Vol. V, No. 21
Japan Gearing Up To Ratify Kyoto
Japanese government officials announced they will seek to ratify the Kyoto Protocol during the next 150-day session of the Diet, which begins in January. Japan’s Deputy Chief Cabinet Secretary Teijiro Furukawa has instructed officials at the Environment Ministry, Ministry of Economy, Trade, and Industry, Foreign Ministry, and Cabinet Legislation Bureau to draft amendments to existing legislation to enable the treaty’s restrictions to be put into place.
The final decision on when to submit the actual text of the Protocol will not be made until after the next round of United Nations’ negotiations - currently scheduled to take place in Marrakech, Morocco on October 29. Japan’s decision comes on the heels of the European Union’s announcement that its member bodies will ratify the treaty before the end of 2002 - in time for the tenth anniversary of the signing of the UN’s Framework Convention on Climate Change in Rio de Janeiro.
In addition to amending its environmental legislation, Japan will need to design support measures for industrial firms that must pay high costs to reduce their carbon dioxide emissions. It will also need to provide incentives for households and transportation companies to make reductions to meet its targets under the treaty (Japan Times, October 12, 2001).
Labor Vows to Ratify Kyoto
In the run-up to Australia's general election on November 10, the Labor Party has for the first time announced that it will move to ratify the Kyoto Protocol if elected to office. According to the Sydney Morning Herald (October 9, 2001), the Labor Party, under pressure from the Construction, Forestry, Mining, and Energy Union and big business, had refused to promise ratification. Labor leader Kim Beazley had stated earlier that his party would not promise to ratify Kyoto because, “We are not unprincipled and we do believe in forming a Government - we do believe in behaving like a government and not simply like a pressure group.”
But the danger of losing support to Green Party and other independent environmental candidates in the general election reportedly changed Mr. Beazley's tune: “Labor will ratify the Kyoto Protocol on climate change. Labor will restore Australia to a position of leadership and credibility in climate change negotiations.” At press time, the Liberal and National parties coalition of outgoing Prime Minister John Howard was leading in opinion polls.
Tax Better Than Cap and Trade
Dr. Ross McKitrick and Dr. Brian Fisher discussed the merits of various schemes to reduce carbon dioxide emissions at a Cooler Heads Coalition briefing on October 11. McKitrick, associate professor of economics at the University of Guelph in Ontario, Canada, concluded that all the emissions trading and cap-and-trade proposals are much more costly than a carbon tax and that a carbon tax was much more costly than any possible benefits.
“Given the uncertainty inherent in carbon dioxide emissions policy,” said McKitrick, “the costs of mistakes associated with tradeable carbon permits are much higher than those associated with carbon taxes.” Indeed, a Resources for the Future study estimated that a permit system could be five times costlier than a carbon tax.
McKitrick also noted that, “If emissions are controlled by tradeable quotas, this creates a new, artificial scarcity in something that hitherto had been free: the right to release CO2.” This creates a new type of asset for the holders of the permit. McKitrick asks where the money for this new asset will come from. “It represents the capitalized value to existing users of fossil fuels of the right to emit CO2 at no charge.” There will be no new money. Rather, “Any policy that puts a price on CO2 emissions (including free permit distribution) extracts that money from it current use and hands it over to the beneficiaries of the policy.” And who are the beneficiaries? The “Carbon Cartel” or those who are “lucky enough to have received a free initial allocation of permits.”
Even though a carbon tax may make the most sense among the available choices, McKitrick argued that regulating CO2 is a bad idea to begin with. The fact remains that even under a carbon tax, “the costs of emission reductions exceed the benefits for any target, however small. For that reason the optimal carbon tax is zero.” His presentation is available at www.cei.org.
In wide-ranging remarks, Fisher, who is executive director of ABARE - the Australian Bureau of Agricultural and Resource Economics - touched on problems with current U.S. proposals to reduce emissions of sulfur dioxide, nitrogen oxides, and mercury much further than current regulations through the multi-pollutant or “3Ps” approach. Fisher expressed surprise that in a country with so many analysts and such open discourse, there seemed to be so little analysis of the correct levels to set the 3Ps. He cautioned that unless this analysis were done carefully, the emissions were likely to be set at the wrong level and could thereby be as costly as cutting CO2 levels. ABARE has just published a paper, co-written by Fisher, that examines the likely costs of Kyoto after taking into account the agreements reached in Bonn last July. The paper an be accessed through www.cei.org.
