out.

Soleri

The word came from Arcosanti today:

"Thank you to all the alumni, architects, writers, artists, journalists, publications, and many others who have shared their thoughts on Paolo Soleri and his work. We, at Arcosanti, are looking forward to continuing this work with even more rigor in the future.", as well as a page in memoriam on the Arcosanti website.

It was significant to me, having spent a college summer working with the building teams out on the mesa, taking in his lessons and living his examples of space and form. Most memorable, to me, was the experience of place, which is situated at a very powerful locus in the Arizona desert. Thank you Paolo. So long....all those lectures in the amphitheater, building East Crescent at dawn in 1978. Experiencing the transcendent power of moonlit desert nights. Bells in the wind. Watching those billowing electrical storms from the apse...

The New York Times provided an excellent writeup, but there are books and books out there. Paolo was prolific in his writings and drawings, and a special volume worth having is the black book full of the renderings of his ecocity dreams. Ecotecture magazine has interviewed Richard Register, who outlined the origins of Soleri's urban approach, resulting from a conference at Arcosanti in 2000. He discusses the idea of the arcology as a node of conciousness that is part of the evolution of the human species, expanding on the concept of the "Omega Point" espoused by Teilhard de Chardin and carried out even further by Soleri's habitation experiment. Soleri took the concept to its most extreme in designs and models for future cities and even space habitats for the human seeding of the universe. He saw the future as infinite and intelligent, with the principles of natural processes at its core.

And the bells! You didn't leave Arcosanti without a bell; a city built from bells...

Update 10/12/19: The history of energy in arcology at Arcosanti

Great Expectations

California passed its “Assembly Bill 32” law in 2006 that forced the state to reduce its greenhouse gas levels to 20% below its 1990 level of emissions by 2020. Since then, California has passed one of the nation’s most aggressive fuel emission standards, a renewable portfolio standard at 33% of total energy use, and the country’s first economy-wide cap and trade program. This cap and trade program is evolving even as initial auctions were held on November 14, 2012, and the second on Feb. 19, 2013.

The backstory on this issue is that the entire program is moving forward on a more or less contingent basis. A statewide organization called Communities for a Better Environment (CBE) is working against the AB 32 implementation. In 2010, it joined a coalition that sued the agency, claiming that cap and trade violated the intent of the law and that the ARB had charged ahead with the program before fully considering public comments and alternatives, as required by the California Environmental Quality Act. The plaintiffs won an injunction in March 2011. But an appeals court allowed cap and trade to proceed while the state revised its CEQA analysis. In September 2011, the California Supreme Court also ruled that cap and trade could move forward. In the summer of 2012, several of the same petitioners filed a civil rights complaint with the Environmental Protection Agency, arguing that cap and trade “disparately and adversely affects communities of color.” The EPA rejected the complaint in January of this year, stating that it’s too early to prove these claims.

The cap-and-trade rules came into effect on January 1, 2013 and apply to large electric power plants and large industrial plants(select "California" to get the EPA emissions in that state). In 2015, they will extend to fuel distributors (including distributors of heating and transportation fuels). At that stage, the program will encompass around 360 businesses throughout California and nearly 85 percent of the state’s total greenhouse gas emissions.The official site for California's cap-and-trade program is here.

At the same time, the State of California is holding public workshops to provide input on the development of an investment plan for the auction proceeds from the Cap-and-Trade program to reduce greenhouse gases. The Proposed State Budget for 2013-14 includes a brief discussion of Administration priorities for investment, emphasizing investments in the transportation and energy sectors from which large reductions in GHG emissions are possible. Offsets are not only covered instate, but are also being developed through oversight of foreign trading in carbon sinks. This oversight is potentially overseen by nonprofit entities that are registered by the state. For example, Climate Action Reserve’s role is that of an accredited offset project registry, which is an official recognition by the State of California, to review offset project documentation, oversee verification, and issue credits that ARB then converts into compliance offsets for use in the cap-and-trade program.

