At least it seems Biden's cap on Russian oil price is working to some degree. World leaders want Putin's oil in the system or else the oil price would skyrocket. At the same time so far it seems the countries buying it are paying the capped lower price so Putin is being punished for his fucked up 'let's create a false historical narrative for the Russian people so they see me as doing something for them' war in Ukraine.
"G7 energy, environment leaders haggle over climate strategy"
Isn't easy dealing with psychopaths, while at the same time weighing economics vs climate.
Biden advisor says oil price cap is working as Russia takes economic hit
Published Fri, Jan 13 2023 5:04 AM EST Updated Fri, Jan 13 2023 5:17 AM EST
Jenni Reid
* The Group of Seven’s oil price cap scheme, which seeks to limit Russian oil export revenues, is working “so far so good,” according to Amos Hochstein, special presidential coordinator to President Joe Biden.
* “There’s no doubt it has so far, as we sit today, achieved our interest,” he told CNBC’s Hadley Gamble in Abu Dhabi on Friday.
* Introduced on Dec. 5, the price cap scheme requires buyers outside of the G7 using Western services such as maritime routes, insurance and financing to pay no more than $60 per barrel for seaborne Russian crude oil.
The Russian oil price cap has so far 'achieved our interest,' Amos Hochstein says ... VIDEO 02:08
The Group of Seven’s oil price cap scheme intended to limit Russian oil export revenues is working “so far so good,” according to Amos Hochstein, special presidential coordinator to President Joe Biden.
“As oil prices have come down, there’s no doubt that the price cap has, so far, and there’s a long way to go, as we sit today, achieved our interest, which was to have continued supply of oil on the market to support economic growth while limiting the value that oil makes for Putin,” he told CNBC’s Hadley Gamble in Abu Dhabi on Friday.
The price cap initiative was introduced on Dec. 5, when the EU stopped taking Russian crude oil. The price scheme requires buyers outside of the G7 using Western services such as maritime routes, insurance and financing to pay no more than $60 per barrel for seaborne Russian crude oil.
EU countries will no longer be able to access seaborne Russian oil products as of Feb. 5.
Hochstein said that, while the scheme was still in its early days, “the fact that the discount on Russian oil has widened is a good thing, we hope that continues. We’ll see where it takes us.”
He did not specify how much the U.S. believes the price ceiling initiative is costing Russia. Finland’s Centre for Research on Energy and Clean Air estimates this toll is at €160 million ($172 million) a day.
The plan faced significant skeptism from some analysts, while it was sketched out by the G-7 and its ally Australia.
Former U.S. Treasury Secretary Steve Mnuchin said the initiative was “not only not feasible, I think it’s the most ridiculous idea I’ve ever heard.”
“I’m glad that where everyone doubted the price cap would work, I think sometimes people have a tendency to think if it’s not been done before it’s not possible. I think the G7 got together, it’s part of the unity of the G7, and I think so far so good,” Hochstein said.
The Biden administration is fending off pressure to lower the Russian oil price cap, insisting that it is achieving its intended goal of limiting Moscow’s oil revenue despite new reports on illegal tankers and new ship tracking data that call the cap’s success into question.
Treasury Department officials have maintained that the cap has been successful so far in achieving its twin goals of driving down Russia’s oil revenue .. https://www.washingtonexaminer.com/tag/war-in-ukraine .. while also keeping its barrels on the market.
ONE YEAR AFTER RUSSIA'S INVASION OF UKRAINE: AN ENERGY WAR AND MASSIVE DISRUPTION
And President Joe Biden told European Commission President Ursula von der Leyen during her White House visit last week that there was “no desire” in Washington to reduce the $60 cap price despite a push from some European countries, the Wall Street Journal reported this week.
But getting a clear picture of the volumes that Moscow is shipping or the price point that buyers in China and India have been paying for Russian supplies is difficult.
That’s due, in part, to the large fleet of unregistered “shadow tankers” Moscow has amassed to sell its oil outside the cap, which trading giant Trafigura estimated last month contains around 400 crude oil tankers, as well as conflicting reports on how high Russian oil is trading.
Russian crude continued to sell for an average of $74 per barrel during the four weeks after the oil price cap came into force, researchers from Columbia University, the Institute of International Finance, the University of California, Los Angeles, and IE University said in a report published earlier this month.
