September, 22 2010, 11:15am EDT

Memorandum: New Storylines Emerging From Climate Negotiations
WASHINGTON
United Nations climate negotiations will resume in Tianjin, China, on
October 4, 2010. This is the first time formal international climate
negations are taking place in China. Several stories are developing that
you may wish to cover. Friends of the Earth is prepared to provide you
with information and contacts related to each of these stories, should
you decide to pursue them.
Lack of climate legislation in U.S. may lead to less tolerance for U.S. efforts to torpedo Kyoto Protocol
The U.S. remains the only wealthy country that has not ratified the
Kyoto Protocol, the only international instrument related to climate
change that contains legally binding emission reduction targets. The
first period of emission reduction commitments under the Kyoto Protocol
ends in 2012, the point at which, according to the Protocol, a second
commitment period is supposed to start.
Instead of supporting this second commitment period, at the Copenhagen
climate talks in December 2009, the U.S. championed the "Copenhagen
Accord," a weak, nonbinding document that features national pledges to
reduce emissions that countries individually put forward, regardless of
science, equity, and what national pledges add up to in aggregate. (The
Kyoto Protocol assigns an aggregate and individual mitigation targets
for developed countries, except the U.S.) The U.S. claims not to take a
position on the Kyoto Protocol, but the "pledge-based" or "bottom-up"
approach it has promoted in the Accord is, in practice, incompatible
with a second commitment period for the Protocol and, in effect, is
therefore an attempt to replace the Protocol with a far weaker
substitute.
In the run-up to the Copenhagen summit and in the months afterward,
many countries felt compelled to tolerate U.S. efforts to weaken
international climate policies because they believed this was the only
way to bring the U.S. on board, given the precarious state of U.S.
domestic climate legislation. However, with U.S. legislation now
seemingly off the table for the next few years, it is likely that the
U.S. will come under increased criticism in Tianjin, with the
possibility that many countries will propose moving forward on
mitigation and other aspects of the negotiations without the U.S. This
backlash has already started, as countries have increasingly voiced
concerns about the role of the U.S. in recent months.[1] For more information, please see the joint NGO analysis, "What Role for the U.S.? A Question for the Rest of the World."[2]
Lack of climate legislation in U.S. may lead developing countries to buck U.S. demands
The lack of U.S. climate legislation will have another likely effect:
increasing the bargaining power of poor countries. For the past several
years, the United States has acted aggressively with regard to
international climate negotiations to try and win concessions from
developing countries. For example, to compel developing countries to
associate with the Copenhagen Accord, the Obama administration
threatened to withhold climate finance from countries outspoken in their
opposition to it. Obama carried out this threat in the cases of Bolivia
and Ecuador. U.S. Special Climate Envoy Todd Stern has also vigorously
pressed to shift the burden to address climate change onto many
developing countries by calling for an agreement that is "legally
symmetrical" with "the same elements binding on all countries, except
the least developed."[3]
The U.S. has especially pushed China to adopt greenhouse gas reduction
commitments, making particular demands about the measurement, reporting,
and verification of its mitigation actions. More recently, the U.S.
articulated that it will block forward movement on establishing a global
climate fund if its demands on mitigation and transparency from
developing countries, especially China, aren't met. Stern issued a new
ultimatum at the Geneva Dialogue on Climate Finance earlier this month,
saying, "We are not going to move on the Green Fund [a UNFCCC climate
fund to help developing countries adapt to and mitigate climate change]
and the $100 billion [in long-term financing that the U.S. had
previously promised to help deliver]. If the issues that were central to
the Copenhagen Accord that were part of the balance of the Copenhagen
Accord, including mitigation and transparency, don't also move."[4]
The U.S.'s bargaining chips in international climate talks have
historically hinged on two promises: the prospect of binding U.S.
emissions cuts and the U.S.'s provision of climate finance. But the
U.S. has largely lost both of these leverage points. Without the
prospect of U.S. climate legislation passing anytime soon, the Obama
administration has lost much of its credibility on this issue and its
ability to make demands of developing countries. With its recent attempt
in Geneva to hold climate finance hostage to more actions from
developing countries, particularly in the areas of mitigation and
transparency, the U.S. has reinforced its image as a bad faith
negotiator making onerous and unreasonable demands.
