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EIN WG10 dinner Brussels March 04

Regulatory Comments and Testimony


EIN WG10 dinner Brussels March 04

Smith Remarks at European Ideas Network Dinner (summary)

Mr Smith.

We must take the climate change/global warming question seriously. But the global warming issue involves at least 3 separate sub-issues: Global warming involves science, economic and political questions.  Consider science: If greenhouse gas concentrations increase, all things equal, we would expect some additional warming. The more relevant scientific question is how much warming might we expect?  There should be much more debate about whether mankind’s contribution is significant enough to justify global energy rationing. Consider economic effects: How serious would climate change effects be?  Think about Putin’s recent comment: Would it be such a bad thing if Siberia warmed a few degrees? There are positives as well as negatives when climate changes. Finally consider the political aspects of global warming:  Note that had Kyoto been totally implemented, shortfalls, current models suggest minimum effect. The temperature change impact in the Year 2100 would be minimal.  Consider finally the political aspects of Kyoto: Many countries as such India, China and Brazil are not going to sacrifice their future. Thus, there is a real question about whether there exists any viable political path toward reducing greenhouse gas energy use to the level the global climate change model suggests is necessary. Even if greenhouse gas reductions were necessary, there is no politically reliable way to suppress energy levels enough.

The United States has never held the same attitude toward energy as in Europe. We emphasized the affordability of energy; you have viewed energy as an attractive tax base. We tax our energy less than you in Europe.  As a result, the U.S. encourages greater mobility. Note that Arthur Wellesley, the Duke of Wellington, once stated: “The passenger railroad was a terrible invention; it would merely allow the poor to aimlessly wander the countryside.” America has never viewed democratic mobility as a bad idea. We think affordable energy is a good thing.

Consider also that the trend is now decidedly toward rethinking, the whole basis and response to the risks of climate change.  After the U.S. moved, Australia, also decided not to ratify—and now Russia. Russia's decision is very dramatic because the Russian decision is based not just on the particular situation of Russia but also questions about the reliability of science in the greenhouse global climate model discussions. Russian scientists doubt—not the theory of global warming—but how serious global warming is likely to be given the contribution of water vapor and other non-anthrogenic greenhouse gases.  They are also more concerned about the consequences of global warming policies, specifically the economic costs of global warming. You might wish to invite Andreï Illarianov, a key Russian advisor in this matter, to address the EU Committee.  His presentation of the consequences to Europe of ratification is very dramatic. It is very impressive whether you agree or disagree with his findings.

One last point: I would like to critique the idea of tradable emission rights, the so-called market mechanisms. If you don't believe energy rationing makes sense than giving every one an energy coupon book doesn’t either. Indeed, it is a dangerous idea, for it will encourage some recipients to lobby for further energy restrictions. Moreover, the experience with energy rationing in World War II suggests that the system will rapidly become corrupt.  An emission trading system creates very strong lobbying forces that seek to make the voluntary standards compulsory. In the United States, Enron and other energy trading companies lobbied for the Kyoto treaty. You should think carefully before unleashing the lobbing forces of European industry to further restrict energy use. You already have enough rigidity in your economies.

We should take seriously the challenge of to protecting our planet. There are risks of using energy—just as there are risks of energy shortages.   There are risks of climate change but here are also risks with climate change policies. Our challenge is to balance these two risks. To reduce energy in today's world means to reduce carbon energy use. Nuclear energy can help to some extent, but we are decades away