Little Progress At U.N. Climate Meeting, writes FORBES as per Oxford Analytica, November 24, 2006.

The annual United Nations conference on climate change concluded in Nairobi, Kenya, on Nov. 17.

The conference was the venue for extensive discussions about integrating adaptation to climate change into development planning. In addition, delegates agreed to start discussions next year on country commitments after the Kyoto Protocol expires in 2012. While minor decisions were reached regarding international emissions trading mechanisms and other matters, no major legal decisions were made.

The U.N. Climate Change Agreements include the Framework Convention on Climate Change (UNFCCC) of 1992 and Kyoto Protocol to the UNFCCC of 1997 (2005 entry-into-force). All major countries are parties to the Framework Convention, but the United States and Australia are not parties to Kyoto. Every year, parties to these agreements convene to discuss details of implementation.

The looming question for the U.N. agreements is what happens after 2012, when the Kyoto Protocol expires:

–The Kyoto Protocol sets targets of emissions reductions for developed-country parties and allows them to reach these via a combination of trading among themselves, and by buying additional credits from “economies in transition” (Eastern European countries) and developing countries. The commitments laid out in Kyoto drive the market for these products, and 2012 is an extremely short time horizon for capital investment.

–Accordingly, there is little incentive for lower-carbon investment, especially that which might require longer payback times, such as renewable energy, without an agreement that covers the period beyond 2012.

While the European Union can set longer targets through its own internal emissions trading system (EU-ETS), many non-European countries would prefer a follow-on to the Kyoto Protocol instead of relying solely on the EU to coordinate emissions reductions. Delegates to the Nairobi meeting arrived hoping to make progress on this issue. However, in the end, this was limited to agreeing to start negotiations on the question next year:

–China and India were reluctant to discuss anything perceived as leading to binding reduction targets for them.

–The administration of President George W. Bush, which has kept the United States outside Kyoto and has no national emissions trading system, maintains that targets are an inappropriate method of regulating emissions internationally, and the focus should be solely on voluntary measures and technological cooperation.

Nonetheless, a number of smaller administrative issues were resolved.

–There was extended discussion of the central importance of adaptation as a component of the international response to climate change. For many years, adaptation has been seen as subsidiary to “mitigation” (reducing greenhouse gas emissions). However, events of the past few years have highlighted societal vulnerabilities to weather and climate. Moreover, the constant search for approaches to climate change that many parties can agree on gradually has led to an understanding that both developing and developed countries have common ground on integrating climate change adaptation planning into development decisions (sometimes called “mainstreaming”).

–There was agreement to review the Kyoto Protocol in 2008.

–Kyoto was amended to allow Belarus to enter as a trading party.
In response, U.S. Sens. Barbara Boxer, D-Calif.; Jeff Bingaman, D-N.M.; and Joe Lieberman, I-Conn., circulated a letter promising that Democrats would try to pass binding limits on U.S. greenhouse gas emissions when the new Congressional session starts in January. There was no word on whether the House was interested in such legislation.

The Nairobi Climate Conference saw little progress on the major, vexing problems of international climate policy under the U.N. process. However, a new emphasis on adaptation crystallized at the conference. The meeting also set the stage for a more significant meeting in the next year or two. Nonetheless, for now, the U.N. agreements are largely unchanged. The major international mechanism for greenhouse gas control remains the EU-ETS. Independent U.S. congressional action on climate change appears possible–but would not survive a presidential veto.
—**–**–**–**–**–

Now the US Business/Politics Reality Check:
Energy, “Big Boost For Ethanol” by Jessica Holzer, Forbes, November 24, 2006.

Washington, D.C. - “You don’t need a crystal ball to see a ramp-up in government support for ethanol coming down the pike. Just look at who’s in charge of next year’s doozy of a farm bill.”

The reauthorization of the massive 2002 bill is likely to dominate the next session of Congress, and it will have a whole section set aside just for energy.

