Are we heading towards a Carbon Bubble?

It seems that there is a growing doubt regarding the efficiency and the results that will be achieved through the Carbon market.

Even worst, recent findings document that there is a potential for a Carbon Bubble which will have tremendous negative effects to carbon trading and subsequently to the efforts for Climate Change abatement.

Here are some of the latest developments, as they are described in the Carbon Tracker report available at the relevant web-site. 

The Carbon Tracker initiative is a new way of looking at the carbon emissions problem. It is focused on the fossil fuel reserves held by publically listed companies and the way they are valued and assessed by markets. Currently financial markets have an unlimited capacity to treat fossil fuel reserves as assets. As governments move to control carbon emissions, this market failure is creating systemic risks for institutional investors, notably the threat of fossil fuel assets becoming stranded as the shift to a low-carbon economy accelerates.

According a research made by the Potsdam Institute, in order to reduce the chance of exceeding 2°C warming to 20%, the global carbon budget for 2000-2050 is 886 GtCO2. Minus emissions from the first decade of this century, this leaves a budget of 565 GtCO2 for the remaining 40 years to 2050.

But the total carbon potential of the Earth’s known fossil fuel reserves comes to 2795 GtCO2. 65% of this is from coal, with oil providing 22% and gas 13%.

This means that governments and global markets are currently treating as assets, reserves equivalent to nearly 5 times the carbon budget for the next 40 years. The investment consequences of using only 20% of these reserves have not yet been assessed!

The fossil fuel reserves held by the top 100 listed coal companies and the top 100 listed oil and gas companies represent potential emissions of 745 GtCO2. This exceeds the remaining carbon budget of 565 GtCO2 by 180 GtCO2.This means that using just the listed proportion of reserves in the next 40 years is enough to take us beyond 2°C of global warming. On top of this further resources are held by state entities.

 Given only 20% of the total reserves can be used to stay below 2°C, if this is applied uniformly, then only 149 of the 745 GtCO2 held by listed companies can be used unabated. Investors are thus left exposed to the risk of unburnable carbon. If the 2°C target is rigorously applied, then up to 80% of declared reserves owned by the world’s largest listed coal, oil and gas companies and their investors would be subject to impairment as these assets become stranded.

The top 100 coal and top 100 oil & gas companies have a combined value of $7.42 trillion as at February 2011. The countries with the largest greenhouse gas potential in reserves on their stock exchanges are Russia, (253 Gt CO2), the United States, (156.5 Gt CO2) and the United Kingdom, (105.5 Gt CO2). The stock exchanges of London, Sao Paulo, Moscow, Australia and Toronto all have an estimated 20-30% of their market capitalization connected to fossil fuels.

The UK has less than 0.2% of the world’s coal, oil and gas reserves, and accounts for around 1.8% of global consumption of fossil fuels. Yet the CO2 potential of the reserves listed in London alone account for 18.7% of the remaining global carbon budget. The financial carbon footprint of the UK is therefore 100 times its own reserves.

London currently has 105.5 GtCO2 of fossil fuel reserves listed on its exchange which is ten times the UK’s carbon budget for 2011 to 2050, of around 10 GtCO2. Just one of the largest companies listed in London, such as Shell, BP or Xstrata, has enough reserves to use up the UK’s carbon budget to 2050. With approximately one third of the total value of the FTSE 100 being represented by resource and mining companies, London’s role as a global financial centre is at stake if these assets become unburnable en route to a low carbon economy.

The Carbon Tracker report mentions that “In the past decade investors have suffered considerable value destruction following the mispricing exhibited in the dot.com boom and the more recent credit crunch. The carbon bubble could be equally serious for institutional investors – including pension beneficiaries - and the value lost would be permanent”.

The authors believe (and I also share the same opinion) that today’s financial architecture is not fit for purpose to manage the transition to a low-carbon economy and serious reforms are required to key aspects of financial regulation and practice firstly to acknowledge the carbon risks inherent in fossil fuel assets and then take action to reduce these risks on the timeline needed to avoid catastrophic climate change.

They also add that “The regulatory regimes covering the capital markets need realigning to provide transparency for investors on the assumptions behind valuing unburnable carbon. With the global economy following the fortunes of the financial sector, it is essential to create capital markets which are robust enough to deliver an economy which can prevent dangerous climate change. Unless a more long-term approach is required by regulators, the shift in investment required to deliver a low carbon future will not occur.”

Greek Rescue: are you kidding?

I closed my previous post (Greece’s collapse and the EU Titanic) writing that “As far as Germany, the captain of the Titanic, does not change its behavior, even if Greeks manage to do their best, they will manage to collapse as first class passengers”.

