A Thought about Europe

I see that Henry Derwint, President and CEO, International Emissions Trading Association in Geneva, Switzerland is scheduled to testify at Thursday’s hearing by the Senate Finance Committee on “Tax Aspects of a Cap-and-Trade System”. It took me a moment, as it seems he switched jobs, but now I recall my exposure to Mr. Derwint’s work in Europe. It is highly relevant to the testimony he is going to give tomorrow.

As I relate in my new book, or at least in the manuscript sent off – which, I regret, was much bigger than stood any realistic chance of making it through, with there certainly being no shortage of material – then-Chancellor of the Exchequer official Derwint traveled around Europe in 2006 selling a post-2012 cap-and-trade plan to Member States understandably wary of taking on a deeper promise.

After all, as we have serially established in these pages, Europe’s emissions have continued to steadily climb since Europe agreed to Kyoto in 1997, something which the “first” Kyoto cap-and-trade plan, their Emissions Trading Scheme, did absolutely nothing to arrest. Despite what you may hear tomorrow.

When Mr. Derwint arrived in Madrid, in between meeting with Ministries of the Environment and Economy, he asked to meet with a colleague of mine not affiliated with any governmental office (outside of his professorship at a local university), but who had been vocal in opposing the rationing plan. Fearing a realistic reassessment by Spain, Mr. Derwint indicated that he came bearing “temporary exemptions for energy-intensive industries” in order to gain Spain’s agreement for a deeper “Round II” promise. The key word for Spain here is “temporary”. The key message for us is that the ETS chases jobs away. Spain knows this, their Acerinox having graced us with new steel jobs in Carroll County, KY (its North American Stainless subsidiary).

Derwint, I was informed in an amazed phone call after the meeting broke up, also indicated a willingness to plead on behalf of Spain in the (ongoing, as we’ve reported) talks about new quotas. He expressed a willingness to assert that their “first” obligation represented a raw deal; that of course was a “reduction” promise not to exceed a 15% increase over 1990 levels. A Polish minister with whom I subsequently met informed me that the same crew, led by Mr. Derwint, also paid them a visit and the exchange was such that my hosts inquired if I had an explanation for why the UK emissaries “had the zeal of missionaries” and were so much more heavy-handed than even Brussels. I didn’t, and still don’t.

There was more, but let’s see what made it into the book. All of this is to say that Mr. Derwint’s sunny message of hope and change tomorrow does tend to fly in the face of his past efforts revealing a thorough understanding of the ETS’s impacts. Possibly he can explain why, if ETS is such a success, Europe increasingly threatens us with trade wars should we refuse to do it to ourselves, too, because they can’t take the hit to their competitiveness much longer. Just a thought.