Vol. II, No. 8

Vol. II, No. 8

April 15, 1998

Politics

Environmental Ministers Meet

Environmental ministers from 29 member countries of the Organization for Economic Cooperation and Development and the G-8 Ministers ("The Group of Seven" most industrialized nations plus Russia) met in Paris on April 2 and 3 to discuss environmental issues.

The G-8 Ministers agreed that climate change is the greatest threat to the world’s sustainable development, public health, and future prosperity. They called for the rapid introduction of measures to implement the Kyoto Protocol claiming to be "aware of their responsibility to take the lead in combating climate change." They also agreed not to use emission trading to avoid domestic reductions in greenhouse gases. The European Union insisted on a strict 50 percent limit on greenhouse gas reductions achieved through emissions trading. The U.S. and Japan demanded a 60 to 70 percent limit.

This is important because the Clinton administration has based its estimates of the Kyoto Protocol’s costs on the assumption that there will be a fully operating trading system. Any limits on the ability to trade emission credits will require an upward revision of the cost estimates.

One bright spot of the meeting was a declaration by the Environmental Ministers of the OECD countries endorsing the need to eliminate subsidies and fiscal incentives that damage the environment. Unfortunately, tax credits (allowing people to keep their own money) were included in the definition of subsidies and incentives (European Report, April 8, 1998).

Class Conflict

One of the provisions in the Clinton Administration’s $6.3 billion tax and subsidy plan to reduce greenhouse gas emissions is a tax credit for car buyers who purchase high mileage vehicles. The tax credit ranges from $3,000 for cars getting twice the base mileage for their class and $4,000 for cars getting three times the base mileage. The Clinton Administration said that it would work with the carmakers to define vehicle classes.

The Big 3 automakers, however, are opposed to classes. They fear that companies will alter existing vehicles to make them eligible for tax credits rather than invest in expensive new technologies such as fuel cells and hybrids. The Corporate Average Fuel Economy produced similar changes in the auto fleet.

Dan Becker, climate change director for the Sierra Club, is confused by the automakers resistance. Carmakers, says Becker, have complained about technology mandates but now the are resisting the market-based programs that they have wanted saying that they will interfere with costly technology investments (Sebastian Sun, April 3, 1998).

Economics

Tax Shifting

One of the policy options for reducing greenhouse gas emissions that is beginning to receive a lot of attention is tax shifting. The idea behind the proposal is that governments shift taxes away from "goods" (i.e., labor and investment) and begin taxing "bads" (i.e., pollution and energy use). The Clinton administration and others who wish to control energy use have seized upon this tax proposal as a nearly cost-free way to reduce energy use. States such as Vermont, New England, Massachusetts, Minnesota, and New York are considering policies of this type.

A study done in June 1997 by the Tellus Institute analyzes the economic affects of tax shifting on the state of New York. It is a good preview of how these types of policies may be sold to taxpayers. The study treats tax shifting optimistically stating that "There need not be a trade-off between environmental policies and economic well-being." According to the study, "Ecological tax reform is a policy strategy in which this double goal is built by design."

The authors concede, however, that some people will be hurt by the new tax policies. Those who depend on energy intensive industries may find themselves in economic straits. "Thus," says the authors, "concrete tax reform policy would require provisions to ensure that businesses that would be hard hit by simple tax shifting, and the employees of these businesses, would be assisted in this transition, through measures such as targeted tax credits, subsidies for energy-efficiency investments, and retraining assistance for workers. Such measures could be focused on communities that depend on energy-intensive industries."

But such adverse effects should not be cause for undue alarm. Structural change is natural in a capitalist economy. Unlike the messy, unpredictable changes that occur in a capitalist economy, however, "ecological tax reform could help give direction to this process," say the authors. The study also touts the advantages of tax shifting for New York’s industrial planners. State industrial policy has become a hodgepodge of tax credits, infrastructure services and other targeted policies designed to lure businesses to the respective states. The study recommends that states adopt ecological tax reform as a way to simplify existing tax systems and eliminating what many economists see as counterproductive competition between states.