Well, I was wrong. According the discussions between troika and the greek goverment even if Greeks do their best they are going to collapse in extreme poverty. Because here are the terms and conditions offered by Germany (and consequently EU) and IMF (apologies for not listing other actors like the French and the Dutch prime minister – they are simply members of the cast with secondary roles).

The rescue package consists of a new 130 billions € loan, which will replace the almost 80 billions € that will be cut by the “haircut” applied to private sector debt holders. Actually the Greek debt will be much higher as soon as the “Rescue package” will be agreed. Someone could say that’s fine because the new bonds will be with a better interest rate and with longer pay-back period. But this is just the top of the iceberg, because the new bonds will be ruled by the British Law and not (as the current ones) by the Greek law, which means that any haircut will be almost impossible. So Greece will exchange 80 billions € of debt controlled by the Greek Law with 130 billions € of debt controlled by the British Law!

Even so, I could discuss such an investment made by our European partners as a form of support to a struggling economy. But it is really disgusting to notice that during last 40 days, every time the Greek government was close to finalize an agreement with the so called Troika (EU, ECB and IMF representatives), the Troika put new terms and conditions, worst than it has asked 10 days ago.

Such a behavior can be explained in only one way:  it seems that Troika’s order was to test the limits of our society and make an agreement not as a partner but as a financial Dictator.

This has resulted to unbelievable terms and conditions offered and not negotiated. Here are some of them:

• 20% reduction of the minimum salary, which will drive in a downward spiral all salaries and will make recession much deeper
• 25% reduction in all pensions, which are already very low in most of the cases
• Massive and blind dismissals through the public sector which will boost unemployment from 18% to 25%

And the best: 95% of the new 130 billion € bailout will be used just to ensure pay-back of the new and the remaining (after the rescue) loans! Merkozy proposed that a specially supervised bank account should be used in order to ensure that no money of the bailout funds will be used for non-approved activities like pensions, education and healthcare system.

Well, I am not complaining – the blame is put firstly to the ridiculous and completely incapable Greek political system, but also to all of us who finally left our country to become a pariah like this. We have to find the way out of the crisis and we will do it, sooner or later. After all, we have survived during much more difficult periods and we still have huge resources of creativity and imagination. And last year, we managed to have a primary budgetary surplus, for the first time after many years.

Burning German flags
outside the  Greek  Parliament (7/2/2012)

But on the other hand, I do not believe that the only way out of the current Euro crisis is to drive some societies to collapse.  I wonder if the EU officers and politicians do understand that they create long-term anti – EU feelings and feed nationalist movements. I revolt when I understand that Banks are above all, the top-priority of the EU policy. And I understand that the recent humiliations against Greece are a clever way to draw our attention away of the real problem: the banking system that is the real cancer of Europe.

I believe that Greece has no other option than to make an agreement with its EU partners. This agreement will create huge negative long-term impacts to Greek society, but who knows, maybe EU policies will change later. If this will not happen, Germany and its colleagues create the playground to push Greece (and not only) out the Eurozone, in order to secure their economies.

I have to say that they will be proved wrong once again.

Two years ago, they fought against any “haircut” option. Now they are obliged to do it.

One year ago, they were predicting the success of the austerity programs applied to Greece, Portugal and Ireland. Now they admit that they are not enough and new rescue plans are required.

Few months ago, at the end of October 2011, they said (more or less) the crisis is over because they found out a long-term solution regarding Euro debt crisis. Two weeks later the markets sent Euro at the bottom and few weeks later France (and others) lost the AAA rating.

Simply, you can’t stop a fire just closing the door of the room which is on – fire.

As it was written recently (7/2/2012) in Spiegel:

“But it is already clear that this aid package will not save the country. It appears it will only delay a Greek insolvency -- and it will serve to create new hardships for the country's population. It is time for politicians to admit that their carrot and stick strategy has failed. The idea that the country can be freed from its debt quagmire though austerity programs and aid pledges tied to conditions just isn't going to work. It won't even work if private creditors forgive part of the country's debt”.

By the way, the title of the above mentioned article was “It's Time to End the Greek Rescue Farce”.

A comment by Derek greedy

This is a comment I just received from my good friend Derek Greedy, which is also the President of CIWM. Thanks a lot Derek for your contribution and congratulations for your CIWM inauguration.

"Viewed the video with interest and content duly noted. However it doesn't get us away from the fact that the Greek economy is perhaps under more pressure than many of us. I recognise that you have your troubles and for that you are much in my thoughts but none of us our immune from the economic crisis that much of the world at large faces. A battle in which we are all involved and unless we tackle it together there will be many hard years ahead for all of us. No matter how we look at it we are now part of a global community. Being insular in our outlook is no longer an option."

A comment regarding the Greek Crisis

This is a comment regarding Greece and its economic crisis. It is a video - please spend some minutes to watch it. But before watching the video, please read carefully some lines.

