Fixing the Game

<?xml:namespace prefix = v ns = “urn:schemas-microsoft-com:vml” /><?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” /><?xml:namespace prefix = w ns = “urn:schemas-microsoft-com:office:word” />Foreign countries are all too ready to accuse the <?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />U.S. of not playing its part in the global community when it objects to the Kyoto protocols. Yet “playing its part” might be better thought of as “playing the game,” and when the rules of that game are looked at closer, it becomes apparent that the game is as fixed as any “reality” TV show. Most of the other players have written the rules to ensure they win, and America loses. If the grand prize were a holiday or a record contract, this might not be an issue. But in this game, the grand prize is the future prosperity and well-being of both the United States and the world as a whole.

The main voices urging the U.S. to ratify the Kyoto Protocol come from Europe. Interestingly, each of the three major European powers insisting on Kyoto have the cards stacked in their favor. Let's start with the United Kingdom, where Tony Blair and his Labour government actually have one of their great hated figures to thank for the ease with which they will meet their Kyoto targets. During the 1980s, Margaret Thatcher's government was faced with something approaching outright rebellion in the form of a series of strikes by the National Union of Mineworkers, led by the far-left “Union Baron,” Arthur Scargill. Blackouts and an energy crisis caused by mineworkers cutting off supplies of coal to the power plants had helped bring down a Conservative government in the 1970s, and so Mrs. Thatcher quickly gave way the first time, but was careful to stockpile coal in case this happened again. When it did, the Thatcher government was able to keep the lights on while battling–in some cases literally–the striking miners. She won, and the miners returned to work with their power broken.

In order to guard against any possible resurgence of mine-worker militancy, Mrs. Thatcher embarked on two reforms. First, she privatized the coal industry, but, more important for Kyoto, she began the “dash for gas,” switching the country's electricity industry over from its traditional reliance on coal (Britain is as much built on coal as Saudi Arabia floats on oil) and towards natural gas, which is available in abundant quantities in the North Sea. It should be obvious that had Mrs. Thatcher lost the battle and Scargillism had won, Britain would be a much larger emitter of CO2 than it is today (and an “Old Labour” government would be resisting Kyoto as damaging to the jobs and communities of mine workers). This is something the environmentalists are strangely reluctant to give Mrs. Thatcher credit for. It is because of her actions that Britain is in a position to back Kyoto without significant risk to the British economy.

France also has the deck stacked in its favor. Over 70 percent of France's energy needs are met by nuclear power, which does not produce greenhouse gases. It is odd to think of nuclear power as the environmentalist's friend, but that is the line France takes and it is strictly true in Kyoto terms. The French nuclear-energy commission states, “This energy source enables the emission of 700 million tonnes of CO2 to be avoided each year (equivalent to emissions by 200 million cars) in Western Europe, including 360 million in France. Thus, on average, a French person is responsible for the emission of 1.8 times less CO2 than a German and 2.9 times less than an American.” France was always going to be ahead of the game when it comes to restrictions on greenhouse gases. The French economy will not suffer much from Kyoto either.

Nor will Germany's. It is instructive to look at the baseline year against which Kyoto targets are to be measured. Several things happened in 1990, most notably the fall of the Berlin Wall. Before it, East German smokestack industries belched forth vast amounts of CO2. Since the collapse of Communism and the closing of all those uneconomic industries, German CO2 production has plummeted. Kyoto rewards those countries that close greenhouse gas-producing industries without any regard for whether it helps or hinders the nation's economy. In Germany's case, it clearly helped, and it will help again if Kyoto's reward gives the country a financial bonus in terms of valuable credits for its emissions reductions that it can sell to countries like America that still have economically productive emitting industries.

Yet there's another aspect in which European countries will benefit from the Kyoto targets in a way that the U.S. won't. Europe's demographics are collapsing. Most of the continent has seen its fertility rates drop below replacement levels, which means that Europe's population will remain steady or drop over the next half-century. America's is certain to rise. According to the U.S. Census Bureau, Western Europe's current population of around 400 million will drop to near 350 million by 2035. Germany in particular faces a massive drop off, with some experts predicting a halving of total population over the next century. The middle projection for the U.S., however, predicts a rise from the current population of 280 million to 400 million by 2035 (the high projection estimates the U.S. population could reach 550 million by then).

Each population increase requires energy, which, except in the case of France, requires the burning of fossil fuels and the emission of greenhouse gases. Under the demographic analysis, it is clear that European energy needs will remain steady and then begin to drop over the next few decades, while America will need at least a third more energy than it consumes at present. This means that in order to meet Kyoto targets by 2035, the European Union will require a less than 15 percent reduction in emissions per capita, while the United States will require over 35 percent (and close to 50 percent under the high-population scenario).

There are some who claim that technology could solve these problems for us. Yet the Pew Center on Climate Change recognizes that even with “rigorous” efficiency standards for appliances, caps on CO2 emissions from power plants, renewable portfolio standards (policies requiring specified percentages of electricity to come from wind, solar, and biomass technologies), investment in “combined heat and power” and “distributed generation,” fuel-cell research, breakthroughs in solar photovoltaic manufacturing, a shift in consumer preference from “sprawling” to compact residential development, and a move towards a hydrogen economy—in short, everything the environmentalist lobby dreams of–U.S. carbon emissions will still rise 15 percent above the Kyoto target by 2035.

Because of America's growing population, the only way it can meet Kyoto's targets is by some form of energy rationing—most likely by using the price mechanism. Then, of course, it is the poor who will suffer most. Air-conditioning units will be turned off, and more elderly people will die on hot days, like we have recently seen in France. In order to meet their energy bills, companies will lay workers off. Cars will become luxury items again, and people's ability to take advantage of flexibility in travel to secure themselves better jobs will suffer. The U.S. economy will be badly damaged.

If you find yourself falling behind in a race, normally the best thing you can do is to run faster to try to catch up. But if you can simply ask a referee to handicap the frontrunner by placing extra weights on him, life becomes so much easier. You can still win the race, and take your time doing it. If Kyoto came into force, the European nations would have a much happier time in the economic race. The global community would have America play its part by handicapping its economy. As a result, America would end up poorer, which will hurt every other economy, especially if the harmful predicted effects of climate change turn out to be a natural and not man-made occurrence. For Europe, the upside will be that will be relatively less impoverished than the United States. That's a sophisticated way to play the game, but it still guarantees a pretty poor result.