That’s about a quarter above the $60 capped price for Russian crude and $22 higher than the Urals trading price for December, which reflected prices of just $52 per barrel.
Researchers said the high prices were the result of two factors: Russia’s reliance on illegal tankers, which they estimate shipped around 50% of Moscow’s crude exports in December, and a broader lack of transparency and enforcement from Western service providers in implementing the cap.
Though it is not illegal for Moscow to use non-Western shippers to send its oil to non-sanctions coalition countries, such as China and India, the G-7-led coalition has not introduced any central repository to collect attestations from Western service providers or audit those who might not be complying with the cap.
“When you introduce an oil price cap and you ask people how much Russia is getting money, nobody knows,” Maxim Mironov, a finance professor at the IE University Business School and co-author of the research paper, said in an interview.
Earlier this month, JPMorgan Chase also forecast that Russia would be able to maintain its oil output at pre-Ukraine invasion levels of 10.8 million barrels per day, underpinned by strong demand from China and India, which it expects to increase by a combined 1 million bpd this year.
Due in part to Russia’s stronger-than-expected exports, pressure is rising from some coalition countries to lower the capped price to cut into Russian President Vladimir Putin’s war chest. At least three European Union member countries, Estonia, Poland, and Lithuania, pressured the European Commission this week to lower the cap by 5% to $51.45 when it comes up for review at the end of the month, something the Biden administration has resisted.
Stanford University’s International Working Group on Russian Sanctions, a group of 60 independent, international experts, similarly recommended slashing the price cap in its most recent assessment, published on the one-year mark of Russia’s war in Ukraine.
The group called for a $30 total reduction on Russian oil products, to be applied in increments of $10 every two months.
But the United States and other coalition countries have so far resisted this effort — due in part to concerns that slashing the cap could prompt Russia to take its oil off the market, threatening global supply.
This view has been reiterated by Treasury Department officials, including by Treasury's assistant secretary for economic policy, Ben Harris, who told reporters this week the cap had achieved a “best case scenario” outcome in the eyes of U.S. leaders.
Royal Bank of Canada has emerged as the biggest financier of the fossil fuel industry in 2022, knocking JPMorgan from the top spot, as Canadian banks increasingly take on the role as the “lenders of last resort” for controversial carbon-intensive projects.
An annual report .. https://www.ran.org/wp-content/uploads/2023/04/BOCC_2023_vFinal.pdf .. on fossil fuel financing by a coalition of campaign groups organised by the Rainforest Action Network found that RBC extended $42.1bn in funding to fossil fuel companies and projects in 2022, including $4.8bn for tar sands. Scotiabank, another Canadian bank, also appeared in the list of the top 10 financiers.
The researchers said Canadian banks were becoming the backstop for fossil fuel financing, potentially picking up the slack for financing projects and companies shunned by lenders in Europe. Canadian banks have provided $862bn to fossil fuel companies since the signing of the Paris Agreement, the study found.
Richard Brooks, climate finance director at Stand.earth, an environmental group involved in the research, said it was “obscene that [RBC] is now the world’s dirtiest banker for fossil fuels”.
“RBC is moving in completely the wrong direction, dragging our climate ambitions backwards and positioning Canadian banks as fossil fuels’ lenders of last resort,” he added.
RBC said the “report does not measure progress in meeting our climate goals”, adding that it had set initial interim emissions reduction targets for lending in three key sectors, as well as establishing the RBC Climate Action Institute, which was “focused on advancing climate policy research and action”.
Scotiabank declined to comment.
The report comes as the role banks play in driving global warming through the financing of carbon-intensive companies and projects faces intense scrutiny. It found that 43 of the banks, including RBC and JPMorgan, were part of the Net Zero Banking Alliance, whose members have committed to take action on climate, while 49 had pledged net zero emissions.
The research found that fossil fuel financing from the world’s 60 largest banks hit $673bn in 2022, down 16 per cent from the previous year. The figure was the lowest total between 2016 and 2022, but this was because of “unusual geopolitical and economic conditions, not shifts in bank policy”, said the report.
Oil and gas companies may not be investing as aggressively in new production as they were a decade ago, but in the wake of Russia’s war on Ukraine last year and the subsequent energy crisis, many oil and gas companies reported record profits, and some oil majors such as ExxonMobil and Shell asked for no financing from banks in 2022.
