Saturday 29 June 2019

Double Standards in new Trade Deal

Climate Change was the number one issue in the recent European Elections here in Ireland. Within a few weeks of the results however, the EU and South America signed a new trade deal that will increase global emissions and put more pressure on Brazil's rainforests.

The deal will allow 100,000 tonnes of beef to be exported across 4,000 miles to the EU increasing shipping emissions. More rainforests will need to be cleared to meet this demand, putting EU priorities at odds with the environmental significance attached to these forests.

The farming lobby are now starting to see through the duplicitous nature of the EU. Perhaps this is the beginning of a much needed examination of Ireland's relationship with the EU and the climate agenda that drives much of Irish politics.
I do not think they will take the Paris Climate Accord seriously at all. They will do whatever suits themselves. Once this deal is over the line, we will pay the consequences for that beef coming in.
It goes to show you the double standards, the double speak that they would allow that volume of beef come in. There is already almost close to 300,000t coming in already and you hear stories about rainforests cut down week on week to facilitate more agricultural production in Brazil.
If they were serious about climate change, they would have found some other way around it other than bringing in that volume of beef. [Farmers Journal].   

Tuesday 25 June 2019

Air Travel Gets a Free Pass

Air Travel only gets a couple of mentions in the Government's latest Climate Plan where the aim is to offset emissions from air travel through the purchase of carbon credits. The main focus of the plan is on electric vehicles with legislation to be introduced to ban the sale of fossil fuel cars from 2030.

Meanwhile, on the same week that the Climate Plan was announced, the Irish Prime Minister Leo Varadkar travelled to Brussels to obtain a €350 million loan from the European Investment Bank for investment in Dublin Airport - to facilitate European and global travel in the future.  

 It is perhaps one of the most astonishing cases of cognitive dissonance in Irish political history. Or it indicates that the European Union and the Irish government are not actually concerned about (or believe in) climate change except when it suits their own agendas.

Image result for air travel motor emissions

Monday 17 June 2019

Spending Overruns Undermine Emissions Targets

The European Court of Auditors expect that many EU countries, including Ireland, will not meet their 2020 targets for the share of total energy from renewables :

  • six Member States are unlikely to meet their 2020 target as they need an increase in the share from renewables by: the Netherlands 7.4 pp, France 6.7 pp, Ireland 5.3 pp, the United Kingdom 4.8 pp, Luxembourg 4.6 pp and Poland 4.1 pp.  

  •   the Netherlands shows the largest gap, with an actual average share of 5.9% for 2015/2016, versus an indicative RED trajectory of 7.6%. The gap to the planned NREAP share of 9.7% renewable energy in 2016 is even larger. 

    •  for 11 Member States (Belgium, Cyprus France, Greece, Ireland, Luxembourg, Malta, the Netherlands, Poland, Portugal and the United Kingdom), currently implemented renewable energy policies and already planned renewable energy policy initiatives appear today to be insufficient to trigger the required renewable energy volumes purely domestically. 

    • In addition, for 7 Member States (Austria, Germany, Latvia, Romania, Slovenia, Slovakia and Spain) there is some uncertainty related to 2020 renewable energy target achievement. Their capability of meeting their 2020 national binding targets will to a great extend depend on the levels of energy demand in case there would be a large increase in energy demand that brings their energy consumption back in line with the original trend indicated by the latest EU reference scenario.   

This should be seen as a serious indictment of Ireland's wind only policy which has completely failed to reduce emissions at any meaningful level. The idea that the EU will fine every one of these countries, that are also unlikely to meet their targets, now seems increasingly unlikely, as the widespread impracticality of the targets becomes manifest.

Ireland has already spent €86 million in buying carbon credits to offset it's high emissions with the cost potentially running to billions over the next decade. As with health and foreign aid policy (in fact every policy), Ireland's answer is always to spend more (taxpayers) money instead of doing some actual analysis to uncover the root cause of the problem.

