Free riders getting hot under the collar

A lot of folk are getting antsy as the financial cost of emissions controls slowly dawns on them. Entire industries are going to be restructured, as some asset values collapse under the weight of environmental externalities, and others soar on low-carbon wings. Nimble investors will adapt. The response of the evolutionarily-challenged is to bitch about it.

The EU’s clampdown on NAPs is enough to increase emissions: imagine all those furious German power plant owners reported in Point Carbon at the end of November. They are hot under the collar, practically smouldering, that their new plants will not get free allowances for fourteen years. To cool down, they will need to turn up the air conditioning full blast. A small cost to the planet. But for bystanders, this is a free ticket to an Englishman’s favourite sideshow: Schadenfreude.

Another recently grumpy person has been Mr Andrew Concil, communications director at IATA, the trade association of the world’s big airlines. In his critique of the EU’s plans to include aviation in the EU scheme, he cleverly pointed out: “The devil is in the detail. How do you calculate emissions allocation? How do you divide permits among airlines? Do you count the miles only in European airspace?”

Scary questions indeed. But the real Devil is actually in the emissions, not the details.

A third angry front, published in the letters page of the Financial Times, was opened by financier Mr Douglass Lyon, the eponymous proprietor of Lyon Capital Management in the United States. He has accused the pink newspaper of wasting time and energy on coverage of climate change. “I continue to be amazed that the Financial Times spends so much time tilting at the windmill of global warming or global climate change or whatever we are supposed to call it,” he sniffed on 27th November.

What do we make of all this? It is nice to see that dinosaurs still exist. Some of us had thought that they were victims of abrupt climate change 65 million years ago, but we were wrong.

Three industries – power, travel, and finance – are realising (indeed with the mental alacrity of a dinosaur) that the free ride is a thing of the past. For decades they have been profiting by belching out greenhouse gasses with abandon, or financing such belching, building up a monstrously large off-balance sheet liability in the “externality” ledger.

Now that they are being asked to cover their extra environmental costs as they go, they turn all cross and grumpy. They should be glad that they are not being asked to pay off their accrued debt to future generations. If they were, they would become insolvent instantly.

Of all people, Mr Concil should be glad that free rides are over.

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