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Vol. VI, No. 20

Cooler Heads Digest


Vol. VI, No. 20



European Green Group Wants Trade Sanctions on U.S. Products


Friends of the Earth Europe (FoE-E), an environmental pressure group, has called on European Union Trade Commissioner Pascal Lamy to impose trade sanctions on U.S.-exported genetically-modified foods and energy-intensive products in retaliation for the U.S.’s violation of World Trade Organization rules governing taxation of Foreign Sales Corporations.


In August, the World Trade Organization authorized the EU to impose countermeasures on U.S.-imported goods worth $4 billion in response to the U.S. refusal to comply with the WTO’s ruling.  The EU Trade Commission requested public comment on which U.S. products the EU should sanction.


In its comments to the Commission, FoE-E argues that the EU should take this opportunity to put pressure on the U.S. on environmental issues.  “We call on Commissioner Lamy and European governments to consider European consumer concerns and the protection of our global environment when targeting US products. Genetically modified food and animal feed products as well as energy intensive products seems to be the obvious choice to make a move towards fairer and more sustainable transatlantic trade,” said Alexandra Wandel, FoE-E’s trade and sustainability coordinator.


In a press release detailing FoE-E’s comments, it urges the EU governments to target energy- intensive products because, “The U.S. rejection of the Kyoto Protocol is unfair and puts European business at a disadvantage.  With Bush’s increasing rejection of international agreements that are essential to protect our environment, Europe should have every right to penalize U.S. goods for the pollution they cause.”


Chris Horner, counsel to the Cooler Heads Coalition, warned of such an eventuality in an op-ed in the Washington Times (September 21, 2002).  “The EU have made clear their intent, either through Kyoto or otherwise, to extract Kyoto-style economic pain from the U.S. (which remains a non-ratifying signatory).  They apparently intend to claim that all U.S. goods are impermissibly subsidized by America’s refusal to adopt Kyoto-style energy taxes,” wrote Horner.


While there is little the U.S. can do to prevent the EU from bringing such a case before the WTO, the continued existence of the U.S. signature on the protocol could present serious problems.  According to Horner, “There is no doubt that both ‘customary law’ (international common law) and Article 18 of the Vienna Convention on the Law of Treaties require a non-ratifying treaty signatory to communicate its withdrawal or be held to ‘not violate the treaty’s purpose or objective.’”  With its signature on the Kyoto Protocol the U.S. “would likely be denied standing to object to EU retaliation or enforcement of Kyoto’s objectives.”


If the U.S. wants a “fair fight” before the WTO, it must formally remove its signature from the Kyoto Protocol, according to Horner.


NOAA Workshop on Climate Strategic Plan Announced


On December 3-5, the U.S. Climate Change Science Program (or CCSP) is holding a comprehensive Workshop on the U.S. Climate Change Science Program to “receive comments on a discussion draft version of the Strategic Plan for climate change and global change studies.”  The CCSP incorporates the U.S. Global Change Research Program (responsible for the National Assessment on the Impacts of Climate Change) and the Climate Change Research Initiative.  The workshop is being sponsored by 13 different government agencies.


“The workshop,” according to the announcement, “will review the USGCRP/CCRI plans with emphasis on the development of short-term (2-5 years) products to support climate change policy and resource management decision-making (emphasis added).”


The invited keynote speakers include a number of high-ranking officials, including some known for their extreme views on global warming.  They include Bruce Alberts, President of the National Academy of Sciences; Robert Card, Undersecretary of Energy; Rita R. Colwell, Director of the National Science Foundation; Conrad C. Lautenbacher, Administrator of NOAA; John H. Marburger, Director of OSTP; G.O.P Obassi, Secretary General of the World Meteorological Organization; Sean O’Keefe, Administrator of NASA; R.K. Pachauri, Chairman of the IPCC; and Klaus Toepfer, Executive Director of the United Nations’ Environment Program.


The workshop will cover 13 areas or topics of research.  A number of scientists will be invited to give presentations on these topics.  Attendees will be allowed to comment.  Written submissions will also be accepted for the record.