The research found that 30 companies looking to expand their liquefied natural gas operations sought to almost double the financing in 2022 compared with 2021, as countries such as Germany ramped up the use of LNG instead of gas from Russia.
Maaike Beenes, campaign lead for banks and climate at BankTrack, called the decision by banks to boost their financing for LNG in the past year irresponsible.
“These gas projects will not be able to address Europe’s short-term energy needs or reduce household bills — instead they will lock us into dependence on fossil fuels for decades,” she said.
US banks continued to dominate fossil fuel financing, accounting for more than a quarter of all financing between 2016 and 2022. JPMorgan was the second biggest financier of fossil fuels last year, with $39.2bn in financing, after topping the list for six years.
JPMorgan said it provided financing “across the energy sector”, which included “supporting energy security” helping clients transition to cleaner business models.
Other US banks on the list included Wells Fargo, Bank of America and Citigroup. Citi and Wells Fargo declined to comment, while BofA did not respond to a request for comment. Several Japanese banks also appeared in the top 10.
The 60 banks channelled $150bn last year into the top 100 companies expanding fossil fuels investments, the report said.
Although some banks had fossil fuel financing policies in place, these often did not cover equity and bond underwriting, and often targeted specific project finance but did not apply to general corporate financing, it found.
Will COP28 End Up as the Greatest Flop in Global Climate Diplomacy Thus Far?
"G7 energy, environment leaders haggle over climate strategy"
Environmental economist James K. Boyce analyzes the roadblocks to climate action at the COP28 climate summit.
By C.J. Polychroniou ,
Truthout Published December 9, 2023
Toeolesulusulu Cedric Schuster, Minister for Natural Resources and Environment of Samoa, speaks on behalf of the Alliance of Small Island States on day nine of the UNFCCC COP28 Climate Conference on December 9, 2023 in Dubai, United Arab Emirates. Sean Gallup / Getty Images
Global climate summits have rarely produced tangible results. More than anything, they have proven to be nothing less than platforms for verbose empty promises and extensive lobbying for the fossil fuel industry. COP28, currently underway in Dubai, may very well end up as the greatest flop so far in global climate diplomacy. Aside from the fact that it is presided over by the CEO of the United Arab Emirates’ state-run oil company, global leaders like Joe Biden and Xi Jinping have decided to skip the conference.
In the exclusive interview for Truthout that follows, leading environmental economist James K. Boyce .. https://www.jameskboyce.com/ .. discusses the main roadblocks to climate action facing COP28 and argues for the need to introduce global carbon pricing as an essential policy towards decarbonization. Boyce is emeritus professor of economics and senior fellow at the Political Economy Research Institute (PERI) at the University of Massachusetts Amherst. He is the author of numerous books, including The Political Economy of the Environment (1972), Economics for People and the Planet: Inequality in the Era of Climate Change (2019) and The Case for Carbon Dividends .. https://www.jameskboyce.com/the-case-for-carbon-dividends(2019).
C. J. Polychroniou: COP28 President and United Arab Emirates climate chief Sultan Al Jaber said there is “no science .. https://www.theguardian.com/environment/2023/dec/03/back-into-caves-cop28-president-dismisses-phase-out-of-fossil-fuels” behind demands for phasing out fossil fuels; in addition, he expressed doubts that there is a road map for the phase out of fossil fuels that would allow sustainable development, “unless [we] want to take the world back into caves.” Isn’t this already sufficient evidence that COP28 will be yet another global climate summit flop? Indeed, why would any country serious about tackling the climate crisis agree to a global climate summit that is hosted by a global leader in the oil and gas industry and whose vested interests are therefore in a product that puts the whole planet at risk? Be that as it may, what are the biggest roadblocks to climate action facing COP28?
James K. Boyce: Look, there is a reason these things are called negotiations. And there is something to be said for taking the fight to the heart of the beast.
There are powerful people who profit greatly from fossil fuel extraction. We’re talking here about big corporations as well as oil fiefdoms. But the vast majority of us, and the generations to come, will benefit far more by phasing them out. So there are opposing interests at play, and the issue is who will prevail.
It is ironic, of course, to see a climate summit happening in the Emirates. But the big roadblock isn’t where the summit is held. It is the vested interests worldwide who want to keep us hooked on fossil fuels as long as they can. This is a transnational alliance among people whose commitments to any particular place are weaker than what bonds them together: the pursuit of self-interest. Rising temperatures could make the Emirates uninhabitable in coming decades, but billionaires can buy safe landings in a more salubrious place. It is the people around the world who are more attached to the places they live and work, people who cannot easily move, who are at greatest risk.
