Vol. III, No. 12

Politics

Implementation Sans Ratification

 

A leaked EPA document dated April 23, describes an April 7 meeting between EPA and White House staffers, and private sector officials, where a pilot program to test emission trading between the U.S. and Russia was proposed. According to the document, the U.S. is “considering the possibility of establishing a linked emissions trading/joint implementation pilot program with Russia.” The plan has also been “favorably” received by other countries who are part of the “Umbrella Group.”

“The purpose of the possible pilot programs would be to demonstrate that compliance, measurement, registry, and certification of trades could be ensured in Russia, answering concerns expressed about the practicability of the Kyoto mechanisms in Russia,” the document said. Rep. James Sensenbrenner (R-Wisc.), chairman of the House Science Committee, is concerned about the propriety of the proposal given the absence of Senate ratification of the Kyoto Protocol.

In a letter to Carol Browner, EPA administrator, Sensenbrenner requested detailed information regarding the proposal. Sensenbrenner reminded Browner that the administration has repeatedly said that it will not try to implement the Kyoto Protocol prior to Senate ratification, and that the 1999 appropriations legislation bars the administration from such activities.

“Quite frankly, I fail to see how it [the proposal] is consistent with administration policy, as stated by [the Office of Management and Budget], or with the ‘purposes and plain meaning’ of the VA-HUD Appropriations Act for fiscal year 1999 for anyone in the U.S. delegation to even initiate discussions with the Umbrella Group, which includes the Russian Federation, for such programs to ‘test’ the interests of U.S. business in such programs,” said Sensenbrenner (BNA Daily Environment Report, May 28, 1999).

Federal Government to Reduce Emissions

On June 3 President Clinton ordered federal agencies to “reduce…greenhouse gas emissions attributed to facility energy use” to 30 percent below 1990 levels by 2010. It also requires each agency to “reduce energy consumption per gross square foot of its facilities…by 20 percent by 2005 and 35 percent by 2010 relative to 1985.”

These goals seem to be at odds with the Clinton Administration’s claims that we can comply with Kyoto without lowering energy use, but by simply using energy more efficiently. Yet the executive order requires a greater reduction in energy use than in greenhouse gas emissions.

The order also requires the greater use of renewable energy. The federal government will be required to install 2,000 solar energy systems at federal facilities by the end of 2000 and 20,000 by the end of 2010 as part of the Million Solar Roofs initiative. The executive order can be found at the www.whitehouse.gov.

U.S., E.U. Still at Odds Over Emission Trading

Representatives from 150 countries are meeting on Bonn, Germany to continue talks about how to implement the Kyoto Protocol, and to prepare for COP-5 this coming November. Progress has come to a standstill due to a dispute between the U.S. and the European Union, over the use of emission trading. The U.S. wants to have unlimited emission trading while the E.U. wishes to limit emission trading, forcing governments to achieve most of their emissions reductions within their own borders.

Chief U.N. climate official Michael Zammit Cutajar said it is “highly unlikely” that the dispute will be settled before the November meeting (The Toronto Star, June 1, 1999). State Department spokesman James Foley reiterated the U.S. commitment to unlimited trading, and pointed out that the E.U. accepted the Kyoto language that sets no quantitative limits (The Electricity Daily, June 4, 1999).

A new report released by the Paris-based International Energy Agency shows that the European proposal to cap emissions trading would heavily impact on the U.S. According to the study, a cap would reduce the ability of the U.S. trade emissions by as much as 66 percent.

With unlimited trading U.S. companies could trade as much as 2.07 million tons of CO2, whereas a cap would reduce the volume of trade to 674,000 tons, forcing the U.S. to implement new emissions regulations. Melinda Kimble, U.S. acting assistant secretary of state, argued that “eliminating flexibility or to reduce it so it’s no longer cost-effective is just going to endanger the agreement” (Greenwire, June 7, 1999).

Economics

Can Emission Trading Lower Cost?

