REDD-Monitor open thread: Capitalism, climate change and carbon trading

In this open thread are six links covering two themes, followed by a seventh as a postscript. First, the global economy is in serious trouble. Second, runaway climate change seems to be getting ever nearer. While neither of these are strictly REDD issues, I think they are both relevant to REDD (for reasons that I hope I don’t have to spell out).

Capitalism

1. Nouriel Roubini, “Is Capitalism Doomed?”, Project Syndicate, 15 August 2011.

Nouriel Roubini is Professor of Economics at New York University’s Stern School of Business and is known as “Dr. Doom”. He is one of the few economists that predicted the financial crisis of 2007-2008. In his book “Crisis Economics”, Roubini and his co-author Stephen Mihm argue that the meltdown was not a black swan, or an unpredictable exception, but an inherent part of capitalism.

Here’s what he writes in a recent piece on the Project Syndicate website:

Now a combination of high oil and commodity prices, turmoil in the Middle East, Japan’s earthquake and tsunami, eurozone debt crises, and America’s fiscal problems (and now its rating downgrade) have led to a massive increase in risk aversion. Economically, the United States, the eurozone, the United Kingdom, and Japan are all idling. Even fast-growing emerging markets (China, emerging Asia, and Latin America), and export-oriented economies that rely on these markets (Germany and resource-rich Australia), are experiencing sharp slowdowns.

2. Carlo Rotella, “Can Jeremy Grantham profit from ecological mayhem?”, New York Times, 11 August 2011.

Every three months, Jeremy Grantham of investment firm GMO puts out a quarterly letter. April’s letter was titled, “Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever”. This, according to the New York Times is the gist:

“The prices of all important commodities except oil declined for 100 years until 2002, by an average of 70 percent. From 2002 until now, this entire decline was erased by a bigger price surge than occurred during World War II. Statistically, most commodities are now so far away from their former downward trend that it makes it very probable that the old trend has changed — that there is in fact a Paradigm Shift — perhaps the most important economic event since the Industrial Revolution.”

Grantham is, as the New York Times puts it, “the public face of a company that manages more than $100 billion in assets, the very embodiment of a high-finance insider in blue blazer and yellow tie”, but he “has serious doubts about capitalism’s ability to address the biggest problems facing humanity”.

He describes himself as an environmentalist. The Grantham Foundation for the Protection of the Environment supports the Environmental Defense Fund, the World Wildlife Fund and “other such organizations”. So that’s all right, then.

“We’re all involved in environmental causes,” Grantham said of his family. “We can’t recall some single moment of conversion. We found our separate ways to it.” His wife, Hanne, sits on the board of the E.D.F. [Environmental Defense Fund] One son, Oliver, buys forests for Harvard Management Company; another, Rupert, manages forests in Massachusetts; his daughter, Isabel, helps run an E.D.F. program that recruits summer interns from top business schools to improve companies’ energy efficiency.

3. A Visualization of United States Debt

What the US debt looks like as piles of US$100 bills:

The debt currently stands at US$14,654,237,323,627 – but by the time you click on the link, it will be somewhat higher.

4. Clarke and Dawe – European Debt Crisis

Here’s a brilliant explanation of the European debt problem by John Clarke and Brian Dawe:

Climate change

The climate, meanwhile, seems to be heading in the same direction as the economy:

5. Joe Romm, “Bombshell: Warming May Shrink Russian Permafrost 30% by 2050”, Climate Progress, 5 August 2011.

The permafrost in Russia is melting. “Russia’s vast permafrost areas may shrink by a third by the middle of the century due to global warming,” states a recent AFP article on the subject. The article concludes,

Scientists have said that permafrost thawing will set off another problem because the process will release massive amounts of greenhouse gas methane currently trapped in the frozen soil.

Joe Romm spells it out in his Climate Progress blog:

The permafrost permamelt contains a staggering 1.5 trillion tons of frozen carbon, about twice as much carbon as contained in the atmosphere, much of which would be released as methane. Methane is 25 times as potent a heat-trapping gas as CO2 over a 100 year time horizon, but 72 (to 100) times as potent over 20 years!

6. Michael Ricciardi, “Unprecedented 2007 Arctic Fire Released a Year’s Worth of Stored Carbon”, Planet Save, 8 August 2011.

Two extracts from the article, which is based on research published in Nature magazine, should be enough to explain the seriousness of this fire, which lasted more than two months and burned an area covering over 1,000 square kilometres:

For the past 11,000 years or so, the Arctic’s boreal forests and tundra have remained mostly free of wild fires. But in 2007, the largest fire ever recorded in the Arctic swept across the Alaskan Northern Slope region, releasing an estimated 2.1 teragrams (2.3 million tons) of carbon into the atmosphere. According to a recently published paper in the journal Nature, this is an amount “two orders of magnitude larger than annual net C (carbon) exchange in undisturbed tundra.”

Normally, a tundra fire does not cause great concern amongst ecologists, as the wet vegetation and soil (which is under-layered by permafrost ) tends to constrain the fire’s spread. However, that year the tundra soil was unusually dry; a lightning strike hit the area in July, ignited the fire that would continue to burn for over two months, boosted by strong September winds. The researchers found that 40% of that burn met the classification for “severe burn”, which is a large percentage for any tundra fire.

P.S. Carbon trading

7. Ben Garside, “EU may propose plan to extend Kyoto: sources: report”, Reuters, 22 August 2011.

A senior EU negotiator, who requested anonymity, told Point Carbon News that,

“It’s not a formal EU position yet, although it is something that has gained ground in recent months. We see there are a lot of parties that want to maintain the Kyoto Protocol and its rules-based system – maybe it’s possible to preserve the rules, but not ratify (a second period).”

In other words, the EU may propose to keep the carbon trading mechanisms in the Kyoto Protocol and throw out the targets.

If anyone could explain to me how carbon trading is supposed to work in the absence of caps on emissions (which create the demand for the carbon credits), I would be very grateful. And does anyone really think that this stands the remotest chance of preventing runaway climate change?