Carbon offset programs include three primary areas where emissions reductions can be had and can create offsets. One area, forestry, involves sequestering carbon. As trees grow, they take carbon out of the atmosphere, hold it in their roots, trunks, and limbs. Under the rules that have been drafted and that were adopted by ARB, there are a number of mechanisms to ensure the ongoing permanence of that sequestration (permanence here meaning holding it for 100 years). Then credit is generated that can be used to offset emissions at a covered entity like a power plant or refinery.

This carbon offset program is now being developed through symposiums in the state in order to establish the basis for these offsets in forests in foreign countries. Critics say the offsets are difficult to verify. According to Carbon Market Watch, it’s hard to prove that the European Union’s offset program is actually creating the kind of emission savings it alleges for a large number of wind, hydropower and biomass energy offset projects. And the offset market in the EU has generated several high-profile cases of fraud.

Under discussion are potential benefits and challenges of linking programs in foreign jurisdictions directed at Reducing Emissions from Deforestation and Forest Degradation (REDD) to California’s cap-and-trade program as sources of offsets.  The focus is on regulatory design elements and the legal and institutional mechanisms that would be required to enable California to recognize emissions reductions from jurisdictional REDD programs as offsets under California’s cap-and-trade program. There are legal and institutional mechanisms that are required to enable California to recognize international REDD-based emission offsets for compliance purposes. Unlike the U.N.’s costly and bureaucratic global offset program, the Clean Development Mechanism, California uses a “performance standard” to determine whether projects are “additional.” The most recent press release from the REDD Offset Working Group outlines the concerns of indigenous people in countries that would participate in the preservation of their forested lands.

These great expectations and ambitions will play out in ways unforseen today. Will these goals be attainable?

Offshore

The April issue of Vanity Fair has an in-depth article on the network of offshore tax havens that support the corporate shell holdings in Hyde Park in London. It's one of many articles and studies that have appeared recently because of the scale of this problem. Other publications have examined this issue in broader scope, such as Financial Services Technology

and our very own U.S. Government Accountability Office

The discussion of this issue has come to the forefront because tax evasion by multinationals and corrupt leaders has emerged as a key issue ahead of the third substantive meeting of a UN high-level panel this week to discuss a framework for global development after 2015. It's basically follow the money, and the developing countries are trying to structure their tax bases rather than relying upon foreign aid, and this requires transparency in global capital flows. Paul Krugman speaks out on it with respect to Cyprus, whose banks are on the brink of failure due to the capital parked in their accounts from expat Russian money: "But the truth, hard as it may be for ideologues to accept, is that unrestricted movement of capital is looking more and more like a failed experiment".

These capital flows are critical for support of not only the emerging global economies, but also as a means to fund the essential changes in all countries for providing carbon-free energy and conserving remaining natural resources and watersheds.The transfer from the old carbon-based energy sources will necessarily happen quickly, and so the capital must be made available. But how should this capital be captured and allocated?

As it stands right now, governments are legally taxing vibrant small-scale capital, while the old capital that resulted from the earlier industrial development and later corporate growth flees into tax havens. The capital generated from the developed countries, especially the USA and Canada, were generated from the old railroad industries that started with coal, and employed the railroads to develop land that was essentially given to them for free by the government during the expansion phase of the 13 colonies as they evolved into the 50 states. This shifted later on into the oil industry that again used government subsidies to develop roads and highways, and the auto industry came into prominence. During this time, the oil resources claimed by the oil industry were nationalized by various governments in the Middle East (OPEC) and South America. As industries evolved through WWII, their growth came from global industry and government military contracts which funneled money to other governments and countries throughout the world. Technology emerged in the 1970's that basically drove a massive expansion into the digital and electronic information industry, much of which was outsourced to third world economies. Not only that, as the corporate sector bloated in the 1980's and beyond, the banking sector became way outsized in the global economy in the late 1990's, driving speculation into a bubble which the world economy has yet to recover from. These hot spots of banking have coalesced in illegal tax-free havens that are very small countries unto themselves and don't support a large local population. They're entities that basically bleed the money system and exist as private corporate vaults, and the scale of this top tier money, especially in the last decade, has become unprecedented, particularly the expat money from Russia. Meanwhile this top tier money (legal and illegal - drug trade and arms) consumes the resources that belong to global citizens and the natural ecosystem of the planet.

