Vol. 5, No. 20
EU Bows to Industry Pressure
The European Union has been devising an emissions trading scheme to trade greenhouse gas permits, that is scheduled to take effect in 2005. According to Reuters (October 2, 2001), “The EU executive originally aimed to propose the regulations in July but was persuaded to redraft them in a more business-friendly form after intense lobbying from industry.”
Firms within the EU have demanded the changes because they fear that the plan would put them at a competitive disadvantage with U.S. firms. “The latest draft bows to several industry demands by halving the proposed fines, allowing the Commission to exempt certain sectors temporarily and enabling member states to give firms extra emission credits in special market conditions.”
Fines for noncompliance were reduced from 200 euros to 100 euros per excess ton of CO2 emitted. If permit prices go too high, then governments can issue extra permits. Governments can also temporarily exempt certain sectors during the first three years of the program if they can demonstrate that they can reduce the same amount of emission by other means.
The ability of governments to issue additional permits is very problematic and is likely to short circuit the trading that would take place otherwise. Increasing the supply of permits not only defeats the cap, but it also decreases the price of existing permits, thereby harming the firms holding them.
EU to Propose Aviation Fuel Tax
The European Union is pushing for a tax on aviation fuel for international flights at a meeting of the International Civil Aviation Organization currently underway in Montreal. Under a long-standing international agreement, aviation fuel for international flights is exempt from taxation. Environmentalists claim that this is a major subsidy to the airline industry.
The EU says that if an agreement cannot be reached it may and unilaterally impose a tax on internal EU flights or impose a tax on airfreight (ABC News, September 15, 2001).
Climate Change Policies Add to Economic Hard Times
Over the last year, industrial gas prices in Great Britain have risen by more than 50 percent, an increase that was kicked off with the government’s new climate change levy that increased prices by 7 percent. Rising world prices contributed the remainder of the increase. The climate change levy has also increased the price of coal by 13 percent and electricity by 8 percent (Daily Telegraph, September 28, 2001).
Many businesses are feeling the impacts of the new tax. Carpetmaker Stoddard International has seen its operating profit fall 35 percent in the last half year, which chief executive Alan Lawson attributes in part to the climate change levy. The company’s energy costs rose by 250,000 pounds sterling, some as a result of the levy. “The principle is fine but the actual levying of it is penal, especially at a time when we are facing currency costs and threats of cheaper imports from countries which don’t have the climate change levy,” said Lawson (The Herald (Glasgow), September 28, 2001).
The Engineering Employers Federation in Great Britain conducted a survey of 550 engineering firms and found that the costs of the climate change levy would exceed 100 million pounds sterling. “Our figures prove that the Government was wrong when saying the levy would not impact on competitiveness because it is imposing an ever greater burden on manufacturing at a time when it is already in recession,” said Martin Temple, EEF’s director general (Belfast Telegraph, September 24, 2001).
Scientists Lack Necessary Tools to Predict Climate Change
A report in Science (September 7, 2001), looks at the issue of climate prediction by looking at one area of the planet that has experienced significant warming, the Antarctic Peninsula. According to Vaughan, et al., the average temperature increase for all Antarctic stations from 1959 to 1996 was about 1.2 degrees Celsius. Some regions, however, experienced cooling trends, while others experienced warming trends.
The Antarctic Peninsula has experienced a warming trend “considerably larger” than the Antarctic average. The authors argue that, “There is a 99 percent likelihood that the recent warming is exceptional compared with any part of the 500-year period recorded in the longest of these records.”
By analyzing sediment cores the authors found that seven ice shelves, including the Prince Gustav Channel ice shelf that collapsed in 1995, have been lost in the last fifty years in the Antarctic Peninsula. They also found, however, that between 6000 and 1900 years ago the Prince Gustav “ice shelf was absent and climate was as warm as it has been recently.”
