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Vol. VIII, No. 12

Cooler Heads Digest

Title

Vol. VIII, No. 12

Politics 

Cost Estimates Keep Rising on Lieberman-McCain Climate Bill

 

A new study by Charles River Associates provides a fuller picture of the costs of the weaker version of S. 139, the  Climate Stewardship Act, that was defeated on the Senate floor last year, by incorporating adjustments to investment decisions and consumption choices made as a result of the effects of the bill.  The study finds that residential electricity prices could rise by up to 43 percent by 2020, the average household would lose up to $2,255, and GNP would fall by almost 2 percent.  As a result, the nation would lose 600,000 jobs.

The detailed results for the United States are as follows.  Residential electricity prices would rise 13-31% by 2010, and by 19-43% by 2020.  Retail gas prices would rise 9-23% by 2010, and 14-36% by 2020.  The average household, with an income of $49,000, would lose $625-$1346 each year by 2010, rising to a loss of $1043-$2255 by 2010 (representing a maximum loss of almost 5 percent of household income). 

 

The cost burden falls most heavily on the poor, despite the bill’s setting up of a new welfare bureaucracy to mitigate its effects.  The poorest 20 percent of households with an income of $14,600 or less will bear an energy cost increase burden 64 percent larger than the highest income households.  The elderly will similarly be faced with a burden 15 percent larger than that for the under-65s.

 

 

The study estimates an annual loss to gross domestic product from $164 billion to $525 billion by 2025.  The expectation of a further tightening of emissions caps in 2010 and later (as is implicit in the bill) produces job losses of 250,000 and 610,000 in 2010 and 2020 respectively.  The reduction in economic activity would have a further effect on government revenue, reducing tax incomes from motor fuels tax and income tax by a total of $7.5 billion to $19 billion in 2010.  The bill would seriously affect industries outside the energy sector, reducing motor vehicle production by up to $24 billion and agriculture by up to $29 billion.

 

Released by United for Jobs 2004 (www.unitedforjobs2004.org) and the American Council for Capital Formation on June 8, the study also examines the effects on individual States.  Illinois consumers, for instance, will see slightly lower increases in prices but slightly larger reductions in household incomes, and the loss of up to 25,000 jobs in the State.  Pennsylvania residents will see electricity prices rise up to 54% and the loss of up to 28,000 jobs.  The electricity and oil refining industries there will be particularly badly hit. 

 

Louisiana, whose Senator Mary Landrieu has hinted she might vote in favor of the bill, would be much worse hit than the national average.  Electricity prices could rise up to 52 percent, gas prices by up to 42 percent.  Household income could drop by $2,818 and up to 20,000 jobs could be lost.  Gross state product would drop by up to $11.5 billion in 2025, with state revenues falling by $211 million.

 

West Virginia, however, suffers the most of the States so far analyzed.  Gas prices would rise up to 44 percent, but electricity prices could rise by as much as 76 percent.  The burden would fall particularly disproportionately on the state’s poor, who would face a burden 70 percent higher proportionally than the highest incomes.

 

Senators Joseph Lieberman (D-Conn.) and John McCain (R-Az.) offered phase one of S. 139 last October 30, when it was defeated by a 43 to 55 vote, and are seeking another vote this summer.  Their amendment would cap greenhouse gas emissions at 2000 levels by 2010.  Sen. McCain has also said that once this cap is enacted into law, he will immediately seek lower future emissions caps.

 

Canadian Conservatives Promise to Scrap Kyoto if Elected

 

Canada could be the next country to put national interest above rhetoric in repudiating the Kyoto Protocol.  The leader of the Conservative Party, Stephen Harper, told the Canadian Press (June 9) that he would scrap the implementation of the Kyoto procedures and instead introduce a bill aimed at reducing air pollution by 2010.  He said, “Kyoto is never going to be passed and I think we'd be better to spend our time on realistic pollution control measures.”

 

The measures Harper would introduce instead would focus on genuine pollutants rather than carbon dioxide, but there are few details on the extent of the planned legislation.  Canadian environmentalists have reacted with outrage to the suggestion, with the Sierra Club taking the ultimate step of ejecting him from its “eco-Olympics” in protest.