Until recently, it was on track to be crafted by Sen. Saxby Chambliss of Georgia and Rep. Bob Goodlatte of Virginia, two Republican southerners with soft spots for cotton, peanut and tree farmers. But thanks to the Republican rout on Election Day, two Midwestern Democrats from the Corn Belt, Rep. Collin Peterson of Minnesota and Sen. Tom Harkin of Iowa, will tackle the legislation as the new chairmen of the respective House and Senate agriculture committees.

The switch more or less guarantees a huge boost to an ethanol industry that is already roaring ahead at full throttle.

“The consensus is that this makes it even more likely that we’ll have some aggressive biofuels policies adopted,” says Nathanael Green, a biofuels expert at the Natural Resources Defense Council. Already, ethanol producers benefit from a constellation of government supports, including a tariff on imported ethanol, subsidies for growing corn and blending the fuel, crop insurance and a guaranteed market: The Energy Act of 2005 required refiners to ramp up ethanol use from 2.5 billion gallons last year to 7.5 billion gallons by 2012.
Now, the farm bill may lavish even more on the industry.

“You’re going to have Harkin, who is as good of an advocate for the corn industry as anyone could get,” says Bill Kovacs, a lobbyist at the U.S. Chamber of Commerce.

Turning the farm bill into a bonanza for ethanol and other biofuels is smart politics for the Democrats, who would be wise to court voters in red states if they want to hold onto Congress. It will also garner the support of Republican lawmakers from farm states and President George W. Bush, who seem equally glossy-eyed over biofuels.

But there will be brush-back from places that don’t have a stake in ethanol–and this is where the refining industry will focus its influence.

“You’ll see us looking with interest at a lot of members of Congress from the coasts,” says one oil and gas industry lobbyist. “Those are the parts of the country where these renewable fuels aren’t nearly as viable or nearly as supported.”

Harkin and Peterson aren’t likely to attempt to raise the ethanol mandate, as it would invite the interest of the House and Senate commerce committees, with whom they’d rather not share credit for the farm bill.

But a hike of the blending subsidy, currently set at 51 cents per gallon of ethanol, or any new support for ethanol producers would be fair game. Environmentalists, for one, are eager to see ethanol plants, which are powered on natural gas or coal, switch to renewables such as wind.

“We’d be interested in seeing a grant program that would help these ethanol facilities adopt these technologies,” Green says.

What the ethanol lobby can’t wring from the farm bill, it will pursue elsewhere. And Rep. John Dingell, D-Mich., the new chairman of the House Energy and Commerce Committee, is a particularly tempting target. As far as he’s concerned, doing the ethanol industry’s bidding is a good way to burnish his green credentials while not tightening fuel economy standards–something that won’t go down easy with his constituents in Detroit.
“Dingell doesn’t want to have an argument with his caucus about [Corporate Average Fuel Economy regulations],” says another energy lobbyist.

Aside from upping the amount of ethanol that refiners must use, the lobby wants to throw money at cellulosic ethanol. Made from cornstalks and other plant waste, cellulosic holds more promise than regular corn-based ethanol, but it is not yet commercially viable.

The ethanol lobby won’t stop there.

It’s likely to push legislation introduced this summer from Rep. Steny Hoyer of Maryland, the new majority leader of the House, that more or less writes the industry’s ticket. Among other things, it would commit the federal government to spending $500 million over ten years on alternative fuels and vehicle technologies; reimburse the private sector for investing in biofuels infrastructure; invest in a freight rail system to transport biofuels; and ramp up the federal fleet’s use of alternative fuels.

With the Iraq War and entitlements busting the budget, it seems far-fetched that such a windfall would go to an industry that has already gotten so much. But, as any ethanol booster will tell you, Wall Street’s support of ethanol would dry up in a flash without all the government support.

“If you want to continue to drive marketplace demand, you’ve got to make sure that the financial community knows there’s a solid market opportunity for them,” says Bob Dineen, the president of the Renewable Fuels Association.