Friday, April 20, 2007

Cap-and-Trade Wirtschaftswunder, Cont.   [Chris Horner]

On Monday, regional Spanish media in Galicia reported yet another story revealing the wonders of carbon cap-and-trade, such that Spain is rapidly pulling ahead as the ideal case study for what awaits us for our moral leaders bent on applying the ETS or its ilk to the US economy. This latest comes on top of a) plants being closed in Valencia and Zaragoza for lack of a Kyoto permit and b) Acerinox's CEO announcing his (steel manufacutring) investment would all go outside Europe now (the US — so far, 175 jobs in Carroll County, KY — and South Africa)..

Ceramics are an industry that Spain seeks to protect from Brussels like Germany (ideally) would its chemicals — they tried, e.g., in the REACh debate — and they require a bit of energy to make their products. Now, in Galicia, a manufacturer announced that last year it earned more from selling credits than ceramics (reminding me of an email I once got in which a French pharma company announced that selling credits was where its future lies, not pharmaceuticals).

Their statement was couched in terms of thanking the government for generously (that is, "over-") allocating ETS credits to them (for free, as industry lobbyists already demand of Congress), and noted that with the credit price having skyrocketed (before collapsing) they were able to reap a windfall by selling what the government had given them. They lamented that the price collapse, however, indicated this wasn't, er, sustainable.

Buried in this however was the phrase that, taking that price spike into account, they had decided to "equalibriate" their operations so as to maximize profits with an ideal mix of selling allocations and using them by, well, using electricity to make stuff...which is to say they also went into the business of making nothing, dedicating more of their operations to the task, which is far less labor intensive. That is, they found it more profitable to partially shut down, to idle workers.

In the name of the environment, mind you.

04/20 05:05 PMShare