Greetings earthlings……i was wondering how to kick off 2011 but was a bit stumped. I mean what’s new? Same old, same old. So i had a look back at my first post of 2010 and figured I’d say the same thing again but maybe add some colour this time. So here was my conclusion a year ago:

“When I look back over the last decade and forward to the next, it seems as if the same themes will recur:

- Financialisation of Economies: Can we remove the yoke of derivative financial instruments from the real economy?

- Technology: Will social media enable the development of a networked based economy?

- Global Politics: Can we move to a multi-polar world without the necessity of the United Nations as a de facto world government?

- Climate change: How do we manage the change in our climate and the resulting shifts in population and its attendant baggage?”

So we saw the Fed continue to print new money and hand it to the banks so they could pay out decent bonuses again. All that new cash managed to pump up the stock markets to new highs and generate hot money flows into commodities and emerging markets thus creating quite nicely the set up for new bubbles. What could the Fed have done? Just directly credited the bank accounts of every citizen thus boosting bank deposits and giving people money to actually spend into the economy or pay down debt.

Oh well, maybe next time.

2010 has seen China flex its international muscles and appear more focused on international relations. And of course Vladimir Putin has been flexing his too but that’s more for Russian domestic consumption. But clearly there’s been an acknowledged shift in influence with the BRIC countries all putting their hands up. Europe has been a huge mess with Auntie Angela having to clear up after the  big party. 2011 will see more shifts as power moves from the USA and spreads all over the globe. I guess it doesn’t help when you national debt is $14trln and rising (great site by the way). How this all plays out will be very interesting but I imagine we will see another crisis within the US insurance market and more derivative catastrophes. There will be huge write offs and if someone owes you a lot of money you may be collecting thin air…..that’s the problem with land…you can’t take it away.

And 2010 was officially rather hot. Well tied with 2005 and 1998. Weather was quite unpleasant all around and the severe flooding in Pakistan, China and now Australia and Brazil. Don’t mention the big freeze in the US and Europe. There’s no answer to this really. Either we bite the bullet now and take action or we’ll just have to adapt and buy a Sealegs amphibious boat (dec: I am a shareholder in Sealegs).

So I think really it’s more of the same for 2011. It’s going to be a year of adjustment before the big one in 2012. We have an election here in NZ in November which might be interesting if we can get financial reform into the debate. Maybe all the politicians should have to watch this film and then discuss (more on this in my next post). Buckle up!

I’ve been traveling a lot in the last 3 months: China, Pacific Islands, Singapore, USA and the Caribbean. It’s been an interesting time to just observe and not spend too much time thinking and writing. It’s been an amazing decade, the noughties, a time of profound shifts and shocks.

The nineties seemed so easy in comparison…yes some financial disasters but they are part of the regular boom/busy cycle..but in general times were good and there was an air of stability. Y2K came and went and in all the excitement we had ourselves caught up in a huge stock market bubble…..the tech wreck….horribly followed by 9/11 and the start of a new era in US expansionary policy.

The last decade saw the financial system gutted from the inside out. That it is still standing is a testimony the the magic that one can weave with numbers. The spread of social media and the growth of the internet was nothing if astonishing. The ability to communicate 24/7 took many by surprise and for some completely took over their lives. The rise of Apple….and the iPod generation transformed music, computing and basically created a whole new industry in itself…mind you was it much different to the Walkman and its introduction? Yes Google, Apple, MySpace, Facebook, YouTube and Twitter brought the world of media, in all its forms, to a completely new level. But that’s what technology does…we’re just moving at an exponential rate.

China and the rest of the BRIC gang really came to the party. The US ended the decade on its knees…wrapped up in wars it cannot win, with a financial system in disarray and an economy on its knees. With Japan the first industrialized economy to fail and the US not far behind, the global shape of international relations has changed. Multi-polarity is an uncomfortable idea for many and how that works out will be a real test.

On that subject climate change continues to take center stage notwithstanding the inevitable failure of the Copenhagen talks. The records all show the noughties being the warmest on record but the small matter of fiddling numbers won’t have helped bolster the case of extreme action. When arguments hinge on tiny fractions any question on their veracity can have serious consequences. As a researcher in this area for sometime i must admit even i have become somewhat sanguine over the whole thing.

When I look back over the last decade and forward to the next, it seems as if the same themes will recur:

- Financialisation of Economies: Can we remove the yoke of derivative financial instruments from the real economy?

- Technology: Will social media enable the development of a networked based economy?

- Global Politics: Can we move to a multi-polar world without the necessity of the United Nations as a de facto world government?

- Climate change: How do we manage the change in our climate and the resulting shifts in population and its attendant baggage?

There’s plenty of hope in those questions for moving to a more sustainable world. But any one of those we get wrong could easily send us into a period of darkness. Let’s hope we don’t end up taking this road.

I will explore each topic in more detail over the next few weeks.

Another case of yes, no, maybe, no. The recent G8 summit started with a resounding yes but soon slipped back into a rather tentative not on your nelly.

Simply put the developing or poorer nations have got pressing issues of poverty to deal with and they simply don’t see why they should have to pay for the ecological sins of the developed and richer nations, never mind the fact that they got rich on the back of an imperialist framework!