Because of this situation, it now appears that international capital flow restrictions are going to become the only rational way to balance global capital flows and put them to use effectively, whether for ecological restoration, carbon emissions reduction or rebuilding industry and human habitats. These capital flows, as one can see, are funneled through scattered tax havens in quantities that dwarf even the large economies of North America and Europe, and China's economy (its government) has yet to shed its veil. It's a wicked problem.

One method which could address this problem is to establish currency zones that capture these tax havens as well as countries that have large populations and balance out the capital flows with a "regional" approach. It could work in tandem with a regionalized trading system that supports local resource preservation rather than immense supply chains fueled by cheap oil. The scale of these systems must be brought into congruency in order to support the necessary shift in human activities that await us in the future.

Update 4/2/16: Huge New Global Corporate Bribery Scandal, Explained

Update 4/3/16:  Trans-Pacific Partnership pact would fuel climate chaos and empower corporate polluters to challenge environmental laws across the globe.

Update 4/4/16:  Huge document leak exposes shell companies
and this shows how it's done 

Update 5/5/16: Shell corporations are effectively located in the US in these states, which are then used to hide the offshore accounts.

Update 5/13/16: The western banking system has assisted the world’s kleptocrats and tax dodgers.

Update 6/6/16:  Panama Papers - US clients hid millions abroad

Update 10/23/16: UN expert urges next UN chief to focus on ending tax havens

Update 12/24/16: How it's done: How to Hide $400 Million

Update 12/31/16: The Panama Papers

Update 1/29/17:  Black Hole for Assets: Mossack Fonseca exposed by the Panama Papers

Update 6/1/17: The ultra-rich are hiding way more money overseas than anyone realized

Update 6/2/17: Companies That Just Don't Pay

Update 6/5/17: Study: The ultra-rich hide 25 percent of their wealth in tax havens

Update 11/6/17:  Paradise Papers Shine Light on Where the Elite Hide Their Money

Update 11/7/17: Trouble in Offshore Paradise (source - Tax Evasion and Inequality)

Update 11/11/17: How Corporations and the Wealthy Avoid Taxes (and How to Stop Them)

Update 12/24/17: Whitewashing evil

Update 2/7/18: Apple paying a record tax because of its last two decades of global tax avoidance

Update 5/7/18:  IMF’s Board of Directors has approved an anti-corruption “framework” policy.

Update 5/11/18: Supreme Court is lax on overseas corporations.

Update 7/1/18: The real beginning of the end for tax havens has begun

Update 8/30/18: The unholy nexus between tax havens & deforestation.

Update 9/9/18: Moneyland ratchet: Money flows across frontiers, but laws do not

 Update 9/25/18: Up to half of global offshore wealth is hidden in British jurisdictions.

Update 10/11/18: The UK Criminal Tax-Havens that drain money from human & environmental needs

Update 10/13/18: How the citizen schemes stack up, by global region

Update 10/16/18:  A blacklist of 21 countries that threaten international efforts to combat tax evasion

Update 10/31/18:  The vast wealth and power of corporations is at the heart of inequality and climate change.

Update 11/1/18: How corporate dark money is taking power on both sides of the Atlantic

Update 1/21/19: U.S. individuals, by Zucman’s estimate, “are evading $30 billion a year [in taxes] through unreported offshore assets,” while U.S. multinational companies are avoiding $120 billion “by artificially shifting profits to Bermuda and similar places.”

Update 1/29/19: Billionaires Called Out for Tax Evasion at Davos 2019

Update 2/10/19: In 1991 the collapsing USSR shoveled billions from the state treasury into private accounts across Europe and the U.S. in one of history’s greatest heists.

Update 6/16/17: Anonymous companies are getaway cars for the world’s criminal and corrupt

Update 6/17/19: Tax havens: Super-rich 'hiding' at least $21tn (2012)

Update 7/30/19: Money is hoarded at the top. The super rich decimated polity and then turned to extremists to protect them.

Update 9/14/19: Shell Companies Hide $15 Trillion From Taxes, Study Reports

Update 9/30/19: Secrecy World: Inside the Panama Papers Investigation (The Movie "The Laundromat")

Update 10/28/19: Tax Justice Network now ranks U.S. 2nd in the world for global financial secrecy

Update 7/17/21: Shut down the Tax Havens

Update 8/10/21:  In the 21st century, Fascism cannot exist without an offshore system.