China has lower per capita emissions and higher poverty than the U.S., yet is investing much more aggressively in clean energy
As the climate meeting takes place in China, much attention in the U.S.
is likely to be directed toward comparisons of the two countries.
Critics who wish to engage in China bashing for domestic political
purposes may point out that China now produces more total greenhouse gas
emissions than the U.S., implying that China should act first when it
comes to emissions reductions.
However, per capita, the U.S. is still a far larger polluter than China
(19.2 vs. 4.9 metric tons in 2008) and the U.S. has a much greater
economic capacity to act. China is still a developing country. Some
one-third of China's population lives on less than $2 a day; per capita
GDP in the U.S. is some eight and a half times higher than in China.
Moreover, a significant portion of China's emissions footprint actually
belongs to developed countries, as a quarter of Chinese emissions come
from producing goods that are exported to, and consumed in, places like
the U.S.[5]
Finally, because carbon dioxide emissions remain in the atmosphere for
decades, a nation's cumulative (rather than annual) greenhouse gas
emissions are central to determining its responsibility to act. Over the
last century, the U.S. has put far more greenhouse gases into the
atmosphere than China.
Despite this, the Chinese appear to be taking climate change and clean
energy development substantially more seriously than the U.S. on many
levels. For example, an estimated 12 percent of the 2009 stimulus
package in the U.S. is considered green, compared to 34 percent of
China's 2009 stimulus.[6]
United Steelworkers challenge China's green development
The United Steelworkers union filed a 5,800-page petition with the U.S.
Trade Representative on September 9, 2010, alleging that China has
violated international trade law by providing subsidies to its clean
energy industry. The Obama administration must decide by October 24 if
it will take the petition forward for further action at the World Trade
Organization (WTO). Although the Steelworkers' complaint focuses on
China, it also points to the continued failure of the U.S. government to
enact comprehensive climate policies and scale up investment in the
emerging clean energy sector, which will heavily disadvantage the
competitive position of the U.S. and U.S. workers moving forward.
This move by the U.S. Steelworkers will likely have repercussions in
the UN climate negotiations. The U.S. has harshly criticized China for
its greenhouse gas emissions, yet China is now being attacked for doing
exactly what the U.S. has demanded of it. The impact of trade measures
on carbon emissions has historically been a hot-button issue. For
example, in 2009 developing countries criticized the Waxman-Markey bill
passed by the U.S. House of Representatives for its proposed "border
adjustment measure," a tariff on carbon-intensive imports of countries
deemed not to have taken sufficient action on climate change. Moreover,
the Steelworkers' petition will raise questions about one of the top
priorities of the climate negotiations: climate finance. Funding for
developing countries to transition to clean technologies is part of the
UN Framework Convention on Climate Change, which requires wealthy
countries to help developing countries build up locally appropriate,
endogenous clean energy industries. Will industries in developed
countries now launch trade wars as countries make good on their UNFCCC
promises?
It is also important to note that the WTO unduly constrains the ability
of governments to act in the public interest, in this case, to enact
effective climate policies. For example, many existing and proposed
climate-related policies and programs run afoul of WTO rules. President
Obama would surely not acquiesce in the face of trade challenges to
policies designed to protect both U.S. livelihoods and the environment.
Developing countries are certain to point out this contradiction in the
Tianjin negotiations. For a developing country perspective on the
Steelworkers' petition, and on how the WTO's subsidies agreement is
prejudiced against developing countries, please see Trade: Beware of U.S. Protectionism by Martin Khor.[7]
A Way Forward
It is clear that domestic politics at this time will not allow the
United States to lead global efforts to tackle climate change. The Obama
administration must stop pretending it can lead. It must cease its
efforts to drag the rest of the world down to its very low level of
ambition, when what the climate crisis demands is far higher ambition
from all developed countries.