I am sure that there are things to debate about the video. For sure, Greece and Greeks have their own, substantial responsibility for what is happening now.

But I am also sure that there are a lot of things that cannot be debated. As an example, Greeks are working much more hours than most of the EU citizens.

I dedicate this video to all those who consider Greeks as the "black sheep" of EU.

Even more I dedicate this video to those ones who might think that Greeks are like the lambs to the slaughter. At least, they have to think that slaughter in Europe is usually combined with German strength and arrogance, French incompetence to resist and late reaction and British criminal negligence for non - members of the former British Empire

As for those European leaders or citizens that consider Greece as the sick part of the EU, I strongly propose them to remember what Jesus has told:

"Medice cura te ipsum." (see Gospel of Luke chapter 4:23).

In English: "Physician, take care of yourself!"

Please enjoy the video:

http://www.gr2day.com/106.htm

How waste management industry can be involved with production and consumption patterns?

This is a contribution from Erik De Baedts, NVRD director. Thanks a lot Erik for this really inspiring post, I hope there will be some good replies. I am sure that the current discussion regarding green market and green development are inspiring you.

"In The Netherlands the economic crisis is -among other things- seen as an opportunity to give an impetus to more sustainable development. A financial impulse should be subject to conditions regarding sustainability.

To what extent can the waste industry itself give an impulse to sustainable ways of production and consumption?

Waste management companies, beit from a public or a private background, know which materials can be reused and which cannot. So in product chains they can get in touch with producers to indicate which materials to use and which not.

An example: at this point we see tea bags being introduced in plastics. Organic and non-organic materials together in the waste bin. Unnecessarily difficult and costly to manage. Not in any way a sustainable innovation at all.This is just an example from the daily household. However, in textiles, clothing, but also in electronics, and in many sectors, continuously choices about materials and design are being made throughout the industry.

So far, the waste management industry finds itself at the end of the pipelines in all these product chains. It just manages the outcome of choices earlier made by others. Does the waste industry see the opportunity to play a more active role?In fact, can ideas be turned into concrete trajectories? Are there opportunities to promote that waste management companies upscale their activities to become logistic and production companies that are providers of secondary resource?

Of course the use of secondary resources over primary resources is more beneficial to the natural resources we leave to our children and grandchildren. Waste management and recycling industry can be an important partner in such a perspective.

What conditions for production and consumption should be set at government level to promote such a development? Can projects be set in motion that show the dynamics and social responsibility that mark the waste industry?

I look forward to your ideas and inputs."

Recycling crisis and barriers that we have to overcome

Dear Antonis

You keep going with special articles about the debate to recycling crisis and after a review I made would like to contribute on that as following

RECYCLING CRISIS

1. What are the barriers we have to overcome?
· Lack of short term capital
· Companies will increasingly need financial resources and/ or bank or state guaranties to continue operations and tackle the negative revenue effects of the recession. This will be essential to maintain the high environmental standards internationally, particularly with respect to climate objectives which cannot be achieved without functioning waste management and recycling infrastructure.
· Recycling needs must remain economically viable.
· There is global supply excess of recyclates without knowing the quantities but there are large stocks for those companies which are largely dependent on international sales in emerging markets such as China and India. And once people stopped buying other products, manufacturers in China no longer accepted America’s recyclables – particularly paper for all that packaging. Secondary raw materials as paper and scrap metals are accumulating at the ports of call because contracting parties refuse to accept the goods.
· The private sector what needs to see is good understanding of how serious the situation is by local authorities. Contractors do not want to stop providing a service but if they cannot afford to continue some contracts, yes the council could take them to the court but this would achieve little. There will be costs incurred and there are few companies who will want to take over the contract at present. The better way forward is for councils to pay more to cover the shortfall in material value and we can agree on a structure so that when prices rise again a fair share of this increase ca be returned to the local authority.
· The biggest market problem is with bad quality of mixed papers and it is irrelevant how it is collected and that means we have to continue with good quality.
· There must be data bases to control the supply and demand in the market otherwise is setting down to a new equilibrium will be a long term effect.
· We have to share experiences and problems and communicate and try and find innovation solutions
· If we have to start landfilling recyclables we will lose public confidence in recycling schemes and it will take a long time to build up again.
· As for eventual market recovery, we would say it won’t happen until manufacturing picks up again. In the mean time, survival is a matter of which recycling businesses anticipated a decrease in demand. Everybody is hurting right now. The question is; How long is it going to happen and who’s best prepared for it ? Who can ride out the storm?.
· In recycling business must understand you are going to lose money one year out four and must prepare for it. It must be part of business plan, but it is difficult to find that altitude, certainly among people who understand recycling and particularly the fluctuation should have been expected because the commodities are volatile and risky whether they’re tin cans or crude oil and we have to understand that the good times wouldn’t roll forever.

