Warming to Bush: The Political Complexities of Suppressing Global Energy Use

Smith Book Review in National Review Online

Those concerned that the Bush administration might have miscued on Kyoto will be reassured by a careful reading of the new book by David G. Victor, The Collapse of the Kyoto Protocol and the Struggle to Slow Global Warming.

The case for approving any Kyoto-style CO2 suppression policy has always rested on "yes" answers to three highly uncertain propositions: The Science Question (Are anthropogenic activities increasing atmospheric CO2 levels substantially affecting the climate?), The Economics Question (Will the impacts of such changes be swift and disastrous?), and The Political Question (Is there a viable and effective global CO2 suppression policy?). Scientific and economic research over the last decade have increasingly cast doubt on the first two propositions (for a review of the literature, see www.globalwarming.org); Victor's book, which focuses on the political difficulties of reducing energy use globally, illustrates that the political viability of any CO2 control plan is even more doubtful.

As most Americans now know, the Kyoto Protocol, crafted in December 1997, outlined a crash program to reduce carbon-dioxide production levels sharply by 2008. Victor spends much time evaluating (rather pessimistically) the premises of this agreement, and the viability of the sketchy plan described in the Protocol to achieve it. Victor argues that the creation of CO2 emission rights on the scale envisioned (trillions of dollars of CO2 emission rights) and their allocation among the various nation states is a vast and highly complex venture. He notes "policy makers cannot credibly set targets" and "international law is a poor mechanism for allocating permits and controlling a permit market with trillions of dollars at stake."

Victor rejects several key elements of the Kyoto protocol; for example, the Byrd-Hagel push to include the developing nations (indeed, he would further limit an agreement to only those nations sharing a common rule of law). He would also restrict the greenhouse-gas-control program to CO2, omitting a range of other greenhouse gases (and the recently discovered "black carbon") on grounds that controls on these gases would be too costly to monitor and enforce. He asks, "Does the extra flexibility of extending a trading system beyond fossil fuel emissions of carbon dioxide offset the additional administrative burden and uncertainty?" (I only wish he had also asked that question about the wisdom of seeking to control CO2 alone.) Victor notes that the inclusion of all nations and gases represents a "broad then deep" strategy but argues that a better approach is to adopt a more modest first stage "deep then broad" approach.

Victor also recognizes that problems arise whenever government creates artificial scarcity in some resource and then allocates privately the rights to that resource. Those gaining these scarcity rights obtain a monopoly privilege and thus will oppose any effort to ever eliminate that artificial scarcity. An example is the taxicab medallion system of New York City. To operate a cab in New York, you need a medallion that can cost hundreds of thousands of dollars; efforts to liberalize cab availability are fiercely opposed by medallion holders. Victor notes that nation states anticipating gains from CO2 trading would resist any easing of carbon dioxide restraints, even if science and economics dictated that course. To create trillions of dollars of rights that will be valuable only if fossil fuels are suppressed may be unwise.

Because the costs of suppressing CO2 vary widely, Victor argues that any global-warming policy must include emission trading — that is, allow trade in "promises" to reduce CO2 levels. A U.S. firm, for example, might contract with a firm in Russia to modernize some energy-using facility, shift to nuclear power or close down a boiler. He comments extensively on the problems associated with monitoring and enforcing such contracts — how does one know that anything real is happening? His solution is to place the burden of ensuring that such trades are "real" on the purchaser ("buyer liability"). However, he understands that while buyer liability might simplify enforcement, it would also reduce the desirability of trades. It would also raise the risk that a company might be sued simply because the nation from which the right was purchased failed to meet its CO2 reduction goal. He argues, however, that such risks also occur in normal business arrangements ("sovereign or political risks") and believes the market can best assess such situations. Victor, however, does not mention that, even had the original Kyoto Protocol been adhered to rigidly, there would have been no impact on climate — the fact that what Kyoto represented was purely symbolic — pain without gain.

Having recognized the complexity and risks of any Kyoto-style initiative, one might have expected Victor to rethink the whole wisdom of suppressing CO2 and he does mention that option. However, he quickly rejects it, because he believes that the "threats are real and warrant preventive action." This is somewhat surprising since he cites Thomas Schelling's suggestion that a better approach to climate risks would be to enhance the wealth and adaptivity of developing nations.

Nonetheless, Victor does favor a global carbon-dioxide-suppression policy and, in fact, outlines an approach he believes might prove viable. To this reader, the complexity of his "solution" — a flexible hybrid tax and emission rights system with many of the bells and whistles incorporated into the existing Kyoto plan — suggests caution. Even then, Victor is well aware that any plan "will require strong and capable international institutions," even though this threatens national sovereignty. He toys with the idea of bringing the one international organization with adequate power — the World Trade Organization — to police such accords but recognizes that any swift move to merge trade and environment policy would be "impossible and could severely harm both regimes."

Victor does realize that there are alternatives to the carbon dioxide suppression strategy embodied in the Kyoto approach. He mentions three:

First, invest in knowledge acquisition on the basis that action is not urgent and that research might well lower the costs and increase the availability of solutions well in advance of any true crisis.

Second, increase the abilities of societies to adapt to climatic change. Victor clearly realizes that wealthier nations are better able to address climate change issues and that adaptation would be valuable even if the global-warming concern proves baseless. Later, he notes, "The same policies that soften the blows of nature also ease adaptation to the effects of global warming."

Third, explore "geo-engineering" schemes that might allow us to offset or mitigate climate changes.

But, Victor still remains convinced that CO2 reductions must remain the central focus of policy and does not expand upon any of these non-CO2 suppression options. Why? Victor's rationale is the now standard Precautionary Principle. Although the scientific, economical and now political case for restricting CO2 levels is weakening, it remains possible that catastrophic global warming might still occur — and thus we must "do something." He identifies two concerns: first, that while mankind might find it possible to adapt to warming, nature might not; and, second, an unanticipated but catastrophic climate-induced change (such as warming creating fresh water flows which might destroy the Gulf Stream).

Note that Victor, like most global-warming advocates, focuses only on the risks of global warming; he largely ignores the risks of global-warming policies. Yet, the risks of inappropriate energy policies and of ceding power to global bureaucracies are certainly real. Higher energy prices will slow economic growth, making it more risky to address all future problems, climatic or other. A global-warming agreement would also increase the risks that trade sanctions might be used for enforcement. The result might be trade wars or minimally increased international tensions and charges of eco-imperialism. Also, granting national political leaders the power and moral authority to determine who will use energy in their societies, poses a real threat to civil liberties. How well are persecuted minorities likely to fare under politicized energy allocation schemes?

Despite these reservations, Victor's book is a useful compilation of the problems faced if mankind were forced to create a global energy authority. His book suffers most from the precautionary biases that have long distorted environmental policy. Still, within its limits, Victor's book is an honest account of the problems of global CO2 suppression, an account made even more effective since he favors such suppression. Victor ends his book by noting that the apparent rapid success at Kyoto and beyond in implementing a global CO2 reduction policy "seemed to good to be true." And concludes, "It was." That statement captures the spirit of the book and seems to caution against any rush to action. But read the book — and make up your own mind.

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