Kyoto-by-Inches Is Just as Foolish
The current energy-bill debate may be mostly about pork, but vital issues of principle are in play.
Real reform would remove political barriers to the production and distribution of affordable energy. Its guiding philosophy would be supply-side economics. But in today's political climate, many influential interests view energy policy as an exercise in "demand-side management." Tacitly or openly, they favor some kind of energy rationing.
In their ideal world, Congress would enact energy taxes. But after Bill Clinton and Al Gore got their ears pinned back in 1993 for proposing an energy tax, the demand-side crowd has promoted regulatory forms of energy rationing less easlly understood bythe public.
Their boldest initiative to date is the Kyoto climate treaty, which would require the UnitedStates to reduce emissions of greenhouse gases, chiefly carbon dioxide (CO2) to 7 percent below 1990 levels during 2008-2012.
Because CO2 is the inescapable byproduct of the carhon-based fuels that supply about 85 percent of all U.S. energy, the power to regulate CO2 is the power to restrict Americans' access to energy. Thus, it is a power to cripple US. productivity, competitiveness and growth.
In the United States, Kyoto has been politically defunct since 1998. In July of that year, Tom Wigley of the National Center forAtmospheric Research calculated that Kyoto would avert only 0.07 degrees Celsius of global warming by 2050 — too small an amount for scientists to detect. And in October 1998, the Energy Information Administration (EIA) estimated that Kyoto in 2010 would reduce the U.S. gross domestic product (GDP) by approximately $100 billion-$400 billion, depending on the extent to which. U.S. firms could comply by purchasing emission permits from abroad. The combined force of those two analyses nixed U.S. participation in Kyoto before President Bush had anything to say about it. Most senators would rather be caught kiting checks than vote for a treaty costing untold billions for an unverifiable 0.07 degree Celsius temperature reduction five decades hence. President Clinton knew better than to shop so bad a bargain to the Senate and declined to submit the treaty fora ratificationvote.
Since then, the demand-side camp has promoted scaled-down policies that cost less than Kyoto but that, if adopted, would have the political virtue (in their eyes) of establishing the critical legal precedents and regulatory machinery. All such proposals are camel's-nose-under-the-tent strategies to align U.S. law with Kyoto's aims and mechanisms.
The seminal Kyoto-lite scheme was the Climate Stewardship Act (S. 139), introduced in January 2003 by Sens. John McCain (R-Ariz.) and Joe Lieberman (D-Conn.). Sens. Lieberman and McCain mothballed their bill after the EIA estimated it would eliminate 80 percent of all electric generation from coal, America's most abundant fuel. They then introduced a pared-down version, Senate Amendment 2028. However, even this Kyoto-extra-lite bill would reduce GDP by $76 billion in the peak impact year, according to the EIA. The Senate rejected it by avote of 55-43. Now along comes Sen. Jeff Bingaman (DN.M.) with an even more "modest" proposal to save the planet. Sen. Bingaman's bill — let's call it Kyoto-by-inches — features a cap-and-trade plan developed by a group pretentiously calling itself the "National Commission on Energy Policy" (NCEP). The group proposes a cap softened by a "safety valve" whereby the government commits to printing more emission permits as needed to keep the purchase price within certain preset limits.
The EIA found that the NCEP policies "would not materially affect average economic growth rates for 2003 to 2025," prompting Sen. Bingaman to proclaim: "This EIA report validates the widely held view that it's possible to have a meaningful program to reduce greenhouse-gas emissions without harming the economy." Not so. All it shows is that Kyoto-by-inches is less expensive than Kyoto, Kyoto lite or Kyoto extra lite. The cap-and-trade program's costs are still huge — a cumulative $331 billion GDP loss during 2010-2025. More important, as a climate policy, the bill is meaningless because it would not "materially affect" potential global warming from greenhouse-gas emissions. Based on Wigley's analysis, I estimate that the NCEP cap would avert 8/1000ths of a degree Celsius of global warming by 2050. That would not benefit people or the planet one whit.
However, enacting a cap of any size would fundamentally change what the fight in Washington is about. Instead of debating whether to suppress U.S. energy supply —the central issue up to now — Congress would continually have to debate how much and howfastto suppress it.
Indeed, since even Kyoto itself can have no measurable climate effect, Sen. Bingaman's plan has no intelligible purpose except to break the political ice for a long series of increasingly costly energy-suppression measures.
Is an unverifiable 0.008 degee Celsius reduction in average global temperatures 45 years from now really worth $331 billion in. lost GDP? If not, is the Bingaman bill's real objective to establish the legal and regulatory framework for much deeper, economy-chilling cuts in CO2 emissions?
If this is just a"first step," how many more steps does Sen. Bingaman want U.S. firms to take? And what would be the cost of those subsequent steps in lost GDP, higher energy prices and lost jobs?
Sen. Bingaman's colleagues -- and the public — deserve answers to those questions.