By Dave Brown – Exclusive to ResourceInvestingNews.com The annual summit meeting of the G8 heads of government was held in Hokkaido Japan last week, with surprisingly little accomplished. Set at a at a remote highland resort at Toyako on Japan’s northernmost island of Hokkaido, the invited guest list included the usual suspects (leaders of Canada, …
By Dave Brown – Exclusive to ResourceInvestingNews.com
The annual summit meeting of the G8 heads of government was held in Hokkaido Japan last week, with surprisingly little accomplished. Set at a at a remote highland resort at Toyako on Japan’s northernmost island of Hokkaido, the invited guest list included the usual suspects (leaders of Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States ) in addition to the bulk of the world’s greenhouse-gas emitters (Australia, Brazil, China, India, Indonesia, Mexico, South Africa, and South Korea). The remote setting and increased security level prohibited many foreign activists from entering the county and provided an excellent backdrop, given the strong international representation, to make progress on important issues.
It was like déjà vue all over again
This year’s version was a déjà vue for the event as the origin of the forum was a meeting for the world’s major industrialized democracies following the 1973 oil crisis and subsequent global recession. A good deal of attention from the first summit focused on growth and price stability fostered by the maintenance of an open trading system, “in a period where pressures are developing for a return to protectionism, it is essential for the main trading nations to confirm their commitment to the principles of the OECD [Organization for Economic Co-operation and Development] pledge and to avoid resorting to measures by which they could try to solve their problems at the expense of others, with damaging consequences in the economic, social and political fields”.
Critics of this year’s meeting, felt the biggest disappointment was on climate change, “At the Toyako summit the G8 leaders rose to the challenges posed by the ‘three Fs’—food, fuel and the financial credit crunch—with platitudes, and little effort was made to resolve the contradiction between calls for larger oil supplies and the promise of a low-carbon future”.
Sitting on the Fence
The Environmental Protection Agency published a 560 page framework to reduce the U.S. output of global-warming gases, but at the same time the Bush administration mitigated the substance of the document — saying it “relies on untested legal theories to suggest that some Clean Air Act provisions could be adapted to provide economic incentives to reduce greenhouse gas emissions.” The letter also addressed the costs for the U.S. economy and its failure, “to provide an effective response to the global challenge of climate change.”
World Bank chimes in on biofuels
A World Bank policy brief recently released suggests that biofuels are a major cause of soaring world food prices that could further undermine support for the alternative fuel worldwide and escalate tension with the current US administration and the member states of the European Union, which heavily endorse the new industry. According to an analysis by Reuters correspondent Lesley Wroughton, “World Bank’s top agricultural economist, Don Mitchell, estimates that the growing use of food for fuel, combined with low grain stocks, market speculation and export food bans, contributed as much as 75 percent of the 140 percent rise in prices between January 2002 and February 2008.” With food and fuel comprising 2/3 of the agenda for the 2008 G8 summit, it is evident that a considerable global brain trust is involved in assessing the impacts of current policies on future results. The challenge for this brain trust is very lofty indeed, considering how difficult it is to reconcile competing industry and environmental interests, in one nation alone, let alone the complications of broadening the scope on a global platform.
Potential Implications for Natural Resources
The energy sector becomes the most obvious stakeholder in any discussion surrounding lower carbon emission targets, biofuel alternatives and a future with increased international standards or related policy guidelines. Plans or initiatives in this area are only relevant if both current and future administrations are committed to meeting these objectives. The next President of the United States will clearly be much more concerned with developing a stronger environmental policy with regards to greenhouse gas emissions than the current one, and investors must remain cognizant of additional costs as well as constricting demands which will impact operational profit margins. Staying informed of constant developments and carefully monitoring geo-political events will be equally important as hedging exposure in this arena.
The G8 summit also discussed common guidelines for a ‘3S-based’ (safeguards, safety, and security) international initiative within the context of existing and future nuclear energy infrastructure developments, as the world is becoming increasingly receptive to nuclear power.