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Vol. I, No. 10

Cooler Heads Digest

Title

Vol. I, No. 10

Politics

U.S. Position Revealed

On October 22, after months of speculation, the Clinton Administration finally announced its official negotiating position for the upcoming climate change talks in Kyoto, Japan. Claiming that the "vast majority of the world’s climate scientists have concluded that if the countries of the world do not work together to cut the emission of greenhouse gases, then temperatures will rise and will disrupt the climate," Clinton laid out a "comprehensive framework" that will include "three elements."

First, the U.S. will commit to reducing emissions to 1990 levels between 2008 and 2012 and then work for further reductions. Second, the Administration will support "flexible mechanisms," such as joint implementation and tradable emission schemes. Third, developing countries must also participate in "meeting the challenge of climate change." Industrialized countries must lead, but developing countries must be "engaged."

Clinton assured that "The United States will not assume binding obligations unless key developing nations meaningfully participate in this effort." What is meant by "meaningful participation" is not clear. It is clear, however, that not all developing countries will be required to restrain their emissions.

Clinton also asserted that the U.S. cannot afford to "wait until the treaty is negotiated and ratified to act." In other words, the Administration plans to implement climate policies before the Senate considers treaty ratification.

He further explained, "…we must move forward by unleashing the full power of free markets and technological innovations to meet the challenge of climate change." He plans to "unleash" free markets by:

     

  • enacting tax cuts and investing $5 billion over the next five years in targeted subsidies for energy efficiency and the use of cleaner energy sources;

     

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  • encouraging companies to take early action by "giving them credit for showing the way;"

     

     

  • creating a tradable permit or quota for reducing emissions drawing on the experience of acid rain permit trading;

     

     

  • reducing energy use by the federal government through new technology, renewable energy resources and partnerships with private firms;

     

     

  • unleashing competition in the electricity sector and removing outdated regulations, "in a way that leads to even greater progress in cleaning our air and delivers a significant down payment in reducing greenhouse gas emissions;"

     

     

  • encouraging corporations to prepare their own greenhouse gas reduction plans and having federal, state and local governments remove barriers to greater energy efficiency.

     

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Clinton assures us that this will be quite painless. He claims that "the conversion of fuel to energy use is extremely inefficient and could be made much cleaner with existing technologies or those already on the horizon, in ways that will not weaken the economy but in fact will add to our strength in new businesses and new jobs. If we do this properly, we will not jeopardize our prosperity – we will increase it." President Clinton’s speech can be found at www.whitehouse.gov/Initiatives/Climate/main.html.

Domestic Reactions to U.S. Proposal

There were many reactions from Capitol Hill. Sen. Frank Murkowski (R-Alaska) said, "To reach the president’s targets, we will need a $50 per ton carbon tax. American consumers and workers will pay dearly and, unless China, Mexico and the other developing countries follow suit, global emissions will still increase."

Rep. John Dingell (D-Michigan), Chairman of the Senate Committee on Environment and Public Works, stated that, "Any agreement in Kyoto must do more than exact a vague promise from the developing countries to participate at some point in the future." He further said, "The virtues of the president’s proposal – and there are a few – are problematic. There is no doubt about the need for new technologies and the promise of research. Voluntary measures and incentives are better than mandates."

Rep. George Brown (D-California), Science Committee Ranking Democrat, said Clinton’s proposal is "a sound and reasonable beginning step." The plan, argues Brown, will lead to "economic growth based on wise and efficient use of all energy resources."

House Majority Whip Tome DeLay (R-Texas) said Clinton "has fully embraced the unproved theories of global warming while promoting damaging regulations and higher taxes that will come from the Kyoto conference. I think that is a real environmental disaster" (BNA Daily Environment Report, October 23, 1997).

