Vol. VII, No. 11
Energy Bill Prompts Rash of Proposals
The Senate energy bill, S. 14, when published in draft form contained a climate change title. Three specific provisions raised alarm bells for many – the requirement for a national strategy to “stabilize and over time reduce net U.S. emissions of greenhouse gases,” including annual reports; a revival of the Clinton-Gore Administration’s White House climate czar and office; and a program to award credits for early action in reducing emissions.
Following protests against the title, such as a letter to Sen. Pete Domenici (R.–N.M.), Chairman of the Committee on Energy and Natural Resources and sponsor of the bill, signed by representatives of 21 nonprofit organizations including members of the Cooler Heads Coalition, the title was dropped from the draft bill. Nor does the bill contain any reference to a higher CAFE standard, a Renewable Portfolio Standard for utilities, or an expanded ethanol mandate.
These omissions have led to a rash of proposed amendments. The Environment and Public Works committee has passed out an ethanol mandate similar to last year's 5 billion gallon per year mandate with some slight improvements. The mandate will ban the current most popular additive MTBE, which has been accused of contaminating groundwater. Ethanol, however, has environmental problems of its own, as more emissions are generated in the production of the
added ethanol than in the burning of the gasoline it replaces. Sens. Schumer, Clinton, Feinstein, and Boxer have signaled that they will again try to defeat the ethanol mandate, but are unlikely to succeed.
The Senate is scheduled to resume floor debate on the bill on Monday 2 June and will continue debate throughout the week. Several Senators are likely to propose amendments reinstating climate change provisions to the bill. It is probable that the Energy and Natural Resources Committee’s ranking Democrat, Sen. Jeff Bingaman (D.–N.M.), will offer language similar to that approved in Titles X, XI and XIII in last year’s Energy bill sponsored by Sen. Tom Daschle (D.–S.D.).
Other possibilities include climate change proposals sponsored by Sens. McCain, Lieberman, Jeffords, Carper, Gregg and possibly others. Any proposal to raise Corporate Average Fuel Economy Standards for automobiles is likely to be defeated following last year’s lopsided vote against them.
Further developments will be featured in the next newsletter.
Christy Testifies to House Resources Committee
The House Resources Committee held a field hearing in Saint Clairsville, Ohio on May 13 on the potential economic effects of Kyoto-style policies on coal-dependent communities. A bleak future for Ohio’s coal communities if CO2 emissions are limited was described in testimony by Robert Murray, a major independent coal producer, Eugene Trisko, representing the United Mine Workers of America, Gary Obloy of the Community Action Commission of Belmont County, and others.
Dr. John Christy, Professor of Atmospheric Science and Director of the Earth System Science Center at the University of Alabama in Huntsville, described the shaky scientific basis for global warming alarmism. He then widened the discussion of the negative social and economic effects of energy-rationing policies by drawing on his experiences as a missionary in east Africa.
Christy expanded on his comments in a May 22 letter to the chairman of the Resources Committee, Rep. Richard Pombo (R.–Calif.), in which he wrote:
“I've always believed that establishing a series of coal-fired power plants in countries such as Kenya (with simple electrification to the villages) would be the best advancement for the African people and the African environment.
“An electric light bulb, a microwave oven and a small heater in each home would make a dramatic difference in the overall standard of living. No longer would a major portion of time be spent on gathering inefficient and toxic fuel. The serious health problems of hauling heavy loads and lung poisoning would be much reduced.
“Women would be freed to engage in activities of greater productivity and advancement. Light on demand would allow for more learning to take place and other activities to be completed. Electricity would also foster a more efficient transfer of important information from radio or television. And finally, the preservation of some of the most beautiful and diverse habitats on the planet would be possible if wood were eliminated as a source of energy.
“Providing energy from sources other than biomass (wood and dung), such as coal-produced electricity, would bring longer and better lives to the people of the developing world and greater opportunity for the preservation of their natural ecosystems.
“Let me assure you, notwithstanding the views of extreme environmentalists, that Africans do indeed want a higher standard of living. They want to live longer and healthier with less burden bearing and with more opportunities to advance.
“New sources of affordable, accessible energy would set them down the road of achieving such aspirations. These experiences made it clear to me that affordable, accessible energy was desperately needed in African countries.
“As in Africa, ideas for limiting energy use...create the greatest hardships for the poorest among us. As I mentioned in the Hearing, enacting any of these noble-sounding initiatives to deal with climate change through increased energy costs, might make a wealthy urbanite or politician feel good about themselves, but they would not improve the environment and would most certainly degrade the lives of those who need help now.”
Russia Cools on Kyoto
Following America’s decision not to move forward with the Kyoto Protocol, environmentalist attention has switched to Russia, as the protocol cannot become international law without Russian ratification. Russia had been expected to ratify the protocol this year as its ailing economy had already met emissions targets thanks to the forced closure of so many emissions sources.
However, following several years of strong economic growth, moves to ratify the protocol have slowed. German Gref, Minister for Economic Development and Trade, has been accused by the World Wildlife Fund of blocking ratification by failing to move the process forward. Speaking at the G8 meeting at the end of April, the junior Minister for Natural Resources, Irina Ossokina told Agence France Presse, “I would like to underline that we at the Ministry of Natural Resources are wholly and truly for the ratification of the Kyoto Protocol … but unfortunately we have a difference of opinion within the country … We were hoping to ratify this summer but we were having difficulties with our economic advisors.”