Best regards

Andrew Kouskouris

From East to West recycling chain collapses...

It seems that problems with recycling due to global crisis are going worst. The followink link from Guardian is very usefull for more details

http://www.guardian.co.uk/environment/2009/jan/09/recycling-global-recession-china

Lot of thanks to David Newman for his contribution

Welcome Mr Greedy - more comments about recycling and financial crisis

It is my honor and pleasure as well to host comments by a good friend Mr. Derek Greedy Chair of the ISWA Landfill Working Group - thanks a lot Derek and feel free to post more..

Derek wrote:

"Dear Antonis I think both Greg and Andrew make some very good points but I do just have one comment with respect to Andrew's observations.

He quite rightly points out that we have to consider these issues in the global context but then considers Europe specifically and the impact that the global economic downturn may have on landfill diversion targets.

I am not as pessimistic here as Andrew would appear as landfill diversion is more about the reduction of biodegradable waste going to landfill than it is about other recyclable materials. The diversion of biodegradable matter should not feel the impact of the decline in the global recycling market. Composting has a very local market place and perhaps could accommodate some of the wastepaper looking for a home. It might need some changes to the current composting /anaerobic digestion activities but it might ease the pressure on wastepaper recycling.

I recognise that my suggestion does not give any answers for the recycling of metals and plastics and only scratches the surface for paper and card we should not forget that recycling is not just about the commodities that find their way to China for recycling."

Some thoughts regarding recycling and the famous “de-couple” approach

The starting point for the following note was the last news regarding the prices of recycled materials. A meltdown of them is more or less a reality going together with the rapid decrease in raw materials prize (by the way Mr. Newman deserves to be proud about his prediction).

Stuart Foster, of Recoup UK, which advises on plastic recycling, said that mixed plastics had slumped from about £200 a tone to the point of worthlessness in only four weeks. He was confident, however, that the low value would be temporary as at least three mixed-plastic facilities will open next year, reducing the nation's dependence on Chinese demand.

Decrease of prices seems to be uniform in all kinds of recyclables. Although there are some predictions that this will not be a permanent situation, in any case the current market conditions create a heavy burden for recycling activities.

As Lewis Smith wrote at TIMES (6-11-2008) “Thousands of tones of rubbish collected from household recycling bins may have to be stored in warehouses and former military bases to save them from being dumped after a collapse in prices.

Collection companies and councils are running out of space to store paper, plastic bottles and steel cans because prices are so low that the materials cannot be shifted. Collections of mixed plastics, mixed paper and steel reached record levels in the summer but the “bottom fell out of the market” and they are now worthless. The plunge in prices was caused by a sudden fall in demand for recycled materials, especially from China, as manufacturers reduced their output in line with the global economic downturn.

Local authorities and collection companies are so concerned about the mountains of paper, plastic bottles and cans that they have to store that they have called for storage regulations to be eased.”

The threat of landfilling recycled materials is realized in some cases as in California. The California Integrated Waste Management Board (CIWMB) is pledging to work with California cities and counties, as well as the many recyclers, brokers, and processors who are trying to cope with the rapid decline in commodity prices for recycled paper, metals and plastic goods.

CIWMB staff are monitoring market trends and prices and examining regulatory and non-regulatory options to keep these materials from being disposed. The CIWMB will hold a special public meeting in Sacramento in early December to explore measures it can enact to ease the current situation. The Board will hear from brokers and others about possible short-term and long-term solutions.

"We're aware of the potential dilemma facing our state's recycling infrastructure," said Board Chair Margo Reid Brown. "We cannot undo the incredible progress our local cities and counties have done to reduce our waste in landfills. By working together, I'm confident we can develop short-term measures that will get us through these challenging times, while ensuring we remain true to our overall environmental goals."

Now let’s move to the famous “de-couple” approach. We are all familiar with the concept of de-coupling growth of economy from waste production. In practical terms, the de-couple approach says that we do not want to put economic growth in a risk but we must try to make it more sustainable.

The EU approach has gone further determining that in order to success on that approach we have to decouple the following:

· Economic growth from resource use (having more growth for less resource use or more products per resource units)
· Environmental impacts from resource use (having less impacts for more growth or less impacts per product units)

Obviously for both the previous requirements the use of recycling materials is a key- element.

But how this fundamental role of recycling can be fulfilled when the use of recycled materials is coupled with their prices?

How can we de-couple growth from resource use when we keep the use of recyclables coupled with the market conditions and market conditions (even temporarily) push to more resource use?

How can de-couple the environmental impacts from resource use when the market conditions will determine if the supply chain of a product will include recyclables or not?