 

Current polls (Bloomberg News, June 9) show the Conservative Party’s surprising revival, with a 37 percent to 34 percent lead over the Liberal Party (there are appreciable third party votes in Canada).  It is unlikely with the current polling numbers, however, that the Conservatives will hold a majority of seats in the 308-member House of Commons.  Canada’s federal elections are scheduled for June 28.

 

“Popcorn, Escapist Fare”

 

Despite terrible reviews, the global cooling disaster movie, The Day After Tomorrow, is proving a hit at the box office.  The movie failed to capture the #1 spot at the box office over the Memorial Day weekend, losing out to Shrek 2.  Nevertheless, it managed to take in $86 million over the period and had ticket sales of $133 million by June 7, although it will probably soon be overtaken in revenue terms by the new Harry Potter movie.  The Day After Tomorrow has proved to be even more of a hit overseas, drawing in $185 million offshore.  This includes $28 million in the UK, $18 million in Germany, and $12 million in Mexico.  Fox Pictures’ head of distribution Bruce Snyder explained the movie’s popularity to internet site Box Office Mojo:  “It’s good, popcorn, summer escapist fare….  It's a thrill ride and ends in a positive way.” 

 

Economics

 

More Experts Confirm that IPCC Temperature Predictions are Bunk 

 

The careful work of Ian Castles, former chief statistician of Australia, and David Henderson, former chief economist of the OECD, in analyzing the implausibility of the economic projections on which the temperature increases predicted in the UN Intergovernmental Panel on Climate Change’s Third Assessment Report critically depend was dismissed intemperately by the IPCC late last year (see Dec. 26, 2003 issue).  Now, independent experts have confirmed the validity of Castles and Henderson’s analysis and exposed the inadequacy of the IPCC’s reply. 

 

The debate centers around the validity of using Market Exchange Rates (MERs), as the IPCC does, or Purchasing Power Parity (PPP) as the basis for predicting future economic output.  The responses of the IPCC (also referred to in this context as the SRES Teams) have now been reviewed by an expert in economic statistics, Jacob Ryten, a leading figure in the development, evaluation and implementation of the International Comparisons Programme.

 

Mr. Ryten comments that he “cannot help being shocked by the contrast between the [IPCC] Teams’ bold assertions and peremptory dismissal of the arguments advanced by Castles and Henderson, and their manifest ignorance of the conceptual and practical issues involved in developing and using intercountry measures of economic product.”  Mr. Ryten concludes (referring to the IPCC’s choice of MER over PPP) that, “Worse than rejecting a statistical measure of which one is ignorant even though it appears to answer an intelligible question is accepting one about which one is equally ignorant but answers no intelligible questions whatsoever.”  Ryten's paper is to appear in a forthcoming issue of Energy & Environment.

 

The criticisms have also been investigated by Professor Warwick McKibbin of the Australian National University and the Brookings Institution and two co-authors (the resulting paper is now available on the Lowy Institute website at http://www.lowyinstitute.org/Public ation.asp?pid=129).  Professor McKibbin and his colleagues have also prepared and are considering the publication of a reduced version of the paper which focuses on the SRES aspects.  Among its more important conclusions are:

*    The SRES scenarios in their present form are neither transparent nor reproducible. The relationship between the driving force assumptions and projected emissions is “far from clear,” and until this information is made available “it is difficult to assess the usefulness of the SRES projections;”

*    There are various problems with these projections which would arise if the SRES authors had done what they said they had done, but “it may just be that the models did something completely different to what is suggested in the SRES report;”

*    It is crucial to understand the drivers of emissions projections and their sensitivity to changes in key assumptions, but “this understanding cannot be gleaned from the SRES in its current form;” and

*    The broad range of projections produced by the IPCC without any sense of likelihood is “of limited use to policymakers” and is “potentially misleading.”

 

The current state of the debate was summed up by the Economist (May 27) as follows:  “The IPCC claims that measuring at PPP or market exchange rates does not affect the economy any more than a switch from degrees Celsius to Fahrenheit alters the temperature. But the analogy is wrong. PPP and market exchange rates, unlike Celsius and Fahrenheit, are measuring different things. That should not be too hard an idea for scientists to grasp.”

