EU Don't Agree on Global Warming Targets - but do agree on Biofuels.

The EU member states failed this week to agree on goals for reduction in CO2 a Europe-wide goal to dramatically increase their use of green energy.

Of the 27 members, 10 EU states , led by Sweden and Denmark, wanted to approve a proposal that 20 % Europe's energy use should derive from renewable sources like wind energy or biofuels by 2020. Germany has already passed the 20% target into law -- Germany's current share of renewable energy consumption is about 7 % of total energy currently consumed.

The UK and Poland, objected to the 20% target as a result "confusion over the industrial reforms necessary within each nation." ... which translatres as let's buy some time.

The good news (for the tree huggers) was that the legally binding proposal that biofuels should make up 10 % of gasoline and diesel fuels for vehicles by 2020 was agreed -- subject to the weasel words of a proviso that " ... biofuel becomes commercially available."

As the Mexican have had food riots because the price of tortillas made from corn flour have doubled - following the rise in price of US corn , demanded as fuel by massive expansions of biofuel production - there are voices who say food should be fed to animals and people before making fuel for vehicles.

In the US biofuel production flourishes because the government has mandated Ethanol in Fuels, massively subsidized it's production, and protected the corn ethanol producers from the more efficient ( and low cost) Sugar cane ethanol produced in central and South America with high tariffs..

Of course, publicly-traded corn companies like Archer-Daniels-Midland (NYSE: ADM), Bunge Ltd. (NYSE: BG - see chart) and Corn Products International Inc. (NYSE: CPO) can't and don't mind that much - their profits are soaring (CPO with US$ 2.62 Bn sales, expects EPS to rise from US$1.63 in '06 to US$2.01 in '07 = 23%) A clutch of smaller biofuels companies have also seen their stock prices soar after hitting the market earlier this year.

Big multinationals like Wal-Mart Stores (NYSE: WMT) must be happy too -- higher prices on big-selling staples are always a good thing for stockholders ... but this year "sustainable" Wal-Mart announced programs to reduce packaging across its global supply chain and to sell 100 million energy efficient compact fluorescent light bulbs at its stores by the end of 2007 - that's one per household.

Should Americans care ? Damn well right they should. There are a lot of low income Hispanics who have been hit by rising food prices, Californian frosts have bumped up the price of citrus fruits , lettuce, avocados , soft fruit like strawberries (up from US42.40 a punnet to US$4.00 in Wal Mart) - Coca Cola who own Minute Maid juices and Pepsi who own Tropicana have put OJ prices up 11% . Remember 2 years ago when Hispanic TV stations in downtown LA led the news with soaring milk price rises ?

Should Europeans care ? Damn well right they should - one consequence is that as corn is used up for fuel, food manufactures shift to wheat - which is now in short supply due to a bad season in Australia, Indian prosperity, wheat prices rise, so European bread prices have risen... and on all projections will continue to rise.

Meanwhile in the unreal world, in Washington the "Global Legislators Organization for a Balanced Environment "(GLOBE) forum met to lay out the broad outlines for a replacement to the Kyoto protocol, which is due to expire in 2012.

Delegates, from the G8 as well as China, India, Brazil, Mexico and South Africa informally agreed that developing countries should face targets for cutting greenhouse gas emissions alongside rich countries. Which the thrid world will be delighted to hear.

Plunging further into the unreal world that these utopians engage with, they also backed the idea of a global market to cap and trade carbon dioxide emissions.... it won't stop once Kg of coal, gallon of petrol, BTU of gas being burnt - but it will make one hell of a lot of money for the money jugglers of Wall Street and Threadneedle Street.

This GLOBE group (neat Acronym hey ?) has no legal authority, no official remit, in fact no powers at all ,however their ill considered recommendations will be sent to the meeting of G8 world leaders and can (and will) shape a "new Kyoto." State Department Undersecretary for Democracy and Global Affairs Paula J. Dobriansky (in office since March 2001) was there to put the Administration's views and told the forum that ''We share with other countries the goals of reducing greenhouse gas emissions and introducing new, cleaner technologies.'' ... which is well, a sign of a slight change ...well sort of. Judging by her picture you can bet she believes in Mom and apple pie too.

Surprisingly (although they were probably in town anyway) the bipartisan duo of Senators John McCain (R-Ariz.) and Joseph Lieberman (I-CT) who are co-sponsoring a new piece of American climate legislation,The Climate Stewardship Act, which they first introduced in 2003 turned up hoping to signal a change in the US position on climate change. Their legislation copies the EU "cap and trade" model, (first used to control acid rain) businesses that exceed a federal cap on emissions would be permitted to buy pollution "credits" from companies that cut their output of CO2. "It's an ingenious solution in which polluters are paying pioneers to innovate," says Lieberman.

It will need a fight to get such laws passed, Idaho Republican Sen. Larry Craig (also in town protecting his lobbyists interests - and hiding from gays outing him) told the Forum that many lawmakers, including himself, will not support mandatory caps because they believe the restrictions will harm U.S. businesses.

"I am convinced that we have reached the tipping point and that the Congress of the United States will act, with the agreement of the administration," McCain told the delegates.

Which leaves a clear message to Stateside investors .. pile into climate change stocks, renewable energy and all the other panaceas of the snake oil salesmen of Pennsylvania Avenue. It will need a fight to get such laws passed, Idaho Republican Sen. Larry Craig (also in town protecting his lobbyists interests - and hiding from gays outing him) told the Forum that many lawmakers, including himself, will not support mandatory caps because they believe the restrictions will harm U.S. businesses.

Greed is good. Gordon Gecko is back in town.