The study analyzes three levels of carbon taxes: $10, $30, and $50 per ton of carbon dioxide (CO2). The taxes would be fully implemented by 1997, would be assessed on carbon content of fossil fuels and at first point of entry to the state. The study also analyzes two policy scenarios: Scenario I returns the entire carbon tax to taxpayers through reduced traditional taxes. Scenario II uses one-quarter of the carbon tax revenue to subsidize energy efficiency investments while the rest is returned taxpayers.

Coal would experience the largest price increase due to a carbon tax. A $10 carbon tax would increase the price of coal by $20.82/ton, $62.46/ton under a $30 tax and $104.09/ton under a $50 tax. Gasoline prices would increase by $0.10/gallon, $0.31/gallon and $0.52/gallon for the respective tax levels and natural gas prices would increase by $0.58/mcf, $1.74/mcf and $2.90/mcf respectively.

The authors claim that additional energy reductions can be achieved through the reinvestment plan under scenario II. Under the $10 tax a 25 percent reinvestment would triple energy reductions relative to no investment. Under the $30 tax energy reductions would be 90 percent higher while under a $50 tax energy reductions would be 55 percent higher.

Finally, the authors claim that ecological tax reform would lead to net job creation. They reason that taxing energy use would discourage capital-intensive production and would encourage labor-intensive production, increasing labor demand. Furthermore, non-energy, labor-intensive products (such as services) are generally produced within the state while energy-intensive products are more often imported into the state. Ecological tax reform would prevent money from leaving the state. The study, Ecological Tax Reform: Carbon Taxes with Tax Reductions in New York can be obtained through the internet at www.tellus.orghttp://www.tellus.org/

for $25.

Science

Mea Culpa

The November 1997 issue of Environment ran a commentary by Phil Jones of the Climatic Research Unit that tried to marginalize Patrick Michaels, a well known global warming skeptic, by saying that he has only published one peer-reviewed article on the issue of climate change detection.

A response by Michaels in the April issue prompted a "clarification" by Jones. "I am writing now to clarify this statement because it can easily be misconstrued if it is taken out of context, " Jones says. "My definition of this issue is very specific, referring only to exercises that use pattern-matching techniques to attempt to attribute what has happened over the last 30 to 50 years to . . . anthropogenic changes in trace gases. There are relatively few papers, approximately 10 to 15, published on this issue."

Michaels says that he doubts he will publish another paper on this subject since that method of climate change detection has been shown to be flawed by Robert Davis and David Legates of the University of Virginia.

A Correction at NASA

A paper appearing in Science in 1989 by Zwally et al., used satellite radar altimeter data to show that the Greenland ice sheet had grown by 23 ± 6 cm/year from 1978 to 1986. A new paper in Science (March 27, 1998) by Davis et al. casts doubt on that conclusion.

The Greenland ice sheet is important to climate change research because it is much warmer than the Antarctic ice sheet, and would experience more dramatic changes in the event of global warming. The 1989 paper suggested that a warmer polar climate would increase precipitation causing the Greenland ice sheet to expand. The large expansion purportedly discovered by Zwally et al. was cited as further evidence of global warming.

The altimeters used were designed primarily for measuring sea-surface height necessitating the "postprocessing" of data measuring ice sheet elevation to ensure accuracy. The new paper reexamines the satellite data by comparing the NASA algorithm used by Zwally et al. with three other algorithms and finds that the NASA algorithm deviates significantly (30 to 50 percent) from the other three which all produce nearly identical results.

Davis et al. have determined that the spatially averaged growth rate of the Greenland ice sheet from 1978 to 1987-88 is 1.5 ± 0.5 cm/year. The researchers argue that due to various uncertainties "the small 1.5 cm/year growth rate estimate may not be significantly different form the null growth rate." Davis et al. conclude, "Considering the large spatial and temporal variations, the 1.5 ± 0.5 cm/year growth rate is too small to assess whether or not the Greenland ice sheet is undergoing a long-term change due to a warmer polar climate."

Sunshine, Cosmic Rays, and Climate Change

It’s obvious to most people that the sun plays an important role in the climate of the planet. Recently evidence has been accumulating that the sun may have more to do with temperature variations than manmade greenhouse gases. Researchers such as Knud Lassen and Eigil Friis-Christensen of the Danish Meteorological Institute (DMI) have found a correlation between sunspot activity and earth’s temperature. The Danish researchers, for example, found a loose correlation between temperature and the number of sunspots (increased sunspot activity brightens the sun leading to higher global temperatures) and a much stronger correlation between temperature and the length of the sunspot cycle.