Let’s think again about the market fluctuations and their economical, environmental and long-term impacts in our industry. Maybe we have to regulate recycling prices in order to promote the use of recyclables. Or maybe we have to forget de-couple as a concept.

In any case, this is the time to think about it in all levels. Any opinion is welcomed…

David Newman strikes back: financial meltdown and waste management

Dear Friends

When I wrote about the financial crisis last October 6th, I made some predictions about how the situation would unfold.
Sadly many of those predictions have already come true.

1. Credit will dry up forcing banks and then companies into liquidation as consumers stop spending.

2. Unemployment will rise fast as companies slow production and fire staff.

3. Economies based on exports of raw materials will suffer particularly as the prices of these fall.

This third prediction is one I am quite proud of as no-one much forsaw oil and food prices falling so fast, leading to economies like Russia, Argentina, and the arab oil economies to slash spending.

What now ?
Every cloud has a silver lining.

A) third world and developing economies are going to benefit from rapidly falling import costs- fuel, food and western technologies will all cost much less. Africa may enter a period of faster growth.

B) inflation is falling fast leading to a cut in interest rates, making it less expensive to finance loans, mortgages, investments.

C) useless and technologically obsolete industries will die. It's goodbye to GM, Chrysler and Ford as we know them. It may even be the beginning of the end for IBM, MS and god forbid Google, Yahoo etc., as newer, leaner companies enter their markets and with lower costs take away their business.

D) the very rich just got poorer. That's no bad thing. It closes the gap a little and ridimensions their arrogance. It opens international fora to developing countries like Brazil, India, southern Asia, which have their financial houses in order and can now raise a stronger voice in fora like the IMF, WB, WTO.

E) the future of the liberalised, globalised, free economy is history.
Politics is back in place as the just governor of international trade rules and financial market rules.

I haven't yet mentioned the effect of a new US President. Personally I am not as optimistic as some. He is as much servant as leader given the powers which elect a President; for sure the outcome gave us the best result but let us not be euphoric until we start to see him in action. COP 15 will be one of those occasions.

We have, as I said in October, two harsh years ahead and the data coming out show this to be probable. But as prices in shares, housing, property, commodities fall, so will the capacity of more people to buy them increase. A point will come within 2009 when we hit bottom. The rebound in 2010 could be very fast indeed.
Hold on for a bumpy ride !

Best,

David Newman

Global financial slowdown and its impact on SWM industry

Here are some more thoughts for the current crisis and their impacts to our industry, just some more thoughts to stimulate a fruitful discussion.


In Chinese language crisis and opportunity are symbolized by the same ideogram. What a perfect symbolism for the current financial crisis which will definitely strengthen the role of China and other emerging countries like Russia, India etc. Of course you need not to learn Chinese in order to understand that “sepsis (biological degradation) is the kingdom of creation” as Carl Marx mentioned 150 years ago.


I recall this phrase in order to outline that the current crisis is not a temporary illness that will pass easily with some medicines, even if those medicines cost 1.5 trillions $, which means one or two orders of magnitude more than the money necessary to provide medicines worldwide for 5 years! It seems much more like a partial biological degradation of one of the pillars of the global growth last 30 years, the glamorous financial services sector. Almost no one could imagine such a collapse few years before, although there were certain economists that were speaking for a no way coming ahead, but not in that manner as far as I know.


But what was underestimated? In my opinion, speaking technically and not financially, the main failure factor that drove to a so sudden and violent collapse was the degree of complexity achieved globally. Complexity is measured by the quantity of data required to describe a certain situation and practically, due to the totally uncontrolled free movement of “toxic” funds, the interactions between different financial institutions, governments and investors became so thick and “self growing” that the data required to describe them was practically non available (even if someone wanted to get it, which is not the case obviously). As this kind of complexity was expanding around the world it created a network of “risk transfer” from one to another institution or investor and finally the loop closed and this network was transformed in a global rope.


And this should be considered as key – message #1: in the era of globalization the complexity of our world becomes so high that leads to unpredictable results rapidly. This is not something new for everyone who is involved in environmental issues. We all know very well that climate change problem is a result of complex global interactions that gradually created an almost unpredictable result. And our main problem regarding climate change is that we are not yet in a position to coordinate globally actions against climate change because the environmental problems are still faced on a national basis, ignoring their global effects and complexity.


Key – message # 2: The governments globally found out a way to coordinate in order to prevent the collapse of the financial system. And although it is not an easy task they will finally manage it, one way or another, sooner or later. That means that global cooperation against common threats is possible even today, with the current level of globalization and international cooperation tools. We should grab this as an opportunity to outline that global cooperation is possible for environmental problems as well, first of all for the fight against climate change. We should highlight that if global action and intergovernmental coordination have already realized in order to save the financial sector they could be also realized to save the planet as well as the almost one billion hungry people of it (with much less cost by the way).


