December 26, 2006

First Thing We Do, Let's Mention the Lawyers

by PG

The attorneys in this story are buried toward the end. At some point, we fell lower in the disrepute rankings than other paperwork producers.

Foreign businesses have embraced an obscure United Nations-backed program as a favored approach to limiting global warming. But the early efforts have revealed some hidden problems. Under the program, businesses in wealthier nations of Europe and in Japan help pay to reduce pollution in poorer ones as a way of staying within government limits for emitting climate-changing gases like carbon dioxide, as part of the Kyoto Protocol.

Among their targets is a large rusting chemical factory here in southeastern China. Its emissions of just one waste gas contribute as much to global warming each year as the emissions from a million American cars, each driven 12,000 miles. Cleaning up this factory will require an incinerator that costs $5 million -- far less than the cost of cleaning up so many cars, or other sources of pollution in Europe and Japan.

Yet the foreign companies will pay roughly $500 million for the incinerator -- 100 times what it cost. The high price is set in a European-based market in carbon dioxide emissions. Because the waste gas has a far more powerful effect on global warming than carbon dioxide emissions, the foreign businesses must pay a premium far beyond the cost of the actual cleanup.

The huge profits from that will be divided by the chemical factory’s owners, a Chinese government energy fund, and the consultants and bankers who put together the deal from a mansion in the wealthy Mayfair district of London.

It's not like lawyers aren't involved; the article quotes "Michael Wara, a carbon-trading lawyer at Holland & Knight in San Francisco," but he sounds suspiciously tree-huggerlike. "Environmental groups say that governments in developing countries should either require factories to incinerate the waste gas as a cost of doing business, or receive aid from wealthier countries to cover the relatively modest cost of incinerators. 'Couldn’t we pay for the cost, or even twice the cost, of abatement and spend the rest of the money in better ways?' Mr. Wara asked."

Bah, you wouldn't hear those Mayfair consultants and bankers say such a thing. I'm only consoled by one of the last few sentences: "For small projects involving less than $250,000 worth of credits, fees for deal makers, consultants and lawyers can far exceed the cost of installing equipment to clean up emissions."

December 26, 2006 05:37 AM | TrackBack
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