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Vol. V, No. 26

Cooler Heads Digest

Title

Vol. V, No. 26

Politics

Bush Administration Searches for Alternatives to Kyoto

The Bush Administration is actively seeking an alternative strategy to the rejected Kyoto Protocol to reduce greenhouse gases, according to the Financial Times (December 14, 2001).  A leading proposal is an emissions trading program that would involve the Canada, the United States, and Mexico.  In a December 4 article, FT reported that President Bush “in July called for joint action on greenhouse gases in North America.”

John Graham, head of the Office of Information and Regulatory Affairs, has also endorsed “market-based” programs.  The December 19 issue of FT reports, “He is also considering an expanded program of pollution trading which might include the swap of emissions permits for the release of nitrogen oxides, sulfur dioxide mercury and the greenhouse gas carbon dioxide.”

On November 30, the Commission for Environmental Co-operation under the North American Free Trade Agreement held the first of two meetings to discuss the establishment of such a system.  There are several obstacles to overcome, including the fact that Canada is still committed to the Kyoto Protocol and that Mexico is exempt from Kyoto commitments (FT, December 14).

The Pew Center on Global Climate Change, an industry front group that has heavily lobbied the administration to regulate greenhouse gases, argues that, “Most companies think something is going to come down” (from the regulators), says Pew spokeswoman, Katie Mandes.  “Some think legislation is inevitable and want to get out in front.”  The 37 companies that make up Pew’s membership hope to profit from government regulation of greenhouse gases.

Annie Petsonk of Environmental Defense, which has set up its own corporate lobby for greenhouse regulation “predicts that the Bush Administration will balk at setting up a cap for emission trading.  The most she expects is a voluntary Nafta-based program, under which companies would trade credits,” reports FT.  A voluntary scheme would increase industry support for a cap since emission permits would be worthless otherwise.

Michael Marvin, president of the Business Council for Sustainable Energy, says his group “only wants three things from government.  To tell us where to go (by establishing caps), when to get there and to get the hell out of the way.”

Economics

UK Must Drastically Cut CO2

A report on the United Kingdom’s future energy outlook, commissioned by British Prime Minister Tony Blair, has been leaked to the media.  The report argues that there is “a strong likelihood that the UK, with other developed countries will need to make very large carbon reductions over the next century,” and that the key task for future energy policy would be “addressing carbon dioxide emissions.”

The Cabinet Office’s Performance and Innovation Unit (PIU) compiled the report to consider the energy implications of a previous report by the Royal Commission on Environmental Pollution.  The Royal Commission argues that the UK must reduce emissions of carbon dioxide by 60 percent by 2050, stating that, “Credible scenarios for 2050 can deliver a 60 percent cut in CO2 emissions, but large changes would be needed both in the energy system and in society.”

The PIU report also recommends that the UK use “economic instruments” such as emission permits and taxes, increase energy efficiency, and expand the use of renewable energy sources to reach a 60 percent reduction.  Even if the electricity sector were to achieve zero CO2 emissions, however, it would still be necessary to substantially shift away from oil in the transportation sector, according to the report (BBC, December 13, 2001).

China’s Emissions Trends

According to an article in Science (November 30, 2001), China’s greenhouse gas emissions have fallen since 1996.  The article states, “The prevailing wisdom about China’s greenhouse gas emissions is that they are increasing steadily, because of the large quantities of coal being used to fuel a fast-growing industrial economy, and most projections show China’s greenhouse gas emissions continuing to grow in the coming decades.”

The article’s authors claim, however, that, “we find that China’s CO2 emissions declined by 7.3 percent between 1996 (the peak year) and 2000, and CH4 [methane] emissions declined by 2.2 percent between 1997 (the peak year) and 2000.”

One of the reasons given by the Bush Administration for its rejection of the Kyoto Protocol is that it does not require commitments from developing countries, especially large emitters like China, India, and Mexico, putting U.S. industry at a competitive disadvantage with foreign industry.  Many who favor U.S. ratification of the Kyoto Protocol may claim that this data proves that exempt developing countries are actively pursuing greenhouse gas reductions and that the U.S. should proceed with Kyoto participation.

But the reasons for China’s greenhouse gas reductions, assuming the data is accurate, give pause to such claims.  According to the article, the reductions resulted from, “the closing of small, inefficient industrial plants; improved efficiency of energy end use; improved coal quality; the switching of many residential fuel users from coal to gas and electricity; technological progress in the energy-intensive sectors; and the opening up of coal and electricity markets.”  Also, “A slowdown in economic growth contributed to the decline in energy use.”

In other words, the elimination of the vast inefficiencies usually associated with communist regimes and an economic slowdown were the reasons for the alleged downward trend in greenhouse gas emissions. 

The authors admit that, “In the last few years, China’s energy data have become more prone to error and uncertainty than they were in the early 1990s,” which, “has caused some skepticism about the reduction in energy use.”  But they still maintain, “Our analysis suggests that the reductions are real, but not as great as previously believed.” 

An energy expert with long experience of the Chinese utility industry told Cooler Heads that the apparent reduction in emissions was  primarily due to a simple change in coal production.  Under communism, coal mines had to meet quotas based on tons of coal mined.  This meant that miners would increase their production by including wet coal and dirt on the edge of seams.  Now under semi-capitalism, utilities will not buy coal below a certain quality.  This means that coal production figures have declined, while the amount of coal actually burned has not declined at all. 

Science

Major Northern Hemispheric Carbon Sink Discovered

Using satellite data researchers have determined that the forests in the U.S., Europe, and Russia soak up at least 700 million metric tons of carbon dioxide per year, equivalent to 12 percent of annual global emissions, according to a study appearing in the December 18 issue of the Proceedings of the National Academy of Sciences.  U.S. forests, according to the study, soak up about 140 million tons of carbon per year or about 11 percent of U.S. total emissions.

 “This is only a piece of the total carbon sink in the north which may be as large as 2 billion tons,” said Compton Tucker of NASA’s Goddard Space Flight Center, one of the studies authors.  Other northern carbon sinks, such as soils, are also suggested. 

Some forests, such as the Canadian boreal forest, are losing carbon.  It is not clear why, however.  “This means that we do not know whether these forests will continue to store carbon in the future or release it at some point. That is why we need to monitor them both from space and on the ground,” said Jiarui Dong of Boston University (unisci.com).

THE COOLER HEADS COALITION

Alexis de Tocqueville Institution

Americans for Tax Reform

American Legislative Exchange Council

American Policy Center

Association of Concerned Taxpayers

Center for Security Policy

Citizens for a Sound Economy

Committee for a Constructive Tomorrow

Competitive Enterprise Institute

Consumer Alert

Defenders of Property Rights

Frontiers of Freedom

George C. Marshall Institute

Heartland Institute

Independent Institute

JunkScience.com

National Center for Policy Analysis

National Center for Public Policy Research

Pacific Research Institute

Seniors Coalition

60 Plus Association

Small Business Survival Committee