The Clinton Administration has claimed that international emission trading would substantially lower the cost of complying with the Kyoto Protocol. A recent paper published by Resources for the Future agrees with that assessment, but with an important caveat. “If all countries use domestic tradable permit systems to meet their national targets and also allow for international trades,” then costs will be minimized, say the researchers. “But when some countries use non-trading approaches such as greenhouse-gas taxes or fixed quantity standards, cost-minimization is not assured.”

The researchers, Robert Hahn with the American Enterprise Institute, and Robert Stavins with the John F. Kennedy School of Government, argue that emissions trading is still an attractive approach to meeting the Kyoto targets, but that “individual nations’ choices of domestic policy instruments to meet the Kyoto targets can limit substantially the cost-saving potential of an international trading program.”

According to Hahn and Stavins, “nation-states are not simple cost-minimizing agents.” For example, governments may discourage trading, even though it may be the cost-minimizing instrument, in order to protect the revenue it gets through carbon taxes. Even if they were cost minimizers, say Hahn and Stavins, “they tend to lack the information required to make such cost-effective trades.”

Preferably, governments would devolve their quota of permits to private entities that would then be allowed to trade freely. The authors argue that this is unlikely, however. A more likely outcome is some sort of mixed system with tradable permits, carbon taxes and fixed quantity standards. This, according to the authors, would lead to heavy use of the other flexible mechanisms, such as joint implementation (JI) and the Clean Development Mechanism (CDM).

Two of the main assumptions in nearly all of the analyses of the costs of reducing greenhouse gases under the Kyoto Protocol are “that all countries adopt a domestic tradable permit system,” and “that all countries adopt either a domestic tradable permit system or a domestic greenhouse gas tax instrument and adopt a tax rate that equals the international equilibrium permit price.” If either assumption holds, then emission trading would lead to cost minimization. However, “if neither…are valid – which we believe to be the more likely outcome – then our analysis has several implications for global climate policy and research.”

First, “a truly cost-effective international emission trading program is not compatible with the notion of full domestic sovereignty regarding instrument choice.” Second, “with most combinations of domestic policy instruments, a significant fraction of Annex B (countries with Kyoto targets) international exchanges would have to be in the form of joint implementation (and CDM in the case of exchanges with non-Annex B nations). But, JI (and CDM) will likely involve relatively high abatement costs and transaction costs.” Third, “real-world abatement costs associated with the execution of a feasible program may be much greater than implied by simulations of the cost-effective solution.” The paper can be found at www.weathervane.rff.org.

Science

High Temperatures with Low CO2

Scientists are still uncertain about the effects of atmospheric carbon dioxide concentrations on the earth’s temperature, although it is generally thought that higher concentrations of CO2 will increase global temperatures and vice versa. Recent studies have cast doubt on that hypothesis, however. In the March 12 issue of Science researchers showed, using ice core samples, that during three deglaciations temperature rises occurred before higher CO2 levels.

A new study published in Paleoceanography (June 1999) finds that CO2 concentrations were very low during the Miocene Climatic Optimum of about 14.5-17 million years ago, a period that experienced extremely high global temperatures that were about 6 degrees C higher than present.

It has been thought that the high Miocene temperatures were caused by a combination of high CO2 levels and changes in the ocean. But the new study presents evidence that the CO2 levels were about 180-290 parts per million by volume, compared to the current level of 360 ppmv. The low levels of CO2 persisted throughout the entire Climatic Optimum and began to rise in concert with a global cooling and expansion of the East Antarctic Ice Sheet that occurred at about 12.5-14 million years ago (Nature, May 27, 1999).

Solar Magnetism and Global Warming

Evidence that the Sun plays a major role in climate change continues to mount, casting doubt on the CO2-global warming link. A new study in Nature (June 3, 1999) has found that the Sun’s magnetism has increased dramatically over the last one hundred years. The researchers, according to a commentary article in the same issue, “use records of geomagnetic activity, monitored in England and Australia since the nineteenth century, to show that the weak general magnetic field on the Sun has more than doubled over the past 100 years.”

The researchers note that the solar wind “drags some magnetic flux out of the Sun to fill the heliosphere with a weak interplanetary magnetic field.” These fields block cosmic rays that contain charged ion particles that contribute to the formation of ice crystals and water drops in the atmosphere, increasing cloud cover. A reduction in cosmic ray influence reduces cloud cover, allowing more sunlight to reach the earth.