 

European Companies Not Ready for Emissions Trading

 

Only one-third of European companies that will be affected by the new EU Emissions Trading Scheme have yet addressed the issue by creating a budget for compliance, a recent survey found.  The new plan, introduced to implement Europe’s Kyoto pledges, mandates significant reductions in the emission of greenhouse gases by 2005 and beyond.

 

The survey by LogicaCMG, a European consulting firm, was aimed at assessing whether corporations were dealing with the Emissions Trading Scheme beyond boardroom discussions and impact studies.  They explained, “A good measure of this is the willingness to commit real money in the form of budget allocation.”  It was found, however, that 91 percent of all companies are currently taking some sort of action to gauge how the regulatory scheme would affect their profits.  Approximately two-thirds of those surveyed have created staff positions strictly for monitoring CO2 regulatory issues.

 

Twenty percent of the surveyed corporations were unsure as to whether they would be emissions sellers or purchasers.  Of these, many felt they must first wait for a market to develop before deciding.  The report concluded by claiming that “trading plans are not a high priority at present, with the vast majority understandably focused on actions necessary to prepare for full compliance, at least in the short term.”  The lack of planning may explain why companies are only now realizing the serious effects the trading scheme will have on their profitability.

 

Science

 

Another New Paper Disputes Surface Temperature Record

 

Historical climate data that had previously been thought to exhibit a slight warming trend has come under fire in another newly published scientific srticle (see story in the last issue on the McKitrick and Michaels paper).  The United States Historical Climatology Network’s (USHCN) temperature database, the most widely used and highly respected database available for regional scale analysis in the U. S., has been shown to have significant biases toward higher temperatures that have apparently been overlooked in years past.  This finding is evident despite the fact that the dataset had been previously adjusted for a variety of temperature discrepancies, ranging from missing temperature data to the transition from mercurial to electronic sensing equipment.  Scientists Robert C. Balling Jr. and Shouraseni Sen Roy found in their recent study published in the Geophysical Research Letters (May 1, 2004) that the USHCN temperature data is considerably upward biased.

 

Using spatial entropy to estimate disorder in the pattern of temperature changes across the 1,221 USHCN climate monitoring stations, Balling and Roy found that some “questionable warming signals” existed at some stations.  Spatial entropy is a measure of disorder or dissimilarity of the distribution of the USHCN’s weather stations.

 

Continuing, “Stepwise multiple regression analyses were conducted with latitude, latitude squared, longitude, longitude squared, and elevation as…potential independent variables in explaining spatial variance in the temperature change values.”  They found all of the independent variables to be highly significant with regards to the temperature increase, meaning that some bias must exist within the dataset.

 

The authors explained their results.  “We find that over the (USHCN) network, the spatial entropy levels are significantly and positively related to the observed temperature trends suggesting that stations most unlike their neighbors in terms of temperature change tend to have a higher temperature trend than their neighbors.”  Balling and Roy added, “One could conclude that the network still contains unproven warming signals possibly related to lingering urbanizations effects.”

 

They concluded the article by explaining, “While the developers of the United States Historical Climatology Network have made substantial efforts to eliminate effects of time of observation biases, changes in measuring equipment, station relocations, and urbanization, our results suggest that the adjusted records continue to contain any number of contaminants that increase the temperature trend (warm) at some stations.”

 

And Another New Paper Challenges Temperature Data

 

And yet another new scientific paper finds other methodological problems in commonly accepted temperature data.  Temperature readings could be positively influenced by “heat island” effects created by the overwhelming proximity of temperature monitoring stations to industrialized regions.

 

Researchers Jos De Laat and Ahilleas Maurellis, of the Earth Oriented Science Division at the National Institute for Space Research in the Netherlands, conducted a study using a global industrial activity dataset which reveals the spatial distribution of various levels of industrial activity over the planet.  De Laat and Maurellis divided the surface of the earth into industrial and non-industrial sectors and plotted their corresponding temperature data from the years 1979 to 2001.  They found that, “Measurements of surface and lower tropospheric temperature changes give a very different picture from climate model predictions and show strong observational evidence that the degree of industrialization is correlated with surface temperature increases as well as lower tropospheric temperature changes.”  The scientists also added that as the degree of industrialization increases, the temperature increases.

