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<p align="left"><font face="Arial"><strong><small>About The Author:<br>
<br>
</small></strong><span lang="X-NONE" style="color: black"><font size="2">
ROGER FELDMAN, Co-Chair of Andrews Kurth LLP Climate Change and Carbon
Markets Group has practiced law related to the finance of environmental and
energy projects and companies for 40 years. In particular, he has analyzed
and executed a wide variety and substantial value of project financings. He
chairs the American Bar Association’s Committee on Carbon Trading and
Finance, serves on the Board of the American Council for Renewable Energy,
and has been a senior official in the Federal Energy Administration. He is
a graduate of Brown University, Yale Law School and Harvard Business School.</font></span></font></p>
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<img src="../images/feldman.gif" alt="Washington Viewpoint by Roger Feldman" border="0" width="375" height="75"><p align="left"><b><u><br>
August 2008</u></b></p>
<p align="center"><font size="6"><b>Even More Than Paris</b></font></p>
<p><strong>by Roger Feldman --
</strong><b>Andrews Kurth, LLP</b><strong><br>
</strong><font face="Arial" size="2">(<em>originally published by PMA OnLine
Magazine: 2008/09/01</em>)<br>
</font><span style="font-size: 10.0pt; font-family: Palatino; color: black">
</span></p>
<div>
<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><span lang="X-NONE" style="color:black">With the Olympics over
and the World Series still too far out of sight, it seems that the only
circus for the American people to focus on--to keep their minds off the
price of bread and oil--is the Presidential Campaign. Inevitably,
pundits have begun to ululate about something called “energy,” and the
“policy makers” have been pressed into the service of the image makers.
Paris Hilton, who thinks <u>both</u> candidates’ energy policies
together are what America needs, may this year have emerged as some sort
of savant. Sober columnists have come to effectively agree with her,
viz. the solemn pronouncement from <u>Newsweek:</u> “Judged by their
rhetoric, you might think McCain and Obama differ dramatically. But
their agendas overlap substantially.” Could be, in a nation where Boone
Pickens is the Ralph Nader of the year, and where windmills have become
both candidates’ symbol du jour.</span></p>
<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><span lang="X-NONE" style="color:black">On the other hand, it
may be that this “sophisticated” thinking of Paris and the pundits
really reflects ultimate self delusion of American society as a whole
with respect to energy. It reflects the three great myths which are the
hallmarks of the “fin de siecle American” thinking:<br>
</span></p>
<p class="MsoBodyText" align="left" style="text-align: left; text-indent: -.25in; margin-left: .5in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">
<span lang="X-NONE" style="font-family: Symbol; color: black">�<span style="font:7.0pt "Times New Roman"">
</span></span><span lang="X-NONE" style="color:black">Things askew are
always saved by the occurrence of a culminating event which induces a
new approach to matters.<br>
</span></p>
<p class="MsoBodyText" align="left" style="text-align: left; text-indent: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">
<span lang="X-NONE" style="font-family: Symbol; color: black">�<span style="font:7.0pt "Times New Roman"">
</span></span><span lang="X-NONE" style="color:black">America’s
God-given destiny is ever upward progress through technology.<br>
</span></p>
<p class="MsoBodyText" align="left" style="text-align: left; text-indent: 0in; margin-left: .25in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">
<span lang="X-NONE" style="font-family: Symbol; color: black">�<span style="font:7.0pt "Times New Roman"">
</span></span><span lang="X-NONE" style="color:black">The “invisible
hand” to guide energy can be wrapped in a soothing velvet glove. </span>
</p>
<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><span lang="X-NONE" style="color:black">Perhaps a word of
clarification on each of these high-falutin’ propositions is in order,
since they permeate both campaigns and feed the national psyche. <br>
</span></p>
<p class="MsoBodyText" align="left" style="text-align: left; text-indent: -.25in; margin-left: .5in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">
<span lang="X-NONE" style="font-family: Symbol; color: black">�<span style="font:7.0pt "Times New Roman"">
</span></span><span lang="X-NONE" style="color:black">The notion of the
“tipping point” (still a non-fiction best seller) is that the occurrence
of a critical event will cause momentum for change to become
unstoppable. It has been merged with the notion that our country will
bumble along making trade offs between competing interests until things
get bad enough--say oil goes over $150/barrel or gasoline prices breach
$15.00--and then Americans will pull their socks up, work together, and
arrive at a pragmatic middle ground solution of their problems.<br>
</span></p>
<p class="MsoBodyText" align="left" style="text-align: left; text-indent: -.25in; margin-left: .5in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">
<span lang="X-NONE" style="font-family: Symbol; color: black">�<span style="font:7.0pt "Times New Roman"">
</span></span><span lang="X-NONE" style="color:black">What occurrence of
the tipping point will mean is that the new adaptive technology will
supplant the old, to all of our benefits, and ever onwards and upwards!
