By Walter Borden

“The conservation of natural resources is the fundamental problem. Unless we solve that problem it will avail us little to solve all others.”  Theodore Roosevelt

What’s In a Petrodollar?
Fossil Fuel producing nations should extract their resources consistent with the health needs of their people, air, land, and water.  History shows us that regulation plays an essential role in this mandate. Energy marketers insist regulations are counterproductive. Implied though not often stated, nations like Russia and China can more easily form capital and drive labor demand from fossil fuel exploitation because they can act largely unencumbered by regulation. This unproven assumption ignores the escalating costs of unconstrained fossil fuel extraction to present and future generations. Should we be more concerned about poisoning our planet for future generations than leaving large amounts of debt for them? I argue yes. Does the regulation of fossil fuel extraction impede aggregate labor demand? The evidence indicates no. The earth is the source of all money so worrying about debt instead of planetary health puts the cart before the horse. A sick, weakened planet will create less value, profit, and wealth.  Concurrently, as oil supplies wane, systemic risk will form around basing currencies on fossil fuels, oil in particular. Searches for fossil fuel resources will grow into fierce and destabilizing conflicts. Increasingly scarce tracts of clean, fertile land can only deepen them.

Unregulated Nations and Quality of Air, Water, Land and Life
Russia and its oil country exemplify the realities of unregulated, petrodollar capitalism. Its oil producing areas constitute what experts describe as our planet’s worst ecological oil catastrophe. Based on reporting from the Associated Press, estimates are that roughly one Deepwater Horizon-scale leakage occurs about every two months. Outdated infrastructure, minimal and unenforced regulation allow for oil to contaminate soil, kill plant life, and damage habitats for mammals and birds. State-funded research shows 10-15 percent of Russian oil leakage enters rivers with nearly 500,000 tons flowing into the Arctic.

Source: Bureau of Labor Statistics

From Chernobyl to more recent paper mill pollution seeping into Siberia’s Lake Baikal, which holds one-fifth of the world’s supply of fresh water, Russia’s lax regulatory posture renders great swaths of territory uninhabitable and fallow. Russian oil spills are more numerous than in any other oil-producing nation. “Oil gets spilled literally every day,” said Dr. Grigory Barenboim, senior researcher at the Russian Academy of Sciences’ Institute of Water Problems. His is not alone. And by all accounts the estimate is conservative since under Russian law, leaks less than 8 tons rate as “incidents” and can thus go unreported. By contrast, the U.S., the world’s third-largest oil producer, logged 341 pipeline ruptures in 2010 — compared to Russia’s 18,000 — according to the U.S. Department of Transportation.

The republic of Komi, just south of the Arctic Circle, is the scene of Russia’s largest oil spill. Up to 40 kilometers of two local rivers were polluted, killing thousands of fish. Respiratory diseases rose by over 28 percent in the year following the leak. Komi’s officials blamed neglected infrastructure and oil companies reporting that “companies that extract hydrocarbons focus on making profits rather than how to use the resources rationally.”

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With Proposition 23 in California defeated, the hard and important work on Cap and Trade in the United States can begin again. Advancing the Western Climate Initiative (WCI) will be critical in building a framework in North America for Cap and Trade policy. “A cap-and-trade system is a market-based mechanism that uses market principles to achieve emissions reduction. A core component of a greenhouse gas cap-and-trade program is that an emitter must turn in one ‘allowance’ for every metric ton of carbon dioxide equivalent (CO2) that they emit.” As so defined on the WCI website. As the Great West and Canada agree, Cap and Trade is an important first step in creating a framework for Sustainable Finance initiatives.

Source: carbontax.org

Well-funded efforts aimed at shaping public discourse labeling Cap and Trade an “energy tax” obscure debate amongst voters in North America.  Much of these funds come from abroad, from sources less interested in creating jobs in North America than extracting its resources. BP, for example, was generous in its contributions to the Tea Party. If it is a tax at all it is a Pollution Tax. Though it is much more a fee exercised on industries that withdraw essential resources from civilization and return them in degraded form. These resources are part of the public domain and when they are removed from the public trust and diminished, the public should be compensated.