Update 10/11/21: Lawmakers seek crackdown on financial 'enablers'

Update 4/6/22: Why Tracking Putin’s Wealth Is So Difficult

 

Update 4/24/22:  He knew that the leverage we had over him was his foreign money. Per the Panama Papers.

Update 7/14/22: Offshore structure for Russia's Gazprom, the source of Putin's wealth.

Update 7/18/22: Oligarchs' shell companies, tax shelters, offshore trusts

 

Update 8/30/24:  In 2001, the United States became one of the money-laundering capitals of the world, with hundreds of billions of dollars laundered in the U.S. every year.

It's Time

There's a conversation emerging among the climate modelers, and it's about how these models have not only accurately presaged the climate changes we're seeing now, but that things are moving very quickly to a much worse scenario than these models predicted. Why? There's no feedback from natural processes accounted for in the relatively straightline projections contained in these models. The permafrost melt in the arctic, as well as other changes in the ocean, will compound an effect that human activity has set off in the ecosphere. A record Greenland ice melt occurred in June of last year, creating global concern around this issue because of the methane emitted from this process, an extreme positive feedback mechanism, which has not yet been factored into the models.

The warnings from the science community ramped up last year after Superstorm Sandy hit New York city, and the International Energy Agency has warned that on current emissions trends the world would be in for 6C of warming – a level scientists warn would lead to chaos. Scientists have put the safety limit at 2C, beyond which warming is likely to become a runaway change. Increasingly, there are models and numbers that show that we're quickly approaching that limit. The popular press has started to publish the even more alarming predictions that are based on this last years' climate events, and warning of the coming impacts of these changes.

Recently, Secretary of State John Kerry has taken an official position in Washington on the urgency of climate change. Kerry called climate change an economic and national security issue — as well as an environmental one — because it affects oceans, aquatic ecosystems and the food they produce. This is a very strong call to action by the USA. It's critically important for the decision to be made on specific actions and goals in response to climate change.The decisiveness of this particular historical moment is highlighted by an important new paper in Nature - the International Weekly Journal of Science, which finds first, that when we start serious change is the most important factor in limiting the damage from climate change, and second, that we have to start serious change now, with policy shifts comparable to an international carbon price of $60 a ton by 2015 in order to mitigate climate change in time to stop irreversible warming.

At this point in time, lawyers and lobbyists are waiting for the White House’s Council on Environmental Quality to issue the long bottled-up standards for how agencies should address climate change under the National Environmental Policy Act, signed into law by President Richard Nixon in 1970. Evidently Washington has decided to take this very belated action and establish standards for approving all manner of projects and initiatives that affect the amount of carbon emissions allowed in the atmosphere. This will have major impacts on the economy and businesses, but as the increasing global public outcry shows, the time has arrived to deal with the issue.

We hardly have any time left.

Changing the Game

Although their development and implementation can be costly, techniques to artificially remove and store carbon dioxide from the atmosphere may become increasingly important as the planet potentially shifts into a permanently warmer state of dangerous climate change. As it stands, removing carbon dioxide directly from the atmosphere has been going on for decades on a small scale to maintain air quality in submarines and spaceships. Commercial processes currently used to liquefy air also require the removal of both water and CO2. Emerging techniques to pull carbon dioxide from the air will be a necessity, say researchers from Columbia University’s Earth Institute. The concern with this approach is the unknown cost impact of these technologies, however, these costs can also drive profitable industries. The research paper from PNAS dated June 28, 2012 is here (Proceedings of the National Academy of Sciences of the USA).

Abstract: CO2 capture and storage (CCS) has the potential to develop into an important tool to address climate change. Given society’s present reliance on fossil fuels, widespread adoption of CCS appears indispensable for meeting stringent climate targets. We argue that for conventional CCS to become a successful climate mitigation technology—which by necessity has to operate on a large scale—it may need to be complemented with air capture, removing CO2 directly from the atmosphere. Air capture of CO2 could act as insurance against CO2 leaking from storage and furthermore may provide an option for dealing with emissions from mobile dispersed sources such as automobiles and airplanes.

