Germany, Denmark and Spain are winners of the new energy economy
BY JIM MADDOX
LONDON – When the deal to save the climate was announced in the early hours of the morning in Copenhagen the first markets to respond were in East Asia. Markets in the Philippines and Indonesia soared as analysts adjusted prices to reflect the global step back from the brink.
“It’s a complete myth that the markets have never believed in climate change,” said Damon Wong, markets analyst with HSBC. “For years long term investments in places like the Philippines have been viewed as likely to be sunk by the end of the century. Literally. Now that civilization is not going to collapse, we can start planning for the long term.”
European markets were also expected to open sharply higher today, as the prospect of massive investment programs in wind and solar power is expected to boost national economies. Unexpected beneficiaries included U.K. shipyards, which are already looking forward to a raft of new orders following Gordon Brown’s commitment to put 100,000 offshore wind turbines in the North Sea over the next five years.
“Building offshore platforms for 100, 000 turbines and the fleet to install and maintain them is a dream come true for shipbuilding,” said John Moore of Swan Hunter shipyards. “With our experience in North Sea drilling this is an area where U.K. shipbuilding should lead the world.”
Big winners from the new energy economy are expected to be Germany, Denmark and Spain, whose investments in renewable energy have created thriving industries. President Sarkozy of France was part of a round of late night diplomacy, which resulted in the replacement of nuclear export agreements with guarantees of technical support for solar power.
The move could make the pan-Mediterranean solar grid a reality, previously thought of as a ‘pipe-dream’ by much of the industry.
“We never understood how we were going to get places like Algeria and Libya to build nuclear power plants anyway,” said a spokesman for French power company EDF. “Now those countries are going to be building solar farms and exporting the power to Europe.”
Many developing countries are expected to benefit from serious funding to preserve tropical forests. The Democratic Republic of Congo, which has long been ravaged by war, may now have a future. Revenues to halt deforestation will become dependent on governance, so the currently compromised government has a powerful incentive to reform.
“Sure these countries are going to lose some of their extractive industry,” said Dimas Stanislav of the World Bank “but they never saw any of the profits from that anyway, and in exchange they got civil war and corruption. Now they can focus on building sustainable economies for themselves.”
There were losers from the deal though, with BP, Exxon Mobil and Shell among companies reeling from the news from Copenhagen yesterday. Shares in the oil majors collapsed as the fossil fuel industry was effectively given just a few decades of operation.
Under targets agreed at the Copenhagen Climate Summit global emissions must fall by at least 90 percent by 2050. Governments have also agreed to pull the plug on the 300 billion dollars in annual subsidies paid to the fossil fuel industry and invest the money in the transition to a clean economy.
“Getting oil out of places like Sakhalin is difficult, dangerous and expensive,” said Wim Cornelius of Shell Exploration and Production, referring to Shell’s new Siberian drilling platforms. “If we’d known that politicians were serious about stopping global warming we’d never have bothered. We’d have left Sakhalin to the whales. Don’t even ask me about the Alberta Tar Sands.”
Meanwhile analysts were questioning the decision of many large fossil fuel companies to wind down their alternative energy business just before it became the hottest ticket in town.
“We thought that was a good move at the time, but thinking about it today it’s hard to see why a business model based on wiping out life on Earth made sense,” said Joe Kazuki, an analyst with Goldman Sachs. “Mind you, back then we still thought sub-prime mortgages were a great bet.”
As tension in the Middle East drained away, private defense firms issued a wave of profit warnings, while the public relations industry instigated a wave of redundancies. Thousands of lobbyists and spin doctors are now looking for work in global capitals around the world.
Some remain skeptical of the longevity of these changes, however.
“We think this is a short-term fad. Just because politicians have done the right thing now, doesn’t mean they’re going to do that consistently,” said one PR practitioner, known for his work with controversial, polluting companies.
“We asked our leaders to put company profits ahead of the survival of the species, and they did. Just because that has now changed doesn’t mean we weren’t good at our jobs. It was a hell of an ask, and we couldn’t stand up to millions of outraged citizens.”