If the USA government found a way to inject markets with a trillion $ for the banks, how to hell is it incapable to finance with 50 billions $ the social health program? If the Greek government found 5 billions € available to finance banks with difficulties how to hell is it incapable to close the dumpsites in the country? I am sure you know the answer. It is simply a matter of priorities. And as the current crisis is clearly shown us priorities in our world have to be set again. That is a great field for environmental and humanitarian NGOs and ISWA should utilize it as much as possible.


There is also another Key-message (#3) from the current crisis. The golden boys that shoot our heads with “easy profits with almost no work” are for the time being “dead men walking”. And we must act in order to finish with their fake values too. It is now obvious that the paranoia for “profitability with any risk” led the world to this crisis. The same paranoia created a totally wrong view of the hard working people and pushed golden boys in top positions in a lot of companies. If there is a lesson from this crisis it is a simple and old one: there is no free lunch out there, even if you are the top investment bank in the world.
Now let’s move to the impacts to Solid Waste management industry. Obviously we can recognize some major changes for the near future:

Funds for new waste management infrastructure will be less available and more difficult to “pump” them.

Capital will be much more expensive and risks (which are always high for waste management projects) should be evaluated and priced higher.

Those two points will certainly create problems in the implementation and preparation of major Public – Private Partnership projects.
As it is obvious from the 20-10-2008 announcement of Veolia (http://www.euro2day.gr/ftcom_en/126/articles/385711/ArticleFTen.aspx) new investments will be reduced and profitability will be considered more risky even for multinational giants.

I think that we can also assume a strengthening of the already existing consolidation wave to SWM industry for the next 2-3 years.

One more obvious remark is that uncertainty is going higher in all levels, thus the business environment will become more conservative in any case.

As everyone is predicting safely consumption patterns will be modified. Certainly consumption will be reduced and waste will be less, thus operators will have less waste to handle and thousands of jobs will be lost.

Less obvious is that waste composition will change as well. Let’s have a look at what Tamar Lewin wrote in New York Times (19-10-2008) for the upcoming crisis era:

“Buying patterns too, can be predicted in economic downturns, according to Leo J. Shapiro, who has tracked consumer behavior since he was a young man in the late 1930s. “DURING a recession, laxatives go up, because people are under tremendous stress, and holding themselves back,” said Mr. Shapiro, now chief executive of SAGE, a Chicago-based consulting firm. “During a boom, deodorant sales go up, because people are out dancing around. When people have less money, they buy more of the things that have less water in them, things that are not so perishable. Instead of lettuce and steak and fruit, it’s rice and beans and grain and pasta. Except this time the price of pasta’s so high that it’s beans and rice.” A recent Nielsen report listed tobacco, carbonated drinks and eggs as especially vulnerable to recession, and candy, beer and pasta sauce as recession-proof.”

A last but not least comment about recyclables is necessary. Extraction of raw materials will be less due to reduced consumption. Their prices will go down as well (they have already been pushed down by 25-30% for some materials like cooper or aluminum). Thus recycling will be more difficult because recyclable materials will be less competitive to raw ones. This is my feeling and I hope it is going to be a wrong one.
Let’s summarize the expected impacts.

Less funds available for infrastructure. Impact High for developed countries – medium for the rest

More expensive capital and risks – reduced bankability. Impact High for all PPPs

More consolidations. Impact High to medium

Less waste – less jobs in SWM industry. Impact High for industry “giants” – medium for the rest

Changes to SW composition. It sounds logical but no impact estimation can be done

Less extraction of raw materials. Impact Medium

Less recycling. Impact Medium to low (I hope)

A comment by George Sbokos regarding financial Vs climate crisis

This is a comment posted by my good friend George Sbokos who happens to be one of the very few lawyers I know with high environmental expertise. George is also running the web-site ECOTHESIS (http://www.ecothesis.gr/) which is unfortunately available only in Greek language – I hope that George is going to prepare and English version too. Thanks a lot George for your contribution.

“Polluter pays, speculator pays
In the upcoming World finance meeting and according to the declarations of Nicolas Sarkozi, a new compromise solution has to be found in order to get consensus for the climate protection aims (http://www.faz.net/s/RubEC1ACFE1EE274C81BCD3621EF555C83C/Doc~E6F7654340A55456BAD032FEB4EB3CFB1~ATpl~Ecommon~Scontent.html).

That should happen before January. Italy’s Prime Minister Berlusconi demanded already a suspension of the treaty’s (cut down C02 emissions) provisions. At the same time Poland, together with other five EU members, incl. Greece (!) are threatening with a veto. (http://www.reuters.com/article/environmentNews/idUSTRE4922NT20081003).