In 2007, international climate negotiators developed a solution to
bring the slow-moving U.S. on board with global climate action--a
solution that won the support of the Bush administration. The 2007 Bali
Action Plan included a carve-out for the United States: a special
section (paragraph 1(b)(i)) to ensure that the U.S. would make emissions
reductions (under the UNFCCC's Long-term Cooperative Action negotiating
track) that were comparable to those made by other wealthy countries
under the Kyoto Protocol negotiating track.
Instead of trying to torpedo the Kyoto Protocol, the U.S. should simply
plug its weak reduction pledge (currently 3-4 percent below 1990 levels
by 2020) into its own special section of the Bali Action Plan while
other developed countries continue with emissions reductions under the
Protocol. This would allow the world to move forward and avoid the
danger of a gap between Kyoto commitment periods, during which binding
emissions reduction targets for other developed countries could
disappear. The European Union, rather than continuing its strategy of
catering to the U.S., could reemerge as a climate leader and take up the
cause of binding, equitable, and science-based emissions targets.
[1]
See, for example, "U.S. Steps Up Its Effort Against a European System
of Fees on Airline Emissions," New York Times, September 10, 2010. https://www.nytimes.com/2010/09/10/business/energy-environment/10emit.html.
[2] "What Role for the U.S.? A Question for the Rest of the World." https://www.twnside.org.sg/title2/climate/pdf/assessments/Bonn_II_U.S._Assessment_11_June_2010.pdf
[3]
U.S. Special Envoy for Climate Change Todd Stern Keynote Address As
Prepared May 18, 2010, Brookings Conference-- Energy and Climate Change
2010: Back to the Future, https://www.brookings.edu/~/media/Files/events/2010/20100518_energy_clima....
[4] Remarks of Special Climate Envoy Todd Stern in Geneva in September 2010: https://www.state.gov/g/oes/rls/remarks/2010/146821.htm
[5] Briefing by the Tyndall Centre for Climate Change Research, July 9, 2008: https://www.tyndall.ac.uk/sites/default/files/tyndallpress09july08.pdf
[6] "Stimulus is Greenest in South Korea and China," Reuters, Sept. 25, 2009. https://www.nytimes.com/2009/09/25/business/global/25green.html
[7] Khor, Martin. "Watch out for New U.S. Protectionism Abroad," The China Post, September 15, 2010. https://www.chinapost.com.tw/commentary/the-china-post/special-to-the-china-post/2010/09/15/272607/Watch-out.htm
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Sanders Calls for Repeal of Trump-Era Deregulation Blamed for Bank Collapses
"We cannot continue down the road of more socialism for the rich and rugged individualism for everyone else," said the U.S. Senator from Vermont.
Mar 13, 2023
Sen. Bernie Sanders on Sunday night called for a full repeal of the 2018 banking deregulations signed into law by former President Donald Trump and declared that "now is not the time for taxpayers bail out Silicon Valley Bank"—the California bank that collapsed Friday.
On Sunday evening, the U.S. Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation (FDIC) issued a joint statement outlining a plan to make all deposits for Silicon Valley Bank as well as Signature Bank, which was shuttered by New York regulators earlier in the day, available to costumers Monday morning.
In his statement, Sanders said, "If there is a bailout of Silicon Valley Bank, it must be 100 percent financed by Wall Street and large financial institutions. We cannot continue down the road of more socialism for the rich and rugged individualism for everyone else. Let us have the courage to stand up to Wall Street, repeal the disastrous 2018 bank deregulation law, break up too big to fail banks and address the needs of working families, not the risky bets of vulture capitalists."
The statement the Fed, Treasury, and FDIC noted that "no losses" associated with the rescue plan "will be borne by the taxpayer," though the extraordinary intervention—the largest of its kind since the 2008 financial collapse—is still seen by many economists and financial experts, even if bank investors and debt holders are not protected, as a "bailout" for the financial industry only made possible by taxpayers.
"Let us have the courage to stand up to Wall Street, repeal the disastrous 2018 bank deregulation law, break up too big to fail banks and address the needs of working families, not the risky bets of vulture capitalists."