As I've discussed before, this is approach is only one part of a multivalent set of ways to actually reduce the CO2 in the atmosphere. It must be done in concert with a shift to non-carbon fuel sources, as well as the actual regeneration of natural systems. It's a carbon reduction framework that can incorporate many strategies.

Some examples of experimental approaches (i.e., Geoengineering) that are developing in the industry:

Sucking CO2 from the skies with artificial trees

A Canadian company has developed a cleansing technology that may one day capture and remove some of this heat-trapping gas directly from the sky. And it is even possible that the gas could then be sold for industrial use.

Revolutionary new technology that produces “petrol from air” is being engineered by a British firm

And in a different approach, Holistic Land Management:  Grazing animals are the path to restoration of the world's grasslands, which has the potential to pull all of the legacy carbon out of the atmosphere and put it back into the ground where it belongs.  There are roughly 12 billion acres worldwide, mostly ruined by human misuse, which we can restore.  At a modest one ton per acre we can pull twelve billion tons of carbon out of the atmosphere every year.  That's 6 parts per million (ppm) - and even if we foolishly continue to add 2 ppm annually, it's still less than a 30-year trip back to a stable pre-industrial 280 ppm, down from today's perilous 393.

These few example processes not only relocate the CO2, but the technological processes can recycle it as a fuel, which is what got us into trouble to begin with. But, it makes it possible to leave the existing oil, coal and gas reserves in the ground instead of extracting it with very expensive processes and transport, as well as put a stop to the environmental damage it does. The urgency in addressing climate change is well-founded, and could be the instigator of a new kind of industry that complements the current renewable and non-carbon energy sources.

Could it even be possible to mitigate climate change faster than we created it? Anything is possible once the old fossil fuel industries get out of the way, encouraged by a global agreement on climate change and a commitment to restorative processes.

Structures

The structure shown above is a tensegrity icosahedron, developed by Bucky Fuller, which demonstrates the dynamic of tension and rigidity that produces a system far stronger than its individual elements. Everything in this universe has different kinds of dynamic structure, even chaos, which is an evolving state. Proportional harmonies, the structures of Phi and the underlying quantum mechanics are the inherent patterns of the universe that interact with all systems.

These structures are systems that emerge and shift, responding to a changing environment, sometimes from the instigation of human societies. A view of these systems is fundamental to understanding the evolution of physical, ecological, cultural, economic and social systems in human culture. Structures are not static, and the interrelated patterns create new possibilities. An article on economics, by Sara Robinson, is part of a series in Alternet's "New Economic Visions" that discusses the emergence of new economic and social structures from the currently failing economic system.

How is the emergent new economy different? Her points are as follows:

Small Is Beautiful - it's local
Marx 2.0 - shared profits are smaller
Systems Theory - interrelated systems
A World Like the Web - matrices and connected frameworks
Reform, Revolution, and Evolution - evolution of the new within the old

This kind of flexible, smaller and nexus-linked structure is the necessary framework for a new economy that is responsive to a sustainable scale of human existence on this planet. It has to emerge, since the existing structures are producing destructive and corrosive situations throughout human society that are detrimental to the entire ecosystem. This is as outlined by Share The World’s Resources (STWR), a privately funded NGO:

Another fundamental concern is how a deregulated and globalised economy has locked large swathes of humanity into unsustainable patterns of overproduction and overconsumption. This irresponsible economic model is the real cause of our environmental problems, which include the rapid depletion of the world's natural resources and surging carbon emissions that governments seem unable - or unwilling - to contain. We are also confronted by an ever-widening gap between rich and poor, the excessive influence of corporate power, on-going financial instability and economic uncertainty.

A commentator in Future of Hope identified one of the root causes of their financial collapse as the domination of aggressively masculine business practices sanctioned by their government. These, he went on to explain, would still be considered successful strategies if they hadn't ultimately precipitated the country's collapse. The same blinkered approach to commerce applies across the world. The inherent flaws in the 'business as usual' model remain largely unacknowledged despite the grave financial and environmental crises it has exacerbated, and policymakers continue to blindly pursue their intimate relationship with the corporate sector.