Cuba's Fertile Oil Reserves

In the wake of the Obama Administration's relaxing of some travel rules regarding Cuba, a growing matter of interest is whether American oil companies will seek more access to Cuban waters (where the oil is located).

In early April, a Cuban official said, "We are open" to possibly doing business with American interests, and noted that oil firms from China and Russia, among others, are negotiating with Cuba about oil concessions, according to Bloomberg.  

Additionally, The Wall Street Journal blog Environmental Capital ("Mambo Kings: What Does Cuba Opening Mean for Energy Firms?" April 14, 2009), reports, "The list of oil companies looking at Cuban waters is actually a little longer -- one consortium planning to drill exploration wells this summer includes Spanish, Brazilian, Norwegian, and Indian companies."

But the American companies are not there yet.  Surely this cannot make sense, with Cuba and the U.S. being a mere 100 miles (or so) apart?

The triumph of foreign policy animosities (even ones that are well past their "sell-buy" date) over economic reality never ceases to amaze.

Swedish Report Says U.S. Has Reached "Critical Political Tipping Point" Regarding Climate Politics

The Obama Administration has "already begun to demonstrate its seriousness about climate change through actions being taken within U.S. borders," according to a new report commissioned by the Swedish government.

The report, "Sea Change: U.S. Climate Policy Prospects Under the Obama Administration, written by the Stockholm Environment Institute (SEI), was prepared in the run-up to Sweden's July 1-December 31 presidency of the European Union.  In this role, Sweden will speak on behalf of the EU at the Copenhagen U.N. climate conference in December.  Based on Sweden's historical performance in the EU presidency, the U.S., and the rest of the world, should expect a well-focused and effectively-argued case being made on behalf of the EU.

The report notes the "dramatic shift" in U.S. climate politics in terms of the executive branch and points out that additional changes are taking place at regional, state, and local levels.  "In short, the conditions for adopting and implementing forceful measures for addressing climate change look far better than at any time previously."

While describing this as "good news," the report goes on to caution, "Nevertheless, some of the important circumstances that condition the development of U.S. climate politics remain stubbornly fixed.  Numerous domestic structural, institutional, and political hurdles remain in place.  These make it unlikely that the most comprehensive measures now being pursued, such as an economy-wide cap-and-trade system, will have been adopted by both House and Senate and signed by the president prior to the [December talks]."

Despite the report's careful analysis of the American political situation, it seems to have missed one key point: the role that money plays in American politics.  Regardless of the merits of the underlying case for cap-and-trade, the fact is that the big industrial interests will be in the shadows currying favor and support.  

Consequently, will the U.S. join the Europeans in the tough fight ahead in terms of climate change?  Time (and unfortunately probably money) will tell.

Endangerment Finding Just Around the Corner?

Since last November, and the election of Barack Obama, there has been speculation as to whether "his" EPA would classifiy carbon as a dangerous pollutant.

Well the wait may be about over, according to the venerable Wall Street Journal. In today's edition ("Henry Waxman Has a Plan...," April 10, 2009) the Journal's editoral page proclaims, "As early as next week the EPA will classify carbon as a dangerous pollutant under current clean air laws." The Journal speculates that this finding will prompt "a seperate avalanche of new regulations."

The editorial goes on to say, "The Obama Administration claims it is flirting with this 'endangerment finding' and the economic havoc it would wreak only to force Congress into falling in line with its climate agenda." Funny, but the European Union has already enacted such legislation and last time I checked the EU still seemed to be standing. Or did I miss something and the EU collapsed this morning? I hope not since I have 100 Euros in my billfold.

And since when does the always-pro-capitalism-without-restrictions Wall Street Journal oppose the creation of a market -- in this case a market for carbon emmissions credits? I thought the Journal figured that markets were the cure for everything.

Obama Willing to Compromise on GHG Auctioning?

Despite initially supporting a cap-and-trade program requiring a 100% auction of greenhouse gas emissions credits, there are indications that the White House might be willing to support legislation calling for less than full auctioning of credits.

Ben LaBolt, a spokesman for President Obama, has told The Wall Street Journal ("White House Flexibility Signaled on Climate Bill," April 9, 2009) that Mr. Obama's "preferred approach was 100% auction to create incentives for companies to reduce their greenhouse gas emissions.  Members of Congress are looking at a variety of policy options to help us make that transition, and the administration will be flexible during the policy-making process" as long as the administration's goals of creating a "clean-energy" economy are met.  

Members of Congress from coal-producing states as well as states that rely heavily on coal-fired power plants have voiced concern that a 100% auctioning scheme would provoke huge home-state opposition.  

The matter of how emissions credits should be handled is a tricky one.  The EU has been mightily burned by disputes involving its initial decision to give away emissions credits as part of the EU Emissions Trading Scheme.  In response, the EU has significantly tightened up the distribution of free emissions credits (although this remains a particularly difficult political issue with regard to the central and eastern European countries such as Poland).