Skeptical Environmentalist: Kyoto Won’t Help Third World
Dr. Bjorn Lomborg, author of the Skeptical Environmentalist published this month in the U.S. by Cambridge University Press, discussed global warming and the Kyoto Protocol at a Cooler Heads Coalition briefing held in the U. S. Capitol on October 4. Lomborg focused on the opportunity costs of cutting emissions of greenhouse gases as a mechanism to address the effects of climate change in third world countries and concluded that the Kyoto treaty is not an effective solution to the problems caused by global warming.
Although Lomborg did not challenge the findings of the Intergovernmental Panel on Climate Change’s Assessment Reports, he did note that there are problems inherent in its drafting of “Summaries for Policymakers” that may lead lawmakers to approach global warming the wrong way. He presented the best data available on the potential environmental effects of the IPCC’s predictions on global warming, and used this to determine the economic costs created by the problem.
Lomborg, who is associate professor of statistics at the University of Aarhus in Denmark, then presented data on the costs of adopting the Kyoto treaty in the developed world. From this, he concluded that adopting the treaty would impose significant costs on industrialized countries - while only delaying the onset of climate change in developing nations by six years. In other words, the treaty would cost developed nations a great deal to implement, but would not produce significant environmental benefits for poor countries.
This, Lomborg asserted, is unacceptable. He discussed a number of alternative ways in which wealthy nations could help the third world cope with global warming and other much more serious environmental problems. He urged significant investment in energy efficiency and renewable energy technologies. However, he emphasized that the most important way in which developed nations can aid poor people is by providing them with additional resources for development. Thus, addressing problems created by poverty is the best way to help third world nations cope with the effects of climate change.
In conclusion, Dr. Lomborg noted that improvements in technologies would inevitably lead to a decline in the use of fossil fuels over time. As a result, he feels there is no need to impose draconian reductions on their use in the present. He views adaptation and development as the keys to a successful policy approach to the climate change issue.
New Studies On Multipollutant Bills
The Energy Information Administration (www.eia.doe.gov) of the U.S. Department of Energy has released two new reports on the costs of multipollutant approaches to reducing emissions from power plants. The studies were undertaken at the request of Senators James Jeffords (I-Vt) and Bob Smith (R-NH), the chairman and ranking Republican of the Senate Environment and Public Works Committee.
The first study, Analysis of Strategies for Reducing Multiple Emissions from Power Plants with Advanced Technology Scenarios, requested by Jeffords, examines the costs of his proposal to cut emissions of sulfur dioxide, nitrogen oxide, mercury, and carbon dioxide to between 75 and 90 percent below 1997 levels. The report states that it would require “significant effort” by utilities to make the cuts necessary because “existing technology may not be able to achieve this level of removal.” In addition, it points out that Jeffords’s proposal would raise the costs of generating power by 8 to 9 percent, or by between $142 billion and $177 billion over the next twenty years.
The second study, Reducing Emissions of Sulfur Dioxide, Nitrogen Oxides, & Mercury from Electric Power Plants, requested by Smith, examined the costs of cutting emissions of the first three gases, but omitted carbon dioxide. In it, the agency states that, even without carbon dioxide limitations, Jeffords’s proposal would deter utilities from burning coal and force them to expand their natural gas capacities. It would still cost utilities between $28 billion and $89 billion over the next twenty years.
The studies highlight the policy divide emerging between the Environmental Protection Agency and the Department of Energy. While EPA favors integrating a cap-and-trade approach for sulfur dioxide, nitrogen oxide, and mercury into the Clean Air Act, DOE opposes cutting these emissions because doing so would hamper utilities’ expansion of their electricity output - a key goal of the Bush energy plan (Reuters, October 3, 2001).
IPCC Assumption Bites the Dust
A new study in Nature (October 11, 2001) provides further confirmation that the Third Assessment Report (TAR) of the UN’s Intergovernmental Panel on Climate Change has overestimated future potential warming. The researchers, from the Department of Botany and Microbiology at the University of Oklahoma, note that the IPCC increased its estimates of future warming in the TAR, due in part to the “incorporation of a positive feedback.” The IPCC claims that an initial warming caused by higher concentrations of greenhouse gases will lead to a situation where “terrestrial ecosystems” are converted from carbon sinks to carbon emitters.