Warren Gunnels, longtime staffer and top advisor to Sanders, made the connection between venture capitalists clamoring for a speedy government intervention to save the banking sector from a wider shock and the same kind of people who have adamantly opposed financial relief for the struggling middle- and working-class Americans:
As the Washington Postreports, "The decision by Treasury to backstop all deposits at SVB and Signature — not just those up to $250,000 that are insured under federal law — rested on a judgment that it was necessary to avoid a wider 'systemic' meltdown. The move will likely ignite a political firestorm over the decision to protect the assets of tech firms, venture capitalists, and other rich people in California."
In 2018, as Sen. Mike Crapo's (R-Idaho) Economic Growth, Regulatory Relief, and Consumer Protection Act was making its way through Congress, Sanders took to the floor of the U.S. Senate to oppose the bill, warning of exactly this kind of economic disaster if the deregulation was approved:
"Let's be clear," Sanders said Sunday night in his statement. "The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed. Five years ago, the Republican Director of the Congressional Budget Office released a report finding that this legislation would 'increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail.'"
"Unfortunately," he added, "that is precisely what happened."
On Monday, Lindsey Owens, executive directive of the progressive economic watchdog Groundwork Collaborative, focused on the additional lending facility made available to the bank customers and said the latest actions expose a deep "rot" within the Federal Reserve—especially as the central bank squeezes workers with increasingly higher interest rates, hikes that played at least a part in the banks' failures.
"This weekend, the Federal Reserve moved mountains to protect wealthy venture capitalists from the fallout of its aggressive interest rate hikes," said Owens. " Today, the Fed will return to its core work of pushing hardworking Americans out on the street to meet its inflation goals."
Such a set of policies, said Owens, shows the Fed "is irreparably broken and can no longer be trusted to go it alone on monetary policy. As Congress works to re-regulate mid-size banks after the misguided 2018 rollbacks that set this weekend's crisis in motion, they should also address the rot at the Fed."
In a statement on Sunday ahead of the government's rescue plan announcement, Matt Stoller, research director for the American Economic Liberties Project, made the case against any taxpayer bailout for SVB.
"Silicon Valley Bank was a badly managed and corrupt institution that entangled itself with powerful actors in the technology industry," Stoller argued. "The operative question government regulators are now facing is whether to use taxpayer funds to bail out the depositors from the failures of SVB's management."
But a full bailout, Stoller warned, "will only encourage other large regional banks to take similar risks in the future, just as Silicon Valley Bank did."
While bank investors and executives will not be included in the emergency actions announced on Sunday, Rep. Ro Khanna, the California Democrat who represents Silicon Valley, applauded the actions taken by Treasury to keep depositors whole.
Among his constituents impacted by the bank's collapse, he said, were "non-profit leaders, small business owners, start-up founders, and impacted employees of small businesses."
While expressly arguing that government intervention "should not and need not ... cost taxpayers a dime" during a news interview Sunday morning, Khanna later applauded the government plan while echoing Sanders' call for a reversal of the deregulation that led to the current crisis.
"I am glad that the Department of Treasury listened and moved to protect workers, the innovation pipeline, and the economy at large," Khanna said. "But the work doesn't end here. We've known since 2008 that stronger regulations are needed to prevent exactly this type of crisis. Congress must come together to reverse the deregulation policies that were put in place under Trump to avert future instability.”
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'Shocking': Saudi Aramco Posts Largest-Ever Annual Profit for a Fossil Fuel Company
"These extraordinary profits, and any future income derived from Aramco, should not be deployed to finance human rights abuses, cover them up, or try and gloss over them," said Amnesty International.
Mar 12, 2023
Saudi Aramco, an oil giant almost entirely owned by the government of Saudi Arabia, announced Sunday that it brought in a staggering $161.1 billion in profits last year as it joined other fossil fuel companies in capitalizing on energy market turmoil sparked by Russia's invasion of Ukraine.
The company's profit figure for 2022 is the largest ever recorded by an oil corporation. Amin Nasser, Aramco's CEO, declared on an earnings call that "this is probably the highest net income ever recorded in the corporate world."
For comparison, ExxonMobil—the second-largest oil company in the world behind Aramco—reported $56 billion in net income last year, a record for the U.S. firm but nowhere close to the Saudi corporation's haul.
