Daniel Englander
The Morning Feedstock May 26, 2008 at 6:20 AM
Saudi Aramco, the world’s largest oil exporter, will invest $129 billion over the next five years in new energy projects. Khalid al-Falih, Aramco’s VP for operations said, “we are clearly focused on the downstream as the area of greatest potential for future growth,” as he announced a $40 billion increase in planned investments. New joint venture refinery projects, including ongoing construction in China and the Philippines, will take up about $70 billion of the total, while Saudi domestic construction will take up the additional $59 billion. Speaking to an investor conference last week, Falih criticized traders who used petroleum as a financial instrument, saying that its increasing use as a dollar substitute had the effect of delinking price from production and supply levels, leading to inflation in the global price.
While the Saudis go about solidifying their position in the downstream market, the World Bank and some other leading lights will set aside $5.5 billion for a developing country-focused clean technology fund. Speaking at the G8 meeting this week in Kobe, Japan, World Bank VP Katherine Sierra announced the US, UK, and Japan would raise the fund by autumn. Sierra said, “we are hoping that initially the clean technology funds may begin with $5 billion and the other one may be $500 million for climate resilience,” which is the polite way of saying here’s your cash because your village just fell into the sea. UNFCCC chief Yvo de Boer was critical of the plan, saying “this is an initial initiative for the short term with a very clear indication that those funds will stop functioning in 2012 when a new climate-change regime comes into place.” The U.S., whose record on international climate agreements has been less than stellar, has gone so far as to propose enlarging the fund to $10 billion while asking for participation from as many as 40 other non G8 countries.
A more effective use of that cash would be to shore up validation procedures for the lucrative Clean Development Mechanism market. The $100 billion market is, according to two Stanford researchers, riddled with waste and fraud. A working paper published recently by Michael Wara and David Victor (pdf) finds “in practice, much of the current CDM market does not reflect actual reductions in emissions,” and instead is comprised mostly of projects that would be built anyway. The problem of additionality has caused much concern among UN staff seeking to regulate reductions projects. The study found project development companies are earning excessive income on projects that were either under construction or already completed at the time of their certification, while it “looks like between one and two thirds of all the total CDM offsets do not represent actual emissions cuts”, according to Victor.
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Welcome to the UN boondoggle. Same UN system that gave you Oil for Food Scam with Saddam Hussein when Iraqis saw none of it. France, Russia, UK and even a few devious Americans profiteered from it.