Governments Versus The Markets on Auto Industry Role in Climate Change Policy

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The whole issue of climate change and government policy in response to climate change remains issue of immense importance to the metals industry. As major consumers of energy and significant emitters of CO2 (and other so called greenhouse gasses) metals manufacturers serve as both part of the problem and part of the solution. Of course not everyone shares the view that global warming has come as a result of anything man (or industry) has done. Bob Lutz, legendary automotive executive and often outspoken critic of the climate change lobby once famously described the whole concept as a “crock of shit, I don’t entirely hold with that but I do agree with another opinion he expressed quoted in the Economist review of his new book that government would do better to encourage greater fuel economy by taxing petrol at the same kind of rates as other countries rather than applying market distorting and innovation discouraging fuel efficiency standards to manufacturers fleets. In the US especially, one would expect the prevailing philosophical framework should involve letting the market decide by simply raising the cost of fuel closer to the level consumers pay in other advanced industrial countries. The US would suffer from a dramatic disadvantage but manufacturers would have the encouragement to innovate as the market demanded more economy. We see a big difference in both the approach and the result.

One can’t help but sympathize with Mr Lutz’s view on climate change when one reads about yet another ham-fisted attempt to manipulate data used to support the cause. In the Independent (a decidedly liberal and environmentally sensitive UK newspaper) an article lambasts the Intergovernmental Panel on Climate Change (IPCC) for suggesting last month in a new report that renewable energy sources could realistically meet 77% of the world’s energy supply by 2050. In supporting documents released this month it would seem the claims rely upon the assumption that real world energy demand would drop by 40% between now and 2050 hardly likely with a projected increase in population of some 2 billion people and a much larger energy-consuming middle class. Coincidentally (or perhaps not so) the lead author of the ICC report, an employee of Greenpeace, undermined the independence of the report. This follows leaked reports in 2009 that showed scientists at a British university had manipulated data for an ICC report 2 weeks prior to the Copenhagen Summit and raises serious questions about their competence, if not the bias of their approach.

The argument between those that passionately believe humans have and do destroy the planet and those that believe it’s a crock of shit will no doubt continue to rage. The reality probably lies somewhere in between. Whether or not gradually rising global temperatures come as a direct and sole result of Co2 emissions appears less clear. Do we release Co2? Of course we do. We know by isotopic distributions that rising Co2 appears correlated to the burning of fossil fuels. Does it make sense to try and slow our consumption of fossil fuels both to conserve them for longer and to limit the release of more Co2? We would all probably agree, yes it makes sense. How we go about it though remains a subject of controversy. Too often, governments’ response mandates fuel efficiencies in cars rather than simply raising the cost of fuel and letting the market provide innovative solutions.

Always happy to throw a wrench in the works, I leave you with an interesting article from Skynews. According to three studies released in the United States last month, experts believe the familiar sunspot cycle may have started to shut down, heading toward a pattern of inactivity unseen since the 17th century. According to the article, the signs include a missing jet stream, fading spots, and slower activity near the poles. Experts from the National Solar Observatory and Air Force Research Laboratory said, ‘This is highly unusual and unexpected, but the fact that three completely different views of the Sun point in the same direction is a powerful indicator that the sunspot cycle may be going into hibernation. Experts have begun probing whether this period of inactivity could serve as a second Maunder Minimum, (a 70-year period when hardly any sunspots were observed between 1645-1715 and rivers froze over in a mini ice age).   We met yet come to thank those gas-guzzling SUV’s keeping our greenhouse warm and humid!

–Stuart Burns


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