Industry groups also criticized the proposal. Karen Kerrigan with the Small Business Survival Committee, a member of the The Global Climate Information Project, said, "The proposal still is not truly global…" She contends that the developing countries must have "specific scheduled" commitments to reduce emissions. Gail McDonald , president of the Global Climate Coalition said, "It’s worth repeating that American families can expect to pay at least $2,000 a year by 2010 if these efforts to reduce energy are implemented." Both the subsidies and the trading scheme that Clinton proposed "ultimately must be paid for by American consumers and taxpayers," McDonald said.

George Yates of the Independent Petroleum Association of America, representing 5,000 crude oil and natural gas producers, commented, "It is the president’s responsibility to study this issue exhaustively before sacrificing thousands of jobs and spending billions in taxpayer dollars." And the U.S. Chamber of Commerce stated that it "would not support any international global climate plan that is unfair to American business or results in substantial job losses, hidden taxes, or higher energy costs" (BNA Daily Environment Report, October 23, 1997).

Kevin Fay, executive director of the International Climate Change Partnership, an industry group who hopes to make money on emission trading, lamented the administration’s focus on targets and timetables. "It appears," said Fay, "that the recent administration focus has been on the target and timetable [issue]." The "sensible, market-based framework…is crumbling around us," Fay said (BNA Daily Environment Report, October 22, 1997).

Foreign Reactions to U.S. Proposal

Dominique Voynet, French minister of environment and territorial development attacked the U.S. proposal as "a step backward" and "not up to the challenge at hand." The European Union’s (EU) greenhouse gas reduction proposal "remains the only realistic starting point," Voynet said. France has agreed to a 5 percent emissions reduction below 1990 levels by 2010 under the EU plan which calls for a 15 percent reduction for the EU as a unit (BNA Daily Environment Report, October 24, 1997).

Spokesman for the European Commission Peter Jorgensen said that the "U.S. is shirking its global responsibility to counter climate change." The U.S., argued Jorgensen, is backtracking on the agreement it made in 1992 to reduce emissions to 1990 levels by 2000. According to Jorgensen, "it is totally inadequate and downright irresponsible" (BNA Daily Environment Report, October 23, 1997).

Regarding the U.S. position on developing nation participation the European Union’s Environment Commissioner Ritt Bjerregaard said, "We do not share the view as voiced by the U.S. that developing countries should also make cuts. The U.S. and other industrialized countries have a moral responsibility to make a commitment first. After we do that, then we can discuss the issue with developing countries" (BNA Daily Environment Report, October 20, 1997).

News from Bonn

As has become tradition at United Nations conferences the U.S., according to one source, "has come under extraordinary criticism" for its negotiating position. The biggest surprise to come from the Bonn conference is the newly proposed position of the G-77 developing countries. They are calling for a 35 percent reduction below 1990 levels by 2020.

More significantly, they are calling for the creation of a foreign aid fund to be financed by the industrialized countries. If the industrialized countries fail to meet their emission reduction targets the fund will be used to compensate the developing countries for the social, environmental and economic damage that might occur from climate change.

The G-77 has also made it clear that it will not accept a protocol that commits them to targets and timetables, nor a protocol that requires them to participate in joint implementation or emission trading schemes. It appears that negotiations are in total disarray.

Carbon Free Military?

President Clinton’s pledge to "lead by example" by requiring federal agencies to reduce greenhouse gas emissions has some national defense analysts alarmed. In a Wall Street

Journal (October 16, 1997) op-ed, Frank Gaffney of the Center for Security Policy warns that restrictions on fossil fuel use would cause serious damage to the readiness of U.S. military forces. According to a memo by Deputy Undersecretary of Defense for Environmental Security Sherri Goodman, a 10 percent reduction in military fuel use would result in "unacceptable impacts on national security." Such a reduction would lead to the loss of 328,000 miles per year from tank training exercises for the Army, 2,000 steaming days per year from the Navy’s training and operations for deployed ships, and 210,000 flying hours per year for the Air Force, severely affecting the readiness of the armed forces.