It is important to realize that the climate crisis is not an all-or-nothing phenomenon. We have already entered an era of crisis, and this will intensify in the years ahead. The real question is how bad it will get. And that depends on what we do today. There is never a point where all is lost, because it can always get worse. Nothing could be more irresponsible than to throw up our hands and say, “Game over.”
The head of the International Monetary Fund said at the COP28 climate summit that decarbonization cannot proceed without carbon pricing. Could carbon pricing policies that incentivize reduced use of fossil fuels do enough to hold global warming to 1.5 degrees Celsius? The projections say that fossil fuels — oil, coal and natural gas — will continue to provide the bulk of our energy needs for the foreseeable future. So, how effective can a carbon tax be in transforming pathways to reach zero emissions?
She did not say that decarbonization cannot proceed at all without carbon pricing. What she said was that it will not happen fast enough. She is right, but only partially right: We need a carbon price as part of the policy mix, but not just any carbon price. The price must be anchored to a hard emissions-reduction trajectory.
As I have written elsewhere (here .. https://onlinelibrary.wiley.com/doi/full/10.1002/gch2.202200204 , for example), there is a straightforward way to do this: Any country that is serious about tackling climate change could put a strict limit on the amount of fossil carbon — carbon embodied in oil, natural gas and coal — that is allowed to enter its economy. This limit would decline — the cap would tighten — year by year, on a path to net-zero emissions by a specific date, say 2050.
A hard limit is different from a carbon tax. A tax puts a price on carbon and lets the quantity of emissions adjust. A hard limit sets the quantity and lets the price of fossil fuels adjust. The carbon price that results from this limit drives a wedge between the price paid by fossil fuel users and the price received by fossil fuel producers. The first goes up as the supply of fossil fuels is curtailed, while the second goes down as the market contracts.
The higher price to consumers of fossil fuels is not a bug of the policy, it’s a feature: It helps steer the consumption and investment decisions of firms and individuals away from use of fossil fuels toward alternative fuels and energy efficiency. Like it or not, prices matter. They matter a lot. Most investment in the world economy — about three-quarters of the total — is private, not public. And private investment responds above all to price signals.
The problem, of course, is that higher fuel prices on their own would hit consumers, including working families who already struggle to make ends meet. For this reason, many politicians — even those who are not on the take from the fossil fuel lobby — have been reluctant to embrace carbon pricing in any form. But there is a straightforward way to solve this problem, too.
Carbon sequestration should be promoted separately from emissions reductions, not as a substitute for them.
First, auction off the permits to bring fossil carbon into the economy. Don’t give them away, as often is done in “cap-and-trade” systems. For fossil fuel suppliers, the permit price becomes part of the cost of doing business. It’s passed on to final consumers in the prices of goods and services in proportion to the amount of fossil carbon used in their production and distribution.
Second, return most or all of the money from the permit sales straight back to the people as equal dividends to everyone in the country. Low-income households, who consume less than average amounts of carbon for the simple reason that they don’t have much purchasing power, get back more than they pay in higher prices. Wealthy households pay more than they get back. The middle class more or less breaks even, but most of them come out ahead, too, because the dividends are pulled up by the outsized carbon footprints of the rich. So the majority of the people benefit from this policy in straight pocketbook terms, not even counting the benefits of a more stable climate and cleaner air. This is not a pipe dream. Canada already has a carbon dividend policy; they call it the Climate Action Incentive payment .. https://www.canada.ca/en/department-finance/news/2022/11/climate-action-incentive-payment-amounts-for-2023-24.html . The Canadian system did not materialize overnight; it was the product of grassroots activism .. https://canada.citizensclimatelobby.org/about-ccl/ , careful preparation .. https://www.youtube.com/watch?v=YUSO6dpQ3XE .. and committed political leadership .. https://www.bloomberg.com/news/articles/2023-07-13/how-canada-figured-out-a-carbon-tax-and-gave-the-money-back?leadSource=uverify%20wall . In the U.S., Sen. Chris Van Hollen (D-Maryland) has introduced landmark legislation .. https://www.govtrack.us/congress/bills/117/s5338/text .. that would place a hard limit on carbon emissions and rebate the money from permit auctions as dividends, coupled with an environmental justice guarantee that mandates cuts in air pollution in overburdened communities.