Sustainable Economics is a Sustainable Environment

The simple fact, as this blog has pointed out previously, is that the more the government spend, the higher the emissions. Higher welfare spending, for example, results in more resources consumed beyond our means, more imported goods, higher immigration and more waste material like plastics. High government and private debt also encourages more wasteful spending.

A policy that would encourage more savings and less debt would result in lower emissions. Higher savings means more deferred purchasing, which means lower emissions in the short to medium term. 

It is perhaps somewhat ironic that the most climate change obsessed government in Irish history is also the worst offender when it comes to out of control spending. The Irish Fiscal Council last week reported that the government breached post financial crisis spending rules last year, and the increases in spending in recent years were not "conducive to prudent economic and budgetary management".   They warned that the spending had reached a similar magnitude to those prior to the 2008 crisis (funnily enough when the green party were last in government). Cormac Lucey has worked out that the cost of the spending overruns last year was € 3,500 per person living in the state. Instead of putting away the additional tax receipts into a rainy day fund, which would have lowered emissions, every cent has been squandered. 

And the more the government continues to spend recklessly, the more carbon credits they will need to purchase to offset the extra emissions meaning that the spending overruns are set to become a vicious cycle. If Ireland wants to get serious about reducing emissions it  needs a prudent government.

Saturday 8 June 2019

Greencoat Renewables and the Magic of Fair Value Accounting

Make the prices rather higher than lower so that you can make a larger profit - Luca Pacioli, 16th century mathematician

The Irish media recently announced with great fanfare that Income and Profits were up sharply at Greencoat Renewables for the year 2018. On closer scrutiny, things don't look as rosy as one might think. The accounts show income of € 58m.

The majority of this income, € 46m, has nothing to do with actual wind energy or trading as most people would have assumed. It is in fact due to an accounting trick called a fair value adjustment. This boosted the income figure to produce a profit of €43m compared with a loss of € 2.5m for the previous year.   Interestingly, this new profit figure did not result in any tax to be paid.

The Accountancy Standard IFRS No. 13 allows assets to be stated at their Fair Value as opposed to their cost, which conventionally would have been the case. The Fair Value is the amount that an asset (in this case the wind turbines) could be traded for, i.e the selling price. A clause in the accounting standard allows room for subjective assumptions where there is no readily available market information. Greencoat have made use of this clause by increasing the asset life assumption from 25 to 30 years which allows them to record a higher fair value for their wind farm investments. This subjective increase in the value of their wind turbine assets is then recorded in the Income Statement as if normal income.

No actual cash is generated from fair value adjustments, it is simply a bookkeeping exercise to boost profits.

Sunday 2 June 2019

Green Wave or Green Ripple ?

The Irish media were in exuberant mood after an exit poll showed that Greens were dominating the elections. Roll on more carbon taxes urged almost every jet-set loving journalist.

The results are now in. The Green Party garnered only 5.6% of the vote nationally in the local elections and 11% in the European elections. The biggest winners were the Fine Gael and Fianna Fail parties, both of which decided not to impose carbon tax increases in the last budget.

The Green Wave became a Green Ripple. The highest concentration of so called "journalists" in Ireland is in Dublin, where the Greens garnered the most votes, and that may explain the lob sided Green Wave hysteria the rest of us had to endure in the past week.

The fanatically EU devoted media outlets behind the exit polls were in fact in breach of EU law, namely Section 30 of the European Parliamentary Election Regulations 2004, which states :

Prohibition on publication of exit polls

30.—(1) No person shall in the case of a European Parliamentary election publish before the close of the poll—
(a)any statement relating to the way in which voters have voted at the election where that statement is (or might reasonably be taken to be) based on information given by voters after they have voted, or
(b)any forecast as to the result of the election which is (or might reasonably be taken to be) based on information so given.
(2) If a person acts in contravention of paragraph (1), he shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale or to imprisonment for a term not exceeding 6 months.