The 3-day worshop will be held in Washington, D.C. at the Marriott Wardman Park Hotel at 2660 Woodley Rd., NW.  Further information can be found at




More Trouble for Emissions Trading Schemes


The U.S. Environmental Protection Agency has released a report which heavily criticizes the open-market emissions-trading programs that are being run in three States: New Jersey, New Hampshire and Michigan.  This follows on the heels of an announcement by New Jersey Governor James McGreevey (D) that New Jersey will discontinue its emissions trading program.


The report was conducted in response to a request by two environmental groups, Public Employees for Environmental Responsibility and the New Jersey Chapter of the Sierra Club.  What it found was that there are serious problems with the programs and that they need to be fine tuned before the EPA will allow an expansion of state-specific, voluntary, open-market trading programs.


Open-market trading (OMT) programs are different than cap-and-trade programs in that they are voluntary, have no expressly defined cap, allow trading between various types and sources of pollutants, and allow credits to be generated through past emission reduction efforts to meet current requirements.  Cap-and-trade programs, on the other hand, have a defined emissions cap for a specified group of participants that are required to reduce emissions.


The report evaluates the programs in New Jersey and Michigan because they are the only states with extensive programs.  It finds that there are several factors that adversely affect the ability of the programs to reach emission reduction goals.  “Foremost among these factors,” says the report, “were the lack of safeguards, use of data of uncertain quality, and limited regulatory agency oversight of trading activities.  Many sources have opted not to participate, and problems in one state (New Jersey) have become so significant that it has announced its intention to terminate the program.”


Two of the most important missing safeguards, according to the report, are the lack of public comment on proposed trades, and an acceptance of shutdown credits in Michigan.  In fact, 23 percent of Michigan’s total OMT credits and 80 percent of its volatile organic compound emissions credits were shutdown credits.  This shouldn’t be allowed, says to the report, because companies may be able receive credits by shutting down in one state and resuming operations in another.


The program also failed to use reliable emissions data.  “Our reviews of 84 randomly selected trades in Michigan and New Jersey disclosed that no EPA- or State-approved quantification protocols were used to calculate credits,” bringing into question the validity of the credits.  Moreover, the data used to measure emissions was of poor quality.


Finally, there was insufficient enforcement and oversight on the part of EPA, which led to questionable trades.  For example, the EPA alleged that a New Jersey utility, PSEG, had violated clean air requirements when it failed to obtain permits for modifications on two power plants, which would have established lower compliance levels. 


With lower compliance levels, PSEG would not have been able to claim as many emission reduction credits as it did.  In a settlement with the EPA, PSEG agreed to retire 18,600 tons of emissions credits worth $16 million, which represented 90 percent of the tradable credits in New Jersey.  Another New Jersey utility, Conectiv, used “cooler, off-season ozone credits to meet warmer, more polluted, ozone season requirements.”


EPA recommends that federal regulation be developed for OMT programs, that shutdown credits be disallowed, that states be required to use EPA- or state-approved quantification protocols, and that OMT programs use a “risk-based targeting approach for federal and state compliance assurance, enforcement and oversight of OMT trades.”


Canadian Government Hides Cost of Kyoto


In a presentation to two Cabinet committees on September 24, the Canadian government expunged figures showing the estimated costs of compliance with the Kyoto Protocol.  Indeed, Cabinet ministers have been told by the Prime Minister’s office to avoid references to a Kyoto implementation plan, according to the National Post (September 25, 2002).


The cost estimates were the result of a modeling exercise conducted by the government and agreed to by the Prime Minister’s Office, the Privy Council Office, the Environment Department, and the Natural Resources Department.  They show that compliance would result in 200,000 lost jobs and a 1.5 percent loss in GDP. 


The provinces of Alberta and Ontario would experience the worst economic impacts, since each contributes about 27 percent to Canada’s national greenhouse gas emissions.  The cost of natural gas would also rise between 4 and 14 percent and electricity prices would rise by 2 percent by 2010.  These estimates are based on greenhouse gas reductions of 170 megatons, about 70 megatons short of Canada’s Kyoto target.