“The feedback mechanism,” according to the authors, “is usually based on the assumption that observed sensitivity of soil respiration to temperature under current climate conditions would hold in a warmer climate. However, this assumption has not been carefully examined.”
Climate modelers assume that a 10 degree C increase in temperature will lead to a doubling of soil respiration. The researchers tested this assumption by artificially warming plots of tall grass prairie in central Oklahoma. They raised the daily air temperature by an average of 1.1 degrees and the daily soil temperature by an average of 2.6 degrees in clipped plots (to simulate hay mowing) and 2 degrees in unclipped plots. If the IPCC assumption is correct, then the amount of respiration should have increased by 15 to 20 percent.
What the data showed, however, was that, “Soil respiration in the warmed plots decreased by, on average, 5 percent in comparison to that in unwarmed plots without clipping and increased by 0.2 percent with clipping.”
The researchers noted that their study confirms the results of other studies. Two of the studies were long-term field studies in the lowland tundra (Biogeochemistry, 41, 215-235: 1998) and in Finland soils (Ambio, 28, 171-174, 1999), “showing that soil respiration is not significantly different between two or more temperature regimes.”
Another study showed “that experimental warming reduced soil respiration in an alpine meadow study” (Global Change Biology, 5, 125-141, 1999). Other experiments have shown “initial increases in soil respiration under warming,” which then “declined over time.”
“This is good news on a global basis,” said Dr. Linda Wallace, one of the study’s authors. “Grasslands cover such a huge proportion of the terrestrial portion of the globe. We’d been kind of discounting them, saying that as things warm up, they would become carbon sources. But in reality, these grasslands could become carbon sinks” (Christian Science Monitor, October 11, 2001).
Uncertainty Confounds Policymaking
A new study in the Journal of Geophysical Research - Atmospheres (October 16, 2001) finds that uncertainty due to global warming is much greater that previously thought. The study finds that there is a 90 percent likelihood that climate sensitivity is between 1 and 10 degrees C. It also finds that there is a 54 percent chance that climate sensitivity lies outside the IPCC’s forecast of a 1.5 to 4.5 degree increase over the next 100 years.
“This is definitely not good news,” according to Dr. Michael Schlesinger, one of the coauthors with the University of Illinois. “If the climate sensitivity is greater than the IPCC’s upper bound, climate change could be one of humanity’s most severe problems of the 21st century. If, however, it is less than the lower bound, then climate change may not be a serious problem for humanity.”
Conventional policies designed to combat global warming may be unreliable, says Schlesinger. He recommends an adaptive decision strategy to cope with future climate changes. “It could take a fair fraction of a century to acquire enough observations to significantly reduce the level of uncertainty, and by then it may be too late to do anything about it,” he said.
“By using an adaptive-decision strategy, however, we can observe the damages due to climate change, and the rate of change of the cost differential between fossil fuels and non-fossil fuels. Depending upon what we see, we can alter what we do.” See www.news.uiuc.edu.
• In a speech to the Royal Institute of International Affairs Conference, Dr. Harlan Watson, who was recently appointed the U.S. State Department’s Senior Climate Negotiator and Special Representative, reiterated the Bush Administration’s stance on Kyoto.
“The United States does not believe that the Kyoto Protocol is the right answer to the challenge of climate change. The Protocol is flawed - its targets are arbitrary and in many cases unrealistic, it does not include developing countries, and its costs would harm the U.S. economy.
“The United States has made it very clear that it does not intend to ratify the Protocol. At the same time, we do not intend to block those who wish to proceed - the decision of whether or not to ratify the Protocol is a decision that each country will have to make on its own. We do not believe that ratification of the Protocol would be in the interests of the United States, but as we made clear by our engagement at COP-6 in Bonn, we will not impede others if they choose differently. Other countries must do what they think is right.”
• The Frontiers of Freedom Institute is hosting a conference on “Global Warming: Sound Science or Science Fiction.” The event will take place on Thursday, October 25th from 8:30 to 11:45 a.m. at the United State Capitol, Room SC-5. Speakers include: Congressman John Doolittle (R-Calif), former Senator Malcolm Wallop, Dr. Sallie Baliunas (Harvard University), Dr. John Christy (University of Alabama), Dr. Patrick Michaels (Virginia State Climatologist), and Dr. Gerd Weber (Germany). You may RSVP by phone at (703) 246-0110, Ext. 301 or by E-mail at email@example.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
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