Some argue that carbon offsetting is more effective than carbon pricing. Can carbon offsets have a significant impact on global carbon emissions?
Offsets let polluters keep polluting if they pay for things that supposedly compensate for their emissions, like planting trees. Efforts to increase carbon sequestration — in soils and forests, for example — will be an important part of the climate solution, too. But offsets are a deeply flawed way to promote this goal for three reasons: It is hard to verify that the offsetting activities really happen; where verified, it is hard to know whether they add to what would have happened without the offsets; and even where verified and additional, it is impossible to know how long they will last. For these reasons, carbon sequestration should be promoted separately from emissions reductions, not as a substitute for them.
What about the argument that carbon pricing, with its emphasis on “market vs. regulation,” frames the issue of climate change as a market failure instead of a fundamental system failure which requires, in turn, a systematic transformation?
This is a false dichotomy. Many regulations affect prices. The policy I outlined is an example: It regulates the amount of fossil carbon entering the economy, and this affects the price of fossil fuels. Prices and regulations are core elements of economic systems. And any policy that weans economies off fossil fuels is a pretty big systematic transformation.
There are some 70 different approaches to carbon pricing around the world, but setting up a global carbon pricing system doesn’t seem to have much support among politicians. In fact, the U.S. doesn’t even have a carbon tax on a national level. How likely is it that global leaders would agree to a proposal of setting up a global pricing system at the COP28 or any time in the near future?
What I am proposing here is a strict limit on the amount of carbon allowed to enter the economy, a side effect of which is a carbon price emerging from permit auctions. You could have a carbon tax alongside it that acts as a floor price in permit auctions, providing certainty that the minimum price will rise over time.
This does not require agreement on a global pricing system. It is something that countries can adopt independently. We do not have a global government that could implement a global carbon limit or tax. We have national governments. The key is to craft a policy that can win durable support from the country’s people, regardless of what other countries do. The policy I sketched does exactly that: The majority, including working people, come out ahead financially as well as environmentally. Rather than holding national policies hostage to an international agreement, individual countries can forge ahead and inspire others to do the same.
You were among the first economists to address the political economy of the environment — in fact, even before climate change became a prominent issue in the international political agenda. Have the dynamics of environmental degradation changed in any meaningful way since you first started researching and writing about the problem?
The core of the issue is that big inequalities of wealth and power allow those on top to benefit from activities that harm the environment while shifting the costs onto others. For this reason, efforts to protect the environment must go hand in hand with efforts to build more just and equitable societies. Oligarchy is the enemy of the environment.
In this respect, I would say that the dynamics of environmental degradation have not changed. What has changed is the extent to which people understand the problem. When I started working on this, there was a widespread view that inequality had little or nothing to do with the environment. Indeed, some alleged that the poor were the main drivers of environmental destruction, and that the rich would be our enlightened saviors. It was bullshit then, and it is bullshit now. What has changed is that fewer people believe it. The environmental justice movement helped to lead the way. Today more and more people are connecting the dots.
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C.J. Polychroniou is a political scientist/political economist, author, and journalist who has taught and worked in numerous universities and research centers in Europe and the United States. Currently, his main research interests are in U.S. politics and the political economy of the United States, European economic integration, globalization, climate change and environmental economics, and the deconstruction of neoliberalism’s politico-economic project. He is a regular contributor to Truthout as well as a member of Truthout’s Public Intellectual Project. He has published scores of books and over 1,000 articles which have appeared in a variety of journals, magazines, newspapers and popular news websites. Many of his publications have been translated into a multitude of different languages, including Arabic, Chinese, Croatian, Dutch, French, German, Greek, Italian, Japanese, Portuguese, Russian, Spanish and Turkish. His latest books are Optimism Over Despair: Noam Chomsky On Capitalism, Empire, and Social Change (2017); Climate Crisis and the Global Green New Deal: The Political Economy of Saving the Planet (with Noam Chomsky and Robert Pollin as primary authors, 2020); The Precipice: Neoliberalism, the Pandemic, and the Urgent Need for Radical Change (an anthology of interviews with Noam Chomsky, 2021); and Economics and the Left: Interviews with Progressive Economists (2021).
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