And it is not axiomatic that green jobs and sustainable finance mean net job loss. Indeed, quite the opposite as California and China continue to demonstrate.

Major European financial institutions and policy making bodies lead in advancing Cap and Trade, as well as the broader goal of sustainable finance. Yet clearly there are coordinated European-based attempts to influence U.S. elections in favor of Pollution Rights advocates. A recent report used information from the Open Secrets.org database to track what it labeled Europe’s biggest polluters efforts to influence the U.S. midterm elections: “The European companies are funding almost exclusively Senate candidates who have been outspoken in their opposition to comprehensive climate policy in the US and candidates who actively deny the scientific consensus that climate change is happening and is caused by people.” This report lists BP, BASF, Bayer and Solvay as having made contributions.

Such funding is not restricted to European donations. A report by ThinkProgress, tracked donations to the U.S. Chamber of Commerce from a number of Indian and Middle Eastern oil, coal and electricity companies.

All the while much of the manufactured hysteria about Cap and Trade systems misses the real point. Market based efforts to curb pollution, combat acid rain, and offset global warming, represent merely incremental steps towards sustainable economies and finance. Limited supplies of accessible Carbon will be needed for much more than just fuel. Hence society will need to prioritize its usage and deployment.

There is also another side to the proverbial coin of foreign efforts to hinder Cap and Trade. As Thomas Friedman notes in WikiChina in writing a fictional cable from U.S. based Chinese diplomats back to Beijing: “Most of the Republicans just elected to Congress do not believe what their scientists tell them about man-made climate change. America’s politicians are mostly lawyers — not engineers or scientists like ours — so they’ll just say crazy things about science and nobody calls them on it. It’s good. It means they will not support any bill to spur clean energy innovation, which is central to our next five-year plan. And this ensures that our efforts to dominate the wind, solar, nuclear and electric car industries will not be challenged by America.”

So while China continues to dump Carbon on the US, it is quickly consolidating its lead in some of the most lucrative technology and financial markets for the coming decades. One could be forgiven in wondering if they too, might have an interest in keeping the US electorate in the dark about Cap and Trade and sustainable finance. As per our last post, George Schultz’s business thesis may have more facets than meet the eye as well.

This past week, countries meeting in Doha at the United Nations Convention on International Trade in Endangered Species voted down a proposal by Monaco and the United States to ban international trade in Atlantic bluefin tuna. The species, Thunnus Thynnus, is spiraling toward extinction, and is listed as endangered by the U.N. and every major international conservancy group.

This outcome underscores the need for policy makers and those charged with execution of policy to factor in the serious crisis that the world’s oceans and riverine systems face: our Blue Economy in peril.

Dead Zone Remote Sensing Imagery: Sannich Inlet off coast of Vancouver, British Columbia

A major issue for the world’ s coastal regions are the rise of Dead Zones. These vast expanses of ocean contain oxygen levels that are too low to support life outside of algal blooms. The Gulf of Mexico Dead

Zone is the size of New Jersey, or approximately 22, 608 square kilometers. The hypoxic state of these dead zones is caused by run-off from fertilizers used in industrial agriculture. Some recent informal polling at i-say.com conducted by Fund Balance gives some hope that the issue registers with the public. In addition, Fund Balance learned from several Iowan farm ope

rators about their efforts to reduce their run off: from  relocating feed lots farther away from rivers, to applying buffers made of specific nitrogen loving indigenous plants and compounds of gravel and sand. Many have realized economic gains from reducing nitrogen application to crops and benefited from increased production. Informative coverage on these Dead Zones can be found at Link TV.

Demarcation from living to dead zone off the coast of North Carolina

Such activity makes important steps forward. These actions require increased attention from agronomists, urban planners, policy makers and consumers. Just last week major media expanded its coverage of Dead Zones off the coasts of California, Oregon and Washington. Such man-made disasters unfold daily in the Chesapeake Bay as well as in within coastal regions across the globe.