"It is shocking for a company to make a profit of more than $161.1 billion in a single year through the sale of fossil fuel—the single largest driver of the climate crisis," Agnès Callamard, secretary-general of Amnesty International, said in a statement. "It is all the more shocking because this surplus was amassed during a global cost-of-living crisis and aided by the increase in energy prices resulting from Russia's war of aggression against Ukraine."
Aramco said its banner profits—driven by "stronger crude oil prices, higher volumes sold, and improved margins for refined products"—were up nearly 47% compared to 2021, a windfall the company has used to reward investors.
"Aramco declared a dividend of $19.5 billion for the fourth quarter, to be paid in Q1 2023," the oil firm said in a press release. "This represents a 4.0% increase compared to the previous quarter, aligned with the company's dividend policy aiming to deliver a sustainable and progressive dividend. Additionally, the Board of Directors also recommended the distribution of bonus shares to eligible shareholders in the amount of one share for every 10 shares held."
While Aramco said it intends to devote resources to "lower-carbon technologies" and carbon-capture initiatives that climate campaigners have dismissed as false solutions, the company made clear that it has no intention of shifting aggressively away from fossil fuel production—a transition scientists say is necessary to avert climate catastrophe.
In its earnings announcement, Aramco said it is committed to "expanding oil, gas, and chemicals production."
Saudi Arabia is the second-largest oil producer in the world behind the United States. Late last year, the Saudi-led Organization of the Petroleum Exporting Countries (OPEC) agreed to slash oil production by 2 million barrels a day in a bid to keep prices high—benefiting companies like Aramco, Exxon, and other fossil fuel majors that have posted record-shattering 2022 profits as households struggle to heat their homes.
"It is past time that Saudi Arabia acted in humanity's interest and supported the phasing out of the fossil fuel industry, which is essential for preventing further climate harm," Callamard said Sunday. "These extraordinary profits, and any future income derived from Aramco, should not be deployed to finance human rights abuses, cover them up, or try and gloss over them."
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Trump-Era Deregulation Deemed a Key Culprit in the Failure of Silicon Valley Bank
"President Trump and congressional Republicans' decision to roll back Dodd-Frank's 'too big to fail' rules for banks like SVB—reducing both oversight and capital requirements—contributed to a costly collapse," said Sen. Elizabeth Warren.
Mar 12, 2023
In 2018, ignoring the vocal warnings of experts and advocacy groups, the then-Republican-controlled Congress passed legislation that weakened post-financial crisis regulations for banks with between $50 billion and $250 billion in assets, sparking fears of systemically risky failures and more taxpayer bailouts.
Silicon Valley Bank (SVB), the California-based firm that collapsed on Friday, controlled an estimated $212 billion, leading analysts and lawmakers to argue that the 2018 law made the institution's market-rattling failure and resulting federal takeover more likely.
Sen. Elizabeth Warren (D-Mass.), who was an outspoken opponent of the deregulatory measure, said in a statement Friday that "President Trump and congressional Republicans' decision to roll back Dodd-Frank's 'too big to fail' rules for banks like SVB—reducing both oversight and capital requirements—contributed to a costly collapse."
But the GOP wasn't alone in its support for Sen. Mike Crapo's (R-Idaho) Economic Growth, Regulatory Relief, and Consumer Protection Act, which critics dubbed the Bank Lobbyist Act.
As Warren noted as the bill was flying through Congress, a number of Democrats—including Sens. Mark Warner (D-Va.), Joe Manchin (D-W.Va.), and Jon Tester (D-Mont.)—were integral to the legislation's passage, which led almost immediately to more bank consolidation.
Prior to the enactment of the Crapo bill, which then-President Donald Trump signed into law on May 24, 2018, banks with more than $50 billion in assets were subject to enhanced liquidity mandates and more frequent stress tests aimed at ensuring they could weather economic turmoil.
The 2018 law raised the threshold for the more stringent regulations to $250 billion or higher, a gift to banks like SVB that had been working for years to gut post-crisis regulations implemented under the Dodd-Frank Act of 2010. The diminished oversight, some argued, is at least partly to blame for SVB's crisis.