Under these circumstances the Solid Waste Industry, just like any environmental business will be politically directly affected. Indirectly, financially the impacts may stay for the next years because of the global financial crisis.

The main proof -at the time being- of the global hierarchy of environmental issues can be seeing on the comparison between the global reactions after the climate crisis (Fourth Assessment Report (AR4), published in 2007, the Intergovernmental Panel on Climate Change (IPCC)) and the present reactions after the economic crisis.

Nothing binding in the first case, globally bound in the second. Not a penny in the first case, billions of dollars in the second. Money versus Climate at it’s best!

What really matters now is the exploitation of the unfortunate (?) turn of the economy, and the reconsideration/combination of the decision making and the enforcement of some main environmental issues. The global community has to be convinced, that the solution tunnel out of the crisis leads to the environmental management. The taxation of the natural resources, the reduction in employment taxation has to be taken under consideration.

It is a time of change and that was already foreseeing. The door to a Meta-industrial period is viciously opened, in accurate accordance to the vicious environment where it roots. A new chance for environmental policies is born. Though, next to the enforcement of the “polluter pays” principal, a frame of “speculator pays” liability has to be met

George Sbokos”

Call for vote regarding the Waste Management Industry and the Global Financial Crisis

I invite everyone to vote for the answer to the question "Is Solid Waste Industry affected by global financial crisis?" as it seems on the right side of my blog.

I also accept the call for debate regarding Waste Framework Directive and I encourage evryone to write about it. I will also do the same as soon as possible.

One more comment from David for global financial meltdown

It's interesting that Greg takes a US privatistic view point. In Europe, where services are paid for by municipalities, our companies working on a tender contract basis for local government entities, whether public or private companies, all face the financial stress - the growing inability of local governments to collect taxes and pay their bills.

In Italy we are already working on a payment time of six months; in Sicilly famously private companies are owed over 600 million Euros by local authorities, a debt rising monthly and now growing over 18 months.

As tax revenue falls so will many business models dependent upon local governments' ability to pay. So while our services will be required, the capacity to pay for them is falling.

David

Global crisis and waste management industry? A comment by Greg Vogt

It seems that David hit a hot-spot. Andrew Kouskouris, Chairman of the Hellenic FEAD, raised a question about waste management industry and global financial crisis and my good friend Greg Vogt, Managing Director of ISWA, gives an initial response to that question (thanks a lot for that Greg):

"It is important that we in the solid waste stick to doing what we do best, and when predicting the future, use what facts we know and make estimates based on solid assumptions. A few points to offer:

- it is a good time to encourage colleagues and employees to continue to work hard and be productive. There remains a high value for getting things done, regardless of global financial problems.

- during work slowdowns, companies and organizations often take advantage of the time to regroup, educate and train their best personnel, and take a keen look at their marketing approaches so make good value of their resources.

- the need for immediate waste collection and disposal services is very different than the need to make a retail purchase (say, shoes or cell phones). The waste industry generally has the long view with regard to purchasing equipment, servicing customers, compliance with regulations and environmental protection rules, and sustaining recycling programs.

- Those that wish for you to be nervous are winning. "

Obviously, there must be an open forum about global crisis and the future of waste management industry. I invite everyone to start it from this blog, now...

Global financial meltdown - written by David Newman

This is a note from David Newman, a nice looking + thinking friend, member of ISWA Board. He kindly permited me to publish his thoughts regarding global financial meltdown. I found theme very interesting and I am sure that all readers will do the same. Thanks a lot David and I hope that this will be just your first contribution...

"The impact in the real economy of this year's financial meltdown will now start to make itself felt. And we are all about to be hit by an economic tsunami.

The banks can no longer finance themselves through inter bank relations. This means they are without liquidity. They will not therefore be financing companies at risk, even for solid companies ordinary day to day financing is at risk.

Vulnerable companies in all sectors are now going bust; this will escalate rapidly in the next weeks. By the year end this will have caused a significant increase in unemployment worldwide. Solid companies have frozen new investments, either for lack of bank financing or due to adverse risk factors. Export led economies are equally vulnerable as their major markets shrink. We will see unemployment rise here too leading to widespread social unrest.

Those economies that have benefited from high prices of raw materials will be particularly hit as the investments made on the assumption of increasing prices became unsustainable.

The western economies have a varied capacity to react because some of them are overleveraged already and have no further lending capacity. Others are reasonably immune because they have small domestic economies based on services. Among the first are GB, Italy, among the second Ireland, Greece, Belgium.

Our individual investments will be worth much less, or even nothing, in the short term as housing and stock markets collapse and banks fail. Many of us will lose our jobs as companies fail, governments slash spending, consumers spend less.

