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OXLEY: Solyndra debacle goes global
‘Green’ strategies may undermine prosperity in developing countries
Question of the Day
For political junkies, critics of President Obama’s “green” energy initiatives and Republicans on Capitol Hill, the seemingly never-ending Solyndra scandal is the gift that keeps on giving. Every day, new information comes to light detailing the inherent failure of pouring hundreds of millions of U.S. tax dollars into an unsustainable energy company and the dozens of red flags that the Obama administration ignored along the way.
We might think Solyndra is a uniquely American scandal, yet it draws from the very same failed thinking that environmental nongovernmental organizations (NGOs) employ around the globe. They involve two key features: applying “green” economics and squandering taxpayer funding.
The fundamental flaw of the Department of Energy loan program was its promotion of “green” energy that isn’t viable on the open market. Not only did the federal government offer specific loans to these companies, it also pushed for energy standards that only the industries they funded could meet. The result was to prop up a company, indeed an entire industry, that otherwise would be uncompetitive.
While the $525 million price tag of the Solyndra fiasco seems astronomical, policies pushed at the recent United Nations climate change negotiations in Durban, South Africa, offer even greater prospective abuse of taxpayer funding. Consider the $700 million that the Obama administration pledged to a World Bank program with total pledges of $5.5 billion from European governments. NGOs marketed the program as a means of addressing claims that deforestation generated 17 percent of global emissions.
Yet U.S. taxpayers ended up buying another lemon. Research now shows emissions from deforestation could be as low as 6 percent. Plus, a growing body of science demonstrates that promoting sustainable forestry is a far more efficient method of reducing emissions than banning forestry altogether.
The World Bank isn’t the only group peddling this brand of snake oil. The Worldwide Wildlife Fund (WWF) has announced it plans to “transform markets” by capturing supply chains and forcing manufacturers to purchase only products that meet its preferred sustainability standards and not the most competitively priced products. Target industries include timber and paper, soybeans, palm oil, dairy, beef and marine products.
If they succeed, many small farmers in the United States, as well as in developing countries, would be excluded from supply chains and costs to consumers would rise. Furthermore, the WWF would have to pursue anti-competitive strategies to achieve its goal.
The WWF is now even courting the idea of imposing sustainability trade barriers to block imports of products of which it disapproves. This would reduce opportunities for developing countries to supply competitively priced products to consumers in other markets, such as the United States, and to build prosperity and reduce poverty.
The stated goal of all of these “green” programs - part of the U.N. Reduced Emissions from Deforestation and Forest Degradation proposal - is to reduce emissions significantly and simultaneously, benefit the people of those countries by providing financial incentives for creating conservation parks. The end result, however, does not produce environmental benefits and, worse, hamstrings the economic development of countries where much of the population lives in poverty.
While Solyndra remains a major embarrassment, at least the Obama administration has stepped away from efforts by Europeans to lock all economies into a system of global regulation of climate change emissions. Here, Europeans are putting the cart before the horse. For two-thirds of the world’s population, the priority is to reduce poverty. Putting environmental concerns ahead of economic growth means continued and certain failure.
Until world and U.S. leaders alike apply sensible principles to climate change measures - such as protecting against market distortion, scrutinizing expenditures and weighing environmental measures against economic costs - the U.N. strategies will not succeed. They may even produce on a global scale the same sort of disastrous result as Solyndra.
Ambassador Alan Oxley is chairman of World Growth, an observer at the U.N. Climate Change Conference in Durban, South Africa. He formerly served as chairman of the General Agreement on Tariffs and Trade, the predecessor to the World Trade Organization.
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