“The recent rapid regional warming in the Antarctic Peninsula is thus exceptional over several centuries and probably unmatched for 1900 years,” according to the authors. “It may be tempting to cite anthropogenic greenhouse gases as the culprit, but to do so without offering a mechanism is superficial.” Of course, recent climatic conditions in the area are not exceptional for the last 6000 years.
The authors offer three possible explanations for the warming in the Antarctic Peninsula, but warn that, “Because we cannot distinguish between these widely differing mechanisms, we have no basis for predicting future changes, even if we accept that the recent warming is exceptional.” They conclude, “This suggests that we do not yet have tools to predict potentially socially significant regional climate changes in the next 100 years.”
Greening Earth not Necessarily Due to Warmer Climate
We reported in the September 5 issue about a study that was to be published in the Journal of Geophysical Research-Atmospheres (September 16, 2001). The study argued, “that warmer temperatures and elevated levels of carbon dioxide have led to a greening of the northern hemisphere.”
It seems, however, that there are some problems with the study. According to John Daly (Still Waiting for Greenhouse, www.john-daly.com), the study’s claim that warmer temperatures are causing a greener greenhouse is wrong. Thus the increases in vegetation must be due solely to higher levels of CO2, as hundreds of agricultural studies have shown.
A press release from the American Geophysical Union explains that, “Researchers using satellite data have confirmed that plant life above 40 degrees north latitude (New York, Madrid, Ankara, Beijing) has been growing more vigorously since 1981 due to rising temperatures and buildup of greenhouse gases, and Eurasia seems to be greening more than North America, as existing vegetation is more lush for longer periods of time” (www.enn.com).
The correlation between temperature and greening above 40 degrees latitude is fairly weak, according to Daly. From the early-to-mid 1980s there was significant greening even though temperatures were hardly changing. Other years also show significant greening in cooler years.
More importantly, however, when discussing the amount of greening the study includes the area above 30 degrees latitude, which includes the southern United States. But, the area between 30 and 40 degrees latitude is not included when the researchers correlate temperature and plant life. Since the southern U.S. has greened significantly while temperatures have trended downward, including that data would have made the correlation between temperature and plant life disappear altogether.
Daly argues that the CO2 fertilizer effect is the only remaining explanation for the greening of the planet.
· Skeptical Environmentalist Speaks
Professor Bjorn Lomborg will speak at a Cooler Heads Coalition congressional and media briefing from noon to 1:30 PM on Thursday, 4th October, in Room HC-5 of the U. S. Capitol. Lomborg is author of the Skeptical Environmentalist, which was published in the U. S. this month by Cambridge University Press and which has received rave reviews. Those wishing to attend the briefing should Rsvp to Michael Mallinger at CEI: telephone (202) 331-1010, ext. 254, or e-mail: firstname.lastname@example.org. Please give your name, affiliation, phone number, and e-mail address.
· The Cooler Heads Coalition will hold a congressional and media briefing on “What’s Wrong with Regulating Carbon Dioxide?” on Thursday, October 11. The briefing will be held from noon to 1:30 in room SC-5 of the U.S. Capitol building. The speakers will be Dr. Ross McKitrick, associate professor of economics at the University of Guelph, Ontario Canada, and Dr. Brian Fisher, executive director of ABARE, the Australian Bureau of Agricultural and Resource Economics. Those wishing to attend the briefing should Rsvp to Michael Mallinger at CEI: telephone (202) 331-1010, ext. 254, or e-mail: email@example.com. Please give your name, affiliation, phone number, and e-mail address.
· The seventh Conference of the Parties of the United Nation’s Framework Convention on Climate Change is scheduled to take place in Marrakesh, Morocco from October 29 to November 9 under a new chairman, Mohammed Elyazghi, Morocco’s environment minister.
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
Defenders of Property Rights
Frontiers of Freedom
George C. Marshall Institute
National Center for Policy Analysis
National Center for Public Policy Research
Pacific Research Institute
Small Business Survival Committee