In a letter to the Canadian Manufacturers and Exporters, Prime Minister Jean Chrétien had promised that there would be an implementation plan and consultations before ratification.  It now appears that Chrétien is reneging on that promise.   The provincial energy and environment ministers are expecting to see a comprehensive plan to meet the Kyoto targets at an October 21 meeting in Halifax, but Chrétien has admitted that there isn’t one.


“The development of the plan will take 12 years.  Ten years.  You know, it will not be in operation tomorrow,” Mr. Chrétien said.  “There is a series of things that will have to be done and we will have to meet the commitment by 2012.  There is a good chance that if we don’t start, we will not be ready by 2012. So we have to start right now. We have a 10-year period to develop the appropriate plans to meet these international obligations that the Canadians want us to commit to.  We will develop the plan. We will give the framework of the plan. But all the pieces of this plan will take 10 years to finalize.”


Lorne Taylor, Alberta’s environment minister isn’t buying it.  “They’re either incompetent or they’re not telling Canadians the truth, because we don’t have until 2012 to develop a plan,” he said.  “We actually have to hit targets in 2012.  Not develop a plan by 2012.  I think the Prime Minister’s comments just are indicative of the confusion that’s reigning supreme in Ottawa right now.”


Canada’s Environment Minister David Andersen sees no problem with ratifying Kyoto without an implementation plan.  “Only on the second of September [when the Prime Minister announced in South Africa that Canada would ratify the treaty] did certain elements of industry take seriously the fact that ratification was a distinct possibility.  They tended to think it could be avoided.  Now, we’re having a much more constructive tone to the debate,” he said.  Andersen went on to say that the government plans an advertising campaign to “indicate the costs are exaggerated and that the debate must be on a serious level.”




Arctic Sea Ice: the Chicken or the Egg?


Melting sea ice in the Arctic is claimed to be one of the major signals that man is dangerously warming the planet.  Indeed, one of the more amusing episodes of the global warming chronicles was the discovery of open water at the North Pole, which the New York Times claimed had not been seen for 50 million years.  It had to retract the story, of course, because open water at the North Pole in the summer is not unusual.  It is becoming less and less clear, however, whether melting Arctic sea ice is a symptom of warming temperatures or the cause.


A study in the Journal of Climate (September 2002) finds that global warming is not the cause of melting sea ice, but that melting sea ice is causing the warming.  Changes in sea ice extent, it turns out, are related to the well known phenomenon known as the Arctic Oscillation (AO) index, which is a measure of atmospheric circulation in the Arctic.  Much of the observed thinning in the Arctic is due to changing wind patterns that rearrange the sea ice.  When the AO index is in its positive phase, sea ice thins and retreats; in its negative phase it thickens and advances.  The AO is an entirely natural process for which we have measurements for the last 100 years.  Its current values are about the same as they were 100 years ago.

The study concludes, “Intuitively, one might have expected the warming trends in SAT [surface air temperature] to cause the thinning of sea ice, but the results presented in this study imply inverse causality; that is, that the thinning ice has warmed SAT by increasing the heat flux from the ocean.”  In other words, a change in the AO index thins the ice which exposes the warmer ocean water to the cold air and warms it.  It turns out that melting Arctic sea ice is responsible for Arctic warming, not the reverse.




·    The Cooler Heads Coalition will hold a screening of The Climate Conflict, on October 7, from 3:15 to 4:15 p.m., in Room 385 of the Senate Russell Office Building.  The Climate Conflict is an award-winning Danish documentary about the global warming debate in general and about the role of solar variability in particular.  Although it has won six awards in Europe and has been shown on major networks in most European countries, no American network or station has picked it up.  Our special screening will be introduced by Dr. Paal Brekke of the European Space Agency, who is also interviewed in the film.




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

Consumer Alert

Defenders of Property Rights

Frontiers of Freedom

George C. Marshall Institute

Heartland Institute

Independent Institute

National Center for Policy Analysis

National Center for Public Policy Research

Pacific Research Institute

Seniors Coalition

60 Plus AssociationSmall Business Survival Committee