It just seems that no deal can ever be done without some form of equity payback. There has been some suggestion that revenue raised from either carbon taxes or auctioning of permits could be rebated on a per capita basis. This is simply redistributing the costs in a progressive manner and makes sense on the face of it.

However, can’t see the wealthy punters in the West going for that. What to do?

Maybe it’s time to look for the simplest solution and just get a carbon tax on the books. It’s quick and simple as you only need to tax, at source, basic fossil fuels: oil, gas and coal.

This is something i posted about in 2007 but it’s time to take another look.

Let’s say we have established a price for “carbon”,this being a proxy for externalities caused in the combustion of fossil fuels. The most efficient way to alert the market to this cost is to price it in at source ie where the fossil fuel is sold wholesale. This would be the global oil, gas or coal exchanges.

In my paper, Climate Control, i argued for the establishment of a World Energy Agency, where all fossil fuels were sold through. Simply add on the price of carbon and leave it at that. As a one point global process it would be very simple and then that price information would flow out across the world. End of story.

But there are two issues here:

One is that we are trying to stop carbon quantities breaching certain levels. The price elasticity of fossil fuel consumption may hinder this somewhat as consumers of oil products are slow to change demand in response to price. But there is no doubt that the price rises over the last few years certainly caused some pain in the wallet and made people think about ways of cutting back on petrol usage.

The second issue is interesting. What happens to that money? Who does it belong to? As a charge being levied by the WEA it has no soveriegn recipient. So i propose this “charge” goes into a Global Environmental Contingency Fund (GECF). I want to make clear this is not a tax, it is a cost. It is therefore directly related to an expense which is in this case the use or environmental services.

Let’s stop using the word tax. It’s incorrect and draws attention from the fact that we are simply paying for a service we are using.

So how could the GECF work? I have to give that some more thought but the rough idea is that it would hold those funds in bonds (sovereign) or could lend them out at low interest to fund projects that have a positive environmental benefit. This is the tricky bit. But let’s sit with the first piece. The money comes in and sits in bonds. That’s it. So it’s not being spent on projects of a dubious outcome. As the title implies its a Contingency Fund. We don’t know for sure what will happen in the future. The money can be repaid if required by discounting the price of fossil fuels if it turns out that the cost has turned out to be lower.

What could New Zealand do right now?

Implement a tax and use that revenue to reforest the whole country. This can link into a global emissions trading scheme at some point but the important point is to make sure that the tax collected does not go into the general pot.

People need to see the flow of money from them into pure offsetting activities. If we don’t restrict supply (the only accurate and long lasting solution) then we have to slowly change behaviour and do it in the most straightforward way. A ring fenced and targeted tax is probably the best option we have right now given the likelihood of any global agreement at Copenhagen.

In his new book Lovelock, the father of Gaia theory, paints a somewhat hopeless picture for plant earth and all who travel on her broad back. Actually it’s not all doom and gloom but more and more it seems like our ability to prevent global heating is lessened day by day.

He sees an unstable system accentuating positive feedbacks. This amplification of feedbacks can send out misleading signals i.e. periods of cooling can be just as intense as the system ratchets up the power of an accelerating loop. This is similar to tipping points observed in fisheries when the catch hits all time highs one year with collapse the next….no fish left…look there’s loads…..crash. In this interview he leans towards a population collapse, a general die-off as the likely result of our earthly transgressions.

I think I’m with him on this. Having followed and tried to get involved in the climate debate for the last 10 years I have seen how hard it is to effect change and also that change needs to come at a global level AND from the supply side. All the tinkering in the world will not make a difference and perhaps we should just focus on adaptation instead.

At the same time he’s heading off into space, courtesy of Richard Branson who offered him a ride on spaceship Gaia. Hopefully he’ll be listening to Bowie as he takes off. For all you fans here’s the original video….sit back and take off

Another high level global conference and another list of innocuous plans and goals.

Fiddling whilst the plant burns seems to be infectious. With the global economy collapsing around their ears policymakers have never had a better opportunity to declare a move to a quota based system of fossil fuel extraction.

With oil prices at 5 year lows, down $115 from the highs earlier in the year, I am sure that producers would be willing to sit down and listen.

Whilst global demand is down there is an opportunity to slow emissions at source by setting a target as per the Sustento Framework and making it stick. All the talk of the last few years has been about increasing demand for fossil fuels and the impossibility of reigning that in.

Well right now any demand would be welcome. There has never been a better time to lay it on the line. It’s time to stop pissing around with talk fests and policies which will never actually reduce emissions in any meaningful way.

Set a target for global annual fossil fuel extraction and then stick to it.

It’s taken a bit of time but someone decided to publish my climate change proposal. After being rejected by the Journal Of Climate Change for being too grand, the Environmentalist, the publication of the Institute of Environmental Management and Assessment in the UK, published an amended version last month.

You can read it here if you haven’t read the old version.

The key theme is that we must control what we take out of the earth rather trying to control emissions after use. It also stresses the need for a global carbon budget.

Nothing has happened in recent years to change my thoughts on it. It is a large canvas with many themes to explore. If anyone wants to take on some of those themes in a new piece of research just let me know.