Meanwhile, Russian scientists are playing a large role in organizing a major International Conference on Climate Changes, scheduled to take place in Moscow this fall. The chair of the conference, Yuriy Izrael, told Russian reporters, “We are looking forward to serious, interesting discussions … We are not going to create new contradictions but ... find out what is really going on on this planet - warming or cooling.”
Izrael went on to say, “The most important issue, whether [ratifying the Kyoto Protocol] will bring about an improvement of the climate or its stabilization, or its worsening, is not clear.” (AFP, April 27, St Petersburg Times, 13 May).
Pew Center Reports Back Mandatory Limits on Emissions
The Pew Center on Global Climate Change released two reports on May 15 analyzing what it viewed as the best options available to tailor a mandatory greenhouse gas emissions program for the U.S.A.
The first report, “Emissions Trading in the U.S.: Experience, Lessons and Considerations for Greenhouse Gases,” (lead author, Danny Ellerman of MIT) examines the history of emissions trading in respect to other environmental concerns such as acid rain. Ellerman argues that a well designed program can “provide a framework to meet emissions reduction goals at the lowest possible cost.” Trading programs provide incentives by motivating those who can reduce emissions at low cost to reduce emissions more than under a command and control mechanism. The authors find that the historic programs have succeeded in lowering the cost of meeting targets for emissions reduction and at the same time have “enhanced – not compromised – the achievement of environmental goals.”
The authors also examined voluntary features and concluded that they may merit inclusion in any greenhouse gas emissions trading program, but caution that their role should be “determined by weighing the cost savings benefit against the emissions increasing potential.”
The second report, “Designing a Mandatory Greenhouse Gas Reduction Program for the U.S.”, examines three options for such a program: cap and trade (in several forms), a greenhouse gas tax, and sectoral hybrid programs. The examination of cap and trade programs looked at a conventional program, a “downstream” program where the sources of greenhouse gas emissions are required to surrender allowances equal to their emissions, and an “upstream” program that applies to fuel suppliers, requiring them to surrender allowances equivalent to the carbon content of the fuels they distribute.
The authors found that a downstream program would be “unadministrable” while an upstream program would raise the costs of gasoline and home heating unacceptably. A greenhouse gas tax would be politically infeasible. The authors therefore argue that a hybrid scheme combining a downstream program with product efficiency standards that would aim to reduce emissions from automobiles and appliances.
The authors admit that their preferred scheme would be more costly and administratively complex than other proposals, but “may score better on political acceptability because it constrains domestic greenhouse gas emissions while largely shielding consumers from fuel price increases.” Consumers, in other words, will not associate the rise in their cost of living with Greenhouse Gas Reduction efforts.
European Emissions Trading Price Lower than Expected
European investment bank Dresdner Bank has estimated that the right to emit a ton of carbon dioxide will probably trade at a price of around €10 ($11.69) in the European emissions certificates market in 2005.
The estimate is based on approaches from interested brokers. The head of Dresdner’s corporate sustainability division, Armin Sandhoevel, told reporters that the upper bound of trading would probably be around €20.
This estimate is considerably below the price range assumed by the European Commission of €20-33 during the first period of trading, scheduled for 2005-2008.
This news will be a blow to Germany, whose ailing economy contains most of the companies liable to sell high-value emissions owing to the shutdown of heavy industry in East Germany following the fall of the Berlin Wall. Spain, Austria and the Netherlands are the likely beneficiaries. (Reuters, May 26)
Effect of Land Use Change on Climate Greater than Thought
Last year, Roger Pielke, Sr., of Colorado State University added another complicating factor to the debate over what causes rising surface temperatures when he coauthored a major study that found that land use changes may be at least as important as greenhouse gas emissions in accounting for climate change. Growing urban areas, deforestation and reforestation, agriculture and irrigation can have strong influences on regional temperatures, precipitation and large-scale atmospheric circulation.
Now, new research from Eugenia Kalnay and Ming Cai of the University of Maryland backs up Pielke’s conclusions. By comparing observed surface temperatures with a reconstruction of global weather over the past 50 years, they were able to estimate the impact of land-use changes on surface warming.
They concluded that there had been an average increase of 0.27°C in surface temperature per century attributable to urban and other land-use changes. This represents half the observed change in the range of daytime temperatures, and is twice as high as previous estimates based on urbanization alone. (Nature, May 29)
Hazy Picture over Aerosols
Coming hard on the heels of the findings that soot may be responsible for more atmospheric warming than was previously thought (see previous issue), a team of researchers has looked again at the question of how much the atmosphere might be cooled by the presence of sulfate aerosols.
Their research, published in the Perspectives section of Science magazine, compared the likely cooling effects of aerosols worked out from first principles with the likely effects predicted by climate models. They found a discrepancy between the two that they were unable to explain.
The authors argue that their findings suggest that anthropogenic activity will certainly lead to a strong “forcing” of the Earth’s climate between 2030 and 2050. However, they also admit that the discrepancy means that “the possibility that most of the warming to date is due to natural variability … must be kept open.” (Science, May 16)
“[Kyoto] is about trying to create a level playing field for big businesses throughout the world.”
- EU Environment Commissioner Margot Wallstrom, (quoted in the Independent, Mar. 19, 2002)
“Of course it’s about money, about rubles. They are trying to calculate how much [the Kyoto protocol] will give.”
- Wallstrom, in response to Russian reluctance to ratify the protocol, (quoted by Reuters, May 12)
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
60 Plus Association
Small Business Survival Committee