The Sun’s general magnetism is also related to its brightness, although this is not well understood. Moreover, sunspots generate strong magnetic fields that also correspond to greater solar luminosity. These two types of magnetic fields appear to have different sources, but, “it is curious that the general level of both fields has increased by about the same degree over the last 100 years, suggesting some hidden commonality.” These phenomena lead to a more vigorous Sun that is about 0.1 percent brighter.

The increase of solar magnetism has been about 131 percent over the last 91 years. From 1964 to 1996 the Sun’s magnetism has increase by 41 percent. This brightening has occurred during the same time as the measured surface warming experienced on Earth.

Alaska Entering a Cold Spell

Warmer temperatures in Alaska over the last few years have been cited as evidence of global warming. But as with other types of anecdotal evidence no research has linked Alaska’s warming spell with greenhouse gases. Now scientists believe that the warming period is a result of a natural 25-year cycle that causes climatic conditions in Alaska to swing back and forth between cold and warm periods.

The recurring weather cycle is called the Pacific (inter) Decadal Oscillation (PDO), and scientists believe that Alaska has “just finished roughly 25 years of good fishing, warmer ocean temperatures, early ice pack melt-offs and fairly mild winters.” Now Alaskans can “look forward to about 25 years of gray summers, harsh winters, poor fish returns and a lingering ice pack.” In fact, it has already begun. Salmon fishing in Bristol Bay has deteriorated significantly in the last two years, water temperatures in the Gulf of Alaska have cooled this year and the melting of the Arctic ice pack is long overdue. Similar conditions existed in the 1960s with very harsh winters.

According to scientists at the University of Washington’s Joint Institute for the Study of Atmosphere and Oceans, the 25-year pattern can be traced back 300 years. The PDO also influences the pattern of salmon returns. When salmon returns are high in Alaska they are low in Washington and Oregon, and vice versa. In 1915, for example, “Bristol Bay salmon returns were abysmal when Washington and Oregon had one of the best salmon fishing years in history,” and “in 1939, the Bristol Bay catch was regarded as one of the greatest in history, while Washington and Oregon recorded one of the worst” (Anchorage Daily News, June 7, 1999).

Etc.

 

• On May 26 Rep. Zoe Lofgren (D- Cal.) submitted an amendment to the House Science Committee that is virtually identical to the Knollenberg Amendment that prohibited federal agencies from implementing the Kyoto Protocol prior to Senate ratification.

   

 

A certain amount of confusion surrounds the amendment, however. Lofgren, a proponent of the Kyoto Protocol, states in a press release that, “The House and Senate have already agreed to adhere to the Kyoto language. Yet as originally drafted, H.R. 1743 would have undercut that commitment. My amendment simply reiterates that commitment, allowing the EPA to continue to work to limit greenhouse gases.”

Lofgren also argues that, “we have agreed to reduce emissions in line with the Protocol. Such action is vital no only for the health of the world environment, but also to make us ready to ratify the Protocol if and when developing countries meet emissions standards.”

Announcements

 

• The Cooler Heads is sponsoring an economics briefing for congressional staff and media on June 18. The briefing will feature Robert Bradley, director of the Institute for Energy Research in Houston, Texas. Mr. Bradley will discuss “The Economic and Environmental Transformation of Fossil Fuels.” It will be held at the Dirksen Senate Office Building, room 366, at 12:00 noon.

   

 

THE COOLER HEADS COALITION

Alexis de Tocqueville InstitutionAmericans for Tax ReformAmerican Policy CenterAssociation of Concerned TaxpayersCenter for Security PolicyCitizens for a Sound EconomyCommittee for a Constructive TomorrowCompetitive Enterprise InstituteConsumer AlertDefenders of Property RightsFrontiers of FreedomGeorge C. Marshall InstituteHeartland InstituteIndependent InstituteNational Center for Policy AnalysisNational Center for Public Policy ResearchPacific Research InstituteSeniors Coalition60 PlusSmall Business Survival CommitteeThe Advancement of Sound Science CoalitionThe Heritage Foundation