 

They explained that due to the fact that temperature measurements are most commonly monitored in areas that “are often conducted in the vicinity of human (industrial) activity,” there exists an overstatement of warming.  De Laat and Maurellis concluded that, “The observed surface temperature changes might be a result of local surface heating processes and not related to radiative greenhouse gas forcing.” The article was published in Geophysical Research Letters on March 11, 2004.  An excellent review of it can be found at www.co2science.org. 

 

Vikings Preferred Mediterranean Climate

 

The Center for the Study of Carbon Dioxide and Global Change has just produced a good review of the evidence concerning the effects of global cooling on the Viking settlements on Greenland from the eleventh to the fifteenth centuries (available at www.co2science.org). 

 

Recent reports reconstructing environmental conditions in the vicinity of Igaliku Fjord, South Greenland – before, during and after the period of Norse habitations of Greenland – have found that the Vikings flourished during times of warming, and that their eventual fall can be linked to falling temperatures. 

 

Susanne Lassen and colleagues Antoon Kuijpers, Helmar Kunzendorf, Gerd Hoffmann-Wieck, Naja Mikkelsen, and Peter Konradi have published a report appearing in The Holocene (Vol. 14, #2, March 1, 2004) specifically discussing Norsemen and the changing Greenland climate.  They examined the eventual abandonment of the Viking settlements on Greenland and pointed to an “unprecedented influx of (ice-loaded) East Greenland Current water masses into the innermost parts of Igaliku Fjord” as the culprit. 

 

They concluded that the “stratification of the water column, with Atlantic water masses in its lower reaches, appears to have prevailed throughout the last 3200 years, except for the Medieval Warm Period.”  During this period, the scientists believe that living conditions were suitable for settlement and provided an opportunity for the Vikings to prosper, primarily due to the increased nutrients and marine food available.

 

That was until the Little Ice Age.  The combination of a decline of marine food and deteriorating growing and living conditions on land made it difficult to survive.  Lassen et al. concluded that, “Climatic and hydrographic changes in the area of the Eastern Settlement were significant in the crucial period when the Norse disappeared.”

 

A similar study conducted by Karin G. Jensen and also appearing in The Holocene (Vol. 14, #2, March 1, 2004) came to similar conclusions.  “Life conditions certainly became harsher during the 500 years of Norse colonization," Jensen claimed.  The auther added that this climate change "may very likely have hastened the disappearance of the culture.”

 

The co2science.org review (from their June 2 newsletter) concluded by explaining the present-day effects of this study.  “Since the peak warmth of the Medieval Warm Period was caused by something quite apart from elevated levels of atmospheric CO2, or any other greenhouse gas for that matter, there is no reason to not believe that a return engagement of that same factor or group of factors is responsible for the even lesser warmth of today.”  We would only add that the Vikings or Normans conquered Sicily from the Arabs between 1060 and 1091. They found the climate much more agreeable.

 

Announcements

 

Fraser Institute and Istituto Bruno Leoni Join Cooler Heads Coalition

 

The Cooler Heads Coalition has decided to accept member organizations from outside the United States.  We are proud to announce our initial two new members – the Fraser Institute in Canada and Istituto Bruno Leoni in Italy.  Both organizations are leaders in the global warming debate in their countries.

 

Hill Briefing on June 15 on the Lieberman-McCain Climate Bill

 

United for Jobs 2004 will hold an energy roundtable for congressional staff on June 15 from 10 to 11:30 AM in Room 188 of the Senate Russell Office Building.  Margo Thorning of the American Council for Capital Formation will discuss the new economic analysis of the Lieberman-McCain Climate Stewardship Act (see lead story in this issue).  Other speakers are Karen Kerrigan of the Small Business Survival Committee, John Felmy of the American Petroleum Institute, and Myron Ebell of the Competitive Enterprise Institute.  The causes and solutions to rising fuel costs will also be discussed.