Cap and trade - not the only way to skin the cat

Following his defeat in the mid-term elections, US President Barack Obama has now announced that he will drop his plans for a cap and trade system to reduce CO2 emissions. The idea behind cap and trade is to put a limit on greenhouse gases and then allow companies to buy and sell pollution permits under that ceiling.

President Obama said:

Cap-and-trade was just one way of skinning the cat; it was not the only way...I'm going to be looking for other means to address this problem.

As we've argued many times before, the cost of the EU's Emissions Trading Scheme (EU ETS) is massive and it's far from clear that a cap and trade system is the best way to achieve global emission cuts, while also encouraging investment in alternative energy. Obama's decision is sensible. But it clearly has implications for Europe, not least since the EU might now be put at more of a competitive disadvantage in the absence of a cap and trade system in the US.

Interestingly, former deputy prime minister John Prescott - who was a key UK negotiator at the Kyoto global warming conference in 1997 - today argued that in light of Obama's decision world leaders should ditch their hopes for achieving enforceable targets for emissions reductions. Instead, he said, they should push for a voluntary agreement at the upcoming Cancun summit:

Let's have a voluntary agreement. Let's stop the clock. Instead of Kyoto having to be done by 2012, stop it for about five years, put in a voluntary agreement and a verification system.

For his part, German Economy Minister Rainer Brüderle warned yesterday against imposing more environmental rules on German industry, arguing that global competition doesn't allow for a go-it-alone approach. He has a point.

The better way forward for the EU would be to set overall targets but then allow individual member states to reach them in whichever way they deemed to be the most cost-effective.

There is more than one way to skin the cat - also in the EU.

Obama to meet with the EU's various Presidents after all

Looks like U.S. President Barack Obama will meet with his "European counterparts" (at least in terms of pay, they're on par), Commission president Jose Manuel Barroso and the President of the European Council Herman Van Rompuy, after all. A NATO summit in Lisbon on 20 November will be used to make up for the Obama Snub earlier this year.

"Presidents Van Rompuy and Barroso are looking forward to this opportunity to meet again with President Obama to reaffirm the transatlantic agenda and advance EU-U.S. cooperation on issues of mutual concern," the Commission said today.

Now, the big question is: who will get the opportunity to shake the great man's hand first?

Lacking confidence

In global affairs, the EU seems to suffer from a peculiar lack of confidence, stemming from its all too frequent failure to come up with anything meaningful to say on the world stage.

This is probably also why EU leaders attach such a huge importance to summits and institutions, such as the External Action Service - they serve as a way for the EU to cover up the absence of substantive policies.

As we've argued before, this is completely the wrong approach. Being an influential voice in the world stems from being a competitive and vibrant global actor with real policies on offer - not from obsessing about family photos, meetings and artificially created institutions. The rest of the world usually sees through the EU's charades, as was evident from the infamous "Obama snub" back in February, when it emerged that the American President had decided to give the EU-US summit a miss this year.

Now we hear that the EU is hoping that a summit with the Americans will go ahead after all, slightly postponed. EU officials hope that they can tack on a meeting to a Nato summit in Lisbon in November.

The newly appointed EU Ambassador to the US João Vale de Almeida - who apparently hopes that he will be "the leading show" among European representatives in Washington DC - complains in the FT about the lack of attention the US gives the EU. “Not being a problem does not mean we should not be a priority,” he says. "There’s untapped potential in this relationship ... We can co-operate better on foreign policy, from Iran to Pakistan, to the Middle East and the Balkans", which is probably true, but again, the focus must be on substance and not handshakes for the sake of them.

A senior US administration official quoted in the FT explains in plain American why the EU shouldn't have too high hopes about incorporating President Obama into its meetings-and-institutions culture:

This president is not a schmoozer – he doesn’t hang out. We don’t feel the need to profess love because it’s a fact of life that Europe is our main partner, in everything that we do in the world … Do you need to say that all the time?

Apparently you do.

So, while EU officials sob about their hurt feelings, here are some suggested themes for an EU-US summit, which could help lure Obama to Europe:

• How to create a financial regulatory framework which underpins global initiatives rather than undermines them;
• How to create a cost-effective model for cutting emissions - one that the rest of world can follow;
• How to cut tariffs and reform rules of origin to free up global trade;
  
• How to produce fewer and better laws to make Europe a more attractive market;
• How to put the money where your mouth is on defence.

Just to start off with.

Talk about what?

In a piece for the Telegraph we take a closer look at the "Obama snub", arguing,

Until the EU comes up with something actually worth talking about, it's not surprising that Obama thinks that it's more important to travel to Asia, South Africa and to attend NATO summits. Appearing in the EU's latest self-congratulation ritual is something that the leader of the world's most powerful nation has done well to stay clear of.

On basketball, Obama and EU employment rules

Saturday's Times had a rather interesting feature on US President elect Barack Obama and specifically his passion for basketball. The article offers a contrast to Britian's political leaders, and rightly notes that "it is hard to imagine Gordon Brown or David Cameron on the sports pitch, even in their youth." Attention is also drawn to the fact that Obama actually manages to "do a high-five on the court and not look as though he was a middle-aged geek trying to be cool." Again, a contrast is drawn to certain British politicans.

Slightly more relevant to the general theme of this blog, the article notes that American National Baskeball Association, the NBA, is hoping that Obama's victory will give the league a world-wide boost, including in the UK (where basketball enjoys very limited popularity - to put it mildly). The NBA hopes to set up a European division with teams in London, Barcelona and Berlin. But, the NBA's yearly 'draft' of young players - a set scheme under which the clubs recruit their players, usually from college teams - may violate the EU's employment laws. Although no further details are given in the article, this is said to represent an obstacle to the plans of establishing an NBA franchise in Europe.

So, do we here see a future trade row with basketball-loving Obama accusing the EU of enacting non-tariff barriers to prevent American companies (the NBA) to invest in Europe? Hardly. But, as ever, EU regulations work in mysterious ways.

On a seperate note, Obama actually has some decent skills. Open Europe's scouting report shows that he has a good left-hand jump-shot and a nice touch around the basket. However, he seems slightly one-handed (the equivalent of a footballer being one-footed, for those of you not familiar with basketball jargon). Neither does his 'hops' (jumping ability) seem to be what it once was. Still not bad for a 47 year old, also considering that he can 'bench' 200 lbs. In any case, he far outscores most European leaders on athleticism. Sarkozy's jogging rounds are just not quite the same, are they..?

Why Obama is bypassing Brussels

Washington blogger and think-tanker Steve Clemons notes that Barack Obama will not be visiting Brussels on his tour of Europe.

He reckons that “what he is saying to Europeans, symbolically, is that their capital does not quite rank”, and suggests the omission of the EU’s institutional heart from Obama’s itinerary is a product of the candidate’s supposed inexperience and rumoured lack of understanding of international affairs.

But perhaps there is another explanation for Obama’s avoiding Brussels.

What is the core message of the Obama campaign? Vitality, dynamism, change, and popular empowerment are words that immediately spring to mind. But the way the EU is currently going is the polar opposite of these things.

‘Brussels’ as a concept just seems off-message for Obama’s brand. It’s pretty difficult to imagine him giving a rousing speech in front of the Berlaymont, or attending a photo call with the likes of Hans Gert Pottering.