"The collapse of Silicon Valley Bank was totally avoidable," Rep. Katie Porter (D-Calif.) wrote on Twitter. "In 2018, Wall Street pushed a deregulation bill that allowed banks like SVB to take reckless risks. It passed, even as I and many others warned of the risks. I am writing legislation to reverse that law."
As The Leverreported Friday, SVB specifically pushed Congress in 2015 to hike the regulatory threshold to $250 billion, with the bank's president touting its "strong risk management practices."
"Three years later—after the bank spent more than half a million dollars on federal lobbying—lawmakers obliged," the outlet added.
The collapse of SVB, a major lender to tech startups, was the second-largest bank failure in U.S. history and the biggest since the 2008 crisis. SVB's failure came days after it announced it sold $21 billion worth of bonds at a substantial loss, triggering fears about the firm's health and a run on the bank that was intensified by venture capitalists' calls for startups to pull their money.
The bank's last-ditch efforts to raise capital and find a buyer failed, prompting regulators to seize its assets and begin efforts to make depositors whole. (SVB reportedly paid out bonuses to U.S. employees just hours before federal regulators took over.)
The American Prospect's David Dayen noted that "because the depositors holding the bag at SVB are Very Important People, there's going to be intense pressure for a bailout."
"Hedge fund titan Bill Ackman is already calling for one," Dayen observed. "Larry Summers told Bloomberg that the financial system should be fine, as long as depositors get every penny of their money back, which would be a $150 billion bailout."
In an appearance on "Face the Nation" Sunday morning, Treasury Secretary Janet Yellen pledged that "we are not going to do that again," referring to the bank bailouts of 2008.
"But we are concerned about depositors," Yellen said, "and we're focused on trying to meet their needs."
The Federal Deposit Insurance Corporation (FDIC) is currently seeking a buyer for SVB, with final bids due by Sunday afternoon, according toBloomberg.
The Washington Postreported Sunday that "federal authorities are seriously considering safeguarding all uninsured deposits at Silicon Valley Bank, weighing an extraordinary intervention to prevent what they fear would be a panic in the U.S. financial system."
"Although the FDIC insures bank deposits up to $250,000, a provision in federal banking law may give them the authority to protect the uninsured deposits as well if they conclude that failing to do so would pose a systemic risk to the broader financial system," the newspaper reported. "In that event, uninsured deposits could be backstopped by an insurance fund, paid into regularly by U.S. banks."
"This predictable disaster should give serious pause to the current MAGA House majority who are pursuing further rollbacks of consumer financial protections after taking money hand over fist from Wall Street banks."
In a statement on Saturday, Liz Zelnick of the watchdog group Accountable.US said that "this mess was left behind by congressional Republicans and the Trump administration, who were too deep in the big banks' pocket to care about the consequences of gutting financial industry oversight."
"The chickens came home to roost this week in the Republican war against Wall Street reform and consumer financial protections," Zelnick continued. "This predictable disaster should give serious pause to the current MAGA House majority who are pursuing further rollbacks of consumer financial protections after taking money hand over fist from Wall Street banks—but don't count on it."
Some expert observers were quick to voice concern that SVB's collapse is just the start of broader chaos in the financial industry and the overall economy.
Dennis Kelleher, the president of Better Markets, warned that the fall of SVB "is going to cause contagion and almost certainly more bank failures," noting that the Federal Reserve's rapid and large interest rate increases left many financial institutions without "time to reposition their balance sheets and portfolios."
"That's why SVB is just the beginning," Kelleher argued. "Contagion, likely more bank failures, and various bailouts are almost certainly coming. While the immediate financial stability threats will materialize or be addressed, the underlying fundamental problems caused in large part by the Fed will remain and likely get worse."
"The Fed's actions to fight increasing inflation will need to be materially adjusted, which it should be anyway because inflation is driven by many factors that are beyond the Fed's control," he said. "Causing financial instability and a recession (of any depth and length) while missing the mark on inflation should cause a fundamental rethinking of the Fed's powers, authorities, and role."
This story has been updated to include comments from Treasury Secretary Janet Yellen.
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