The power of the western economies will be significantly reduced relative to the east and middle east, awash with years of accumulated export and mineral wealth. But the key will be to what point the western economies will be able to sustain their unemployed masses before social breakdown occurs.

The measure to protect savings accounts are necessarily limited; taxpayers payments to governments being used to guarantee taxpayers savings- the mathematics doesn't work if that guarantee needs to be given over a long term.

So what to do ?

A first reaction is to go out and celebrate ! What the hell. But after the hangover we've all got some very serious thinking to do, and our collective reactions will determine for how long the depression will last.

For those of us with debts, by dramatically cutting our spending we will contribute to an economic depression; by not doing so we are ignoring the reality of our individual vulnerability and will shorten the time in which our banks close the credit lines. For those of us with savings in the banks, it's a frightening period- are they safe ? Are they hell ! But what do you do with these savings ?

Interest rates will now fall dramatically and leaving money in the bank will mean seeing its real value decline. And it is this group which will inevitably lead us slowly out of the mess as they withdraw their savings and take advantage of cheap markets to buy- property and shares mainly.

It takes a brave man to invest today but the profits from doing so in the medium term will be extraordinary. Companies have stock values so low they are give aways; fire sales of houses make some properties incredible bargains. They will reach the point of the early 1990s when to buy a house cost less than to build a new one- then is the time to buy and the whole economy will start to move again. It's two years before this happens.

Two years in which we've all got to face insecurity, fall in spending power, actual or relative poverty. A dramatic response to a decade of over spending fuelled by cheap money and sheer greed.

One bright note: economic decline will mean the use of less resources and may actually benefit the environment. Take some comfort from that if you can !

David
October 6th, 2008"

Some words about the global financial meltdown from David Newman

This is a note written by David Newman, member of ISWA Board. David sent it by e-mail and he kindly permited me to publish it



The impact in the real economy of this year's financial meltdown will now
start to make itself felt. And we are all about to be hit by an economic
tsunami.

The banks can no longer finance themselves through inter bank relations.
This means they are without liquidity. They will not therefore be financing
companies at risk, even for solid companies ordinary day to day financing is
at risk.

Vulnerable companies in all sectors are now going bust; this will escalate
rapidly in the next weeks. By the year end this will have caused a
significant increase in unemployment worldwide.

Solid companies have frozen new investments, either for lack of bank
financing or due to adverse risk factors.

Export led economies are equally vulnerable as their major markets shrink.
We will see unemployment rise here too leading to widespread social unrest.

Those economies that have benefited from high prices of raw materials will
be particularly hit as the investments made on the assumption of increasing
prices became unsustainable.

The western economies have a varied capacity to react because some of them
are overleveraged already and have no further lending capacity. Others are
reasonably immune because they have small domestic economies based on
services. Among the first are GB, Italy, among the second Ireland, Greece,
Belgium.

Our individual investments will be worth much less, or even nothing, in the
short term as housing and stock markets collapse and banks fail. Many of us
will lose our jobs as companies fail, governments slash spending, consumers
spend less.

The power of the western economies will be significantly reduced relative to
the east and middle east, awash with years of accumulated export and mineral
wealth. But the key will be to what point the western economies will be
able to sustain their unemployed masses before social breakdown occurs.

The measure to protect savings accounts are necessarily limited; taxpayers
payments to governments being used to guarantee taxpayers savings- the
mathematics doesn't work if that guarantee needs to be given over a long
term.
So what to do ?
A first reaction is to go out and celebrate ! What the hell.
But after the hangover we've all got some very serious thinking to do, and
our collective reactions will determine for how long the depression will
last.
For those of us with debts, by dramatically cutting our spending we will
contribute to an economic depression; by not doing so we are ignoring the
reality of our individual vulnerability and will shorten the time in which
our banks close the credit lines. For those of us with savings in the banks,
it's a frightening period- are they safe ? Are they hell ! But what do you
do with these savings ?
Interest rates will now fall dramatically and leaving money in the bank will
mean seeing its real value decline.

And it is this group which will inevitably lead us slowly out of the mess as
they withdraw their savings and take advantage of cheap markets to buy-
property and shares mainly.
It takes a brave man to invest today but the profits from doing so in the
medium term will be extraordinary. Companies have stock values so low they
are give aways; fire sales of houses make some properties incredible
bargains. They will reach the point of the early 1990s when to buy a house
cost less than to build a new one- then is the time to buy and the whole
economy will start to move again. It's two years before this happens.

Two years in which we've all got to face insecurity, fall in spending power,
actual or relative poverty. A dramatic response to a decade of over spending
fuelled by cheap money and sheer greed.

One bright note: economic decline will mean the use of less resources and
may actually benefit the environment. Take some comfort from that if you can
!

David
October 6th, 2008