The problem with this hypothesis is that the sun does not brighten enough to directly explain temperature changes. Researchers believe, however, that the solar wind, which becomes stronger during sunspot cycles, shields the earth from high-energy charged particles from outer space called cosmic rays. These incoming cosmic rays may contribute to cloud formation, cooling the earth. Henrik Svensmark, also of DMI, and Dr. Friis-Christensen have discovered that cloud cover does vary with the cosmic-ray flux, with global cloud cover varying between 65 percent when cosmic rays are weakest and 68 percent when they are at their peak.

Researchers are not sure how cosmic rays contribute to cloud cover, though there are a couple of theories. Jasper Kirby and Frank Close, who work at the European particle-physics centre in Geneva, have devised an experiment to strengthen the connection. The researchers plan to use a modified cloud chamber (a box containing air super-saturated with water vapor) that can be used to replicate conditions in the atmosphere. By firing particle beams similar to cosmic rays through the box they can see whether clouds are formed. It may turn out that much of the small amount of warming that we have experienced in the last century is due to solar inconstancy (The Economist, April 11, 1998).

Shooting Down Airplanes

A new study by the Intergovernmental Panel on Climate Change (IPCC) says that aircraft may be responsible for 5 to 6 percent of warming caused by greenhouse gas emissions. Some of the study’s authors say that the figure could be as high as 10 percent or more since the study is based on outdated models of atmospheric chemistry. Air travel, according to the study, influences global warming in two ways. First, through carbon dioxide emissions and second, by emitting nitrogen oxides which are converted into ozone in the upper troposphere which can act as a powerful greenhouse gas at that elevation.

Aircraft emissions are not currently covered by the Kyoto Protocol since negotiators could not agree how to allocate responsibility for emissions the result from international flights (New Scientist, April 11, 1998).

Hurricane Predictions

Dr. William Gray, a hurricane forecaster at Colorado State University has predicted that there will be a rise in the frequency of hurricanes in 1998 due to the dissipation of El Niño, which suppressed hurricane activity in 1997. Dr. Gray predicts that there will 10 named tropical storms, six will become hurricanes and two of those will become intense hurricanes with wind speeds up to 111 mph or more. On average there are 9.3 named storms, 5.8 hurricanes and 2.1 intense hurricanes each year (The Jupiter Courier, April 8, 1998).

Etc.

     

  • Vice President Al Gore and New York Times science writer William Stevens received the "Chicken Little Awards" on April 6 from the National Anxiety Center which gives the annual award to "individuals and groups who have scared the daylights out of millions of people." The center’s founder, Alan Caruba, stated that Al Gore has no "grip on reality." William Stevens was cited for his 125 articles about global warming. "That’s not journalism," said Caruba, "It’s pure propaganda" (U.P.I., April 6, 1998).

     

     

  • Secretary of Energy, Frederico Peña began his speech, where he presented the Clinton administration’s Comprehensive National Energy Strategy, with the following non sequitur: speaking of a meeting with the G-8 energy ministers he said, "Ten years ago, none of the eight of us in that room could have predicted exactly where our energy markets would be today, and none of us can predict exactly where our energy markets will be 10 years from today. But the energy ministerial drove home the point that although none of us can precisely predict the future, each of us needs to prepare our nation for the coming century" (Federal News Service, April 8, 1998).

     

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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, or e-mail to info@cei.org.

Thomas Gale Moore, a member of the Competitive Enterprise Institute’s board of directors, has written a book, Climate of Fear: Why We Shouldn't Worry about Global Warming that will soon be published by Cato Institute. Ordering details will be forthcoming at Cato’s website at www.cato.org

The Institute of Economic Affairs in London has published a book, Climate Change: Challenging the Conventional Wisdom. The book can be ordered by contacting IEA by e-mail at books@iea.org.uk.

The European Science and Environment Forum (ESEF) has recently published Global Warming: The Continuing Debate. It can be ordered for $25 from CEI or by contacting ESEF at lorraine@esef.org.