(This is a technologist’s version of the historian’s theory that
democracy will always produce great men in times of crisis.)<br>
</span></p>
<p class="MsoBodyText" align="left" style="text-align: left; text-indent: -.25in; margin-left: .5in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">
<span lang="X-NONE" style="font-family: Symbol; color: black">�<span style="font:7.0pt "Times New Roman"">
</span></span><span lang="X-NONE" style="color:black">And that this is
so in America because the free market will provide its own directional
signals toward the right fixes (an invisible hand will serve to guide
our leaders, anointed in crisis, and petty dissension between industries
and between regions will give way to the higher laws and national
economic need and requirements for survival. </span></p>
<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><span lang="X-NONE" style="color:black">Put only slightly more
blandly: we need to do everything, including all necessary new things,
and we need to do them well. We have; we will </span>
<span style="color:black">. . .</span></p>
<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><span lang="X-NONE" style="color: black">We wish. </span>
<span lang="X-NONE" style="color:black"> </span></p>
<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><span lang="X-NONE" style="color:black">The beginning of energy
wisdom is to recognize the distorting warps in our need/response
continuum scenario, and critically examine those assumptions. There are
many elephants in this model policies room, but three that stand out:
</span></p>
<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><span lang="X-NONE" style="color:black"> </span></p>
<p class="MsoBodyText" align="left" style="text-align: left; text-indent: -.25in; margin-left: .5in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">
<span lang="X-NONE" style="font-family: Symbol; color: black">�<span style="font:7.0pt "Times New Roman"">
</span></span><span lang="X-NONE" style="color:black">There is a huge
vested interest in every facet of our energy infrastructure. This means
both that there is a powerful population that will fight to preserve its
profit, and a huge cost in replacing, modernizing, and extending it.
The taste for marginal risk-taking in this country is inherently
governed by capital market’s aversion to real long-term risk when it’s
predicate is . . . structural change. We are now a nation that wants
sure things with high returns. This reality may not be compatible with
the degree of radical change which is required. </span></p>
<p class="MsoBodyText" align="left" style="text-align: left; text-indent: -.25in; margin-left: .5in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">
<span lang="X-NONE" style="font-family: Symbol; color: black">�<span style="font:7.0pt "Times New Roman"">
</span></span><span lang="X-NONE" style="color:black">We want this
change to always be environmentally assured and full proof positive.
There is societal and hence governmental risk aversion, and varying
degrees of insistence that the cost of such risk be borne by the
perpetrators of it, not treated as societal costs, because in our system
the perpetrators may also be the profit beneficiaries as well. </span>
</p>
<p class="MsoBodyText" align="left" style="text-align: left; text-indent: -.25in; margin-left: .5in; margin-right: 0in; margin-top: 0in; margin-bottom: .0001pt">
<span lang="X-NONE" style="font-family: Symbol; color: black">�<span style="font:7.0pt "Times New Roman"">
</span></span><span lang="X-NONE" style="color:black">We would like to
believe that globalization does not have inevitable hostile competitive
challenges as well as opportunities, with the result that, increasingly,
we are not the masters of our own fate in making the changes that we
want. </span></p>
<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><span lang="X-NONE" style="color:black">The dance of these
three elephants in the policy room has a potentially distressing
meaning: drawing toward “the middle” of seeing the other guy’s point of
view--in effect, circling the wagons--will not necessarily produce an
optimal “greatest good for the greatest number” unless it is accompanied
by corresponding policies by each of the affected constituencies.
American history has shown the political and substantive difficulties of
calling for “moral equivalent of war” and the need to sacrifice or
conserve; it hasn’t proven to be the impetus for change in the same way
that response to price signals has. Nor, however, does it produce a
nation of nuclear plants, a web of smart grids to deliver renewable
energy, cleancoal powerplant/carbon sequestration solutions, or an
independent economically competitive solar power industry. <br>
<br>
Rather, it points to a mythical character in the fundamental
energy-related planks of both parties: that levying a carbon tax
(whether directly or through “cap and trade”) can--simply by reason of
the cold galvanic shock of domestic energy cost reshaping--provoke a new
entrepreneurial goal to remake an America proof to the bullets of
expensive oil. (Indeed, this strategy may even be akin to bleeding the
patient to remove his fever.) Whether a tool for social engineering or
hands-off faith in the invisible hand--choose your party, choose your
interpretation--it is a plank underpinned by the three myths mentioned
above and doomed to be undermined by the three dancing elephants I have
identified. <br>
<br>
It will take more than Paris to achieve a critical mass of energy wisdom
to keep America in the twenty first century. <br>
</span></p>
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<p class="MsoBodyText" align="left" style="margin-bottom:0in;margin-bottom:.0001pt;
text-align:left"><font face="Arial" size="2">
<span lang="X-NONE" style="color: black">ROGER FELDMAN, Co-Chair of Andrews
Kurth LLP Climate Change and Carbon Markets Group has practiced law related
to the finance of environmental and energy projects and companies for 40
years. In particular, he has analyzed and executed a wide variety and
substantial value of project financings. He chairs the American Bar
Association’s Committee on Carbon Trading and Finance, serves on the Board
of the American Council for Renewable Energy, and has been a senior official
in the Federal Energy Administration. He is a graduate of Brown University,
Yale Law School and Harvard Business School.</span></font></p>
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