Ms. Goodman’s memo proposes a "national security waiver" which "should address military tactical and strategic systems used in training to support readiness or in support of national security, humanitarian activities, peace keeping peace enforcement and United Nation’s actions." Though the military could do without humanitarian, peace keeping and United Nation’s actions, the nation cannot do without a strong national defense.

Other International News

     

  • In response to demands from the European Union and the United States, Japan has agreed to revise its proposal from regulating three greenhouse gases, carbon dioxide, methane, and nitrous oxide, to six, adding hydrofluoroocarbons, perfluorocarbons, and sulfur hexafluoride. Japan will begin by regulating the first three gases and then after "a certain period" will take measure the reduce the other three gases (BNA Daily Environment Report, October 22, 1997).

     

     

  • The European branch of the Global Legislators for a Balanced Environment has threatened to organize a consumer boycott of American oil producers and automobile manufacturers is they succeed in preventing an agreement to reduce greenhouse gas emissions in Kyoto. The threat is in response to a television advertising campaign, sponsored by an industry coalition, which opposes an agreement to restrict energy use in the industrialized countries (BNA Daily Environment Report, October 20, 1997).

     

     

  • The European Union says that it is not prepared to act unilaterally on climate change. Jurgen Henningsen, director of the European Commission’s Environmental Directorate, said at a briefing that "We aren’t about to shoot ourselves in the foot and put our industries at a competitive disadvantage…" (BNA Daily Environment Report, October 27, 1997). Of course, the EU proposal is designed to do just that to the other industrialized countries.

     

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Economics

Emission Reductions Will Hurt Free Trade

According to a study by the Economic Strategy Institute, cutting U.S. emissions of greenhouse gases to 1990 levels by 2010 would hinder the expansion of free trade. First, this would put the U.S. at a competitive disadvantage with Europe and Japan. Second, limiting greenhouse gas emissions in industrial countries would damage economic growth, increase unemployment, and lead to a large increase of imports from developing countries, "giv[ing] substantial ammunition to people arguing that trade with developing countries is intrinsically bad." In other words, the economic dislocations caused by a climate treaty could spur a trade war.

A $100/ton carbon tax would lead to a net drop in output ranging from 3.3 percent to 21.9 percent for the airline, automobile, chemical, semiconductor, and steel industries. "The automobile, airline services, and semiconductor industries in the United States, like their smokestack brethren, can expect significant declines in output and competitiveness if U.S. negotiators agree to an energy tax aimed at constraining U.S. emissions of 1990 levels, especially if steps are not taken to constrain developing country emissions," the report said (BNA Daily Environment Report, September 30, 1997).

Climate Change and the Insurance Industry

With warnings from the Intergovernmental Panel on Climate Change that global warming could increase the frequency and intensity of tropical storms, the insurance industry has become very concerned about the possibility of rising insurance claims as a result of natural disasters.

According to E Magazine (November/December 1997), "After Hurricane Andrew, homeowners’ insurance premiums in Florida rose 72 percent. Allstate canceled 50,000 home policies, and CIGNA stopped offering new coverage in South Florida….And in 1996, Nationwide Insurance Company…announced that it would sharply reduce sales along the Eastern Seaboard and Texas coast."

Frank Nutter of the Reinsurance Association of America warns, "The world faces financial collapse due to global warming, and the insurance industry is the first in line to be affected." Roger Pielke, Jr. of the National Center for Atmospheric Research, on the other hand, argues that "inflation, changing and growing population patterns in coastal areas, as well as more development are the real factors that can contribute to an insurance nightmare should a big storm strike."

Numerous scientific assessments have found that there is no evidence of increased storm activity and indeed, Robert C. Balling, Jr., in a paper for the Competitive Enterprise Institute (Calmer Weather: The Spin on Greenhouse Hurricanes, available at www.cei.org), found that increased hurricane activity might actually be correlated with cooler temperatures.

The E Magazine article laments that the increasing difficulty in acquiring flood and wind insurance has shifted much of the burden of disaster relief to the Federal Emergency Management Agency. This is indeed cause for concern. The insurance industry reaction is rational. Insurance premiums should be more expensive in disaster prone areas, discouraging development. The federal government’s increased role in disaster relief has encouraged development in disaster prone areas massively increasing the societal costs when natural disasters do strike.

To the extent that the government continues to subsidize risky behavior such behavior will continue to increase, ultimately putting insurance markets and people at greater risk.

Science

Growing or Shrinking? Nobody Knows

Environmentalists have repeatedly claimed that global warming is causing the earth’s polar ice caps to melt which could cause widespread coastal flooding. As it turns out the greenies have been speculating in a data-free environment.

The Canadian Space Agency and the National Aeronautics and Space Administration have just completed the data-gathering necessary to construct the first high-resolution map of the Antarctic continent. Previous maps have failed to provide a complete picture of the continent meaning that scientists are not sure whether the massive ice sheet is growing larger or smaller. While the data collection took only four weeks it will be another year before the 8,000 images can be meshed into a complete map of the Antarctic (Canada NewsWire, October 24, 1997).

Better Models, Opposite Results

Scientists have been predicting that global warming would lead to warmer and drier weather for Illinois and Missouri hurting farmers and others who depend on good weather. Now climatologists Derek Winstanley and Stanley Changnon of the Illinois State Water Survey are saying that the weather could be wetter and cooler.

The reversal comes as computer models that attempt to replicate the earth’s climate improve. "The science is still evolving," Changnon said. "The models are far from perfect." The inclusion of aerosols, which cool the planet, into the models is one of the reasons why the models now predict cooling for the Midwest, though the affects of aerosols is still hotly debated.

The new predictions are more in line with what has been happening in the Midwest over the past century where average temperatures have cooled and precipitation has risen. Previous predictions had temperatures in the area rising from 6 to 12 degrees Fahrenheit and major rivers bottoming out. Now researchers are predicting a cooling of 2 to 3 degrees which would not cause problems, Changnon said. He further stated that it will be another ten years before "complete and accurate" models are available. "A whole new outcome is still very possible" (St. Louis Post-Dispatch, October 26, 1997).

A Greener Africa

Climatologists have wondered why North Africa changed from a wet, lush grassland to a barren desert over the last 6,000 years. A study published in Science (October 17, 1997) by researchers John Kutzback and Zhengyu Liu may have solved the mystery.

The researchers believe that the climate change was caused by a combination of shifts in the Earth’s orbit, a decrease in vegetation, and a slight cooling of the Atlantic ocean. Using a computer generated climate model the researchers found that an increase in sea surface temperature would cause deeper penetration of moisture-laden air into North Africa as well as enhance the summer monsoon precipitation by as much as 25 percent.

Solar Cycles and Climate Change

Researcher Richard C. Willson has published an article in Science (September 26, 1997) which shows the sun to be a major component of climate change. Using observations from three satellite-borne sensors which have monitored sun brightness since 1978 Willson found a brightening of 0.036 percent per decade from 1986 to 1996. If this were sustained for 100 years it might produce a warming of about 0.4 degrees C.

As pointed out in a news article on Willson’s findings, appearing in the same issue of Science, the findings are controversial. Some studies have comfirmed Willson’s findings while others find no brightening. Claus Frohlich, who has not found any brightening in his research says, "I’m not saying one or the other is correct; we’re just doing things differently." Frohlich believes that in order to settle the controversy it will be necessary to have reliable measurements that span two solar minima (a complete solar cycle). "But," the article concludes, "that means researchers will have to wait at least another decade before deciphering the sun’s role in global change."

Announcements

The Competitive Enterprise Institute has produced a book and a highlights video based on The Costs of Kyoto conference held in July 1997. Both the book and the video are available for $15 or buy both for $25. To order call CEI at (202)331-1010.

The Competitive Enterprise Institute has just published Mitigation of Climate Change: A Scientific Appraisal, in which S. Fred Singer of the Science and Environmental Policy Project discusses alternative strategies to mitigate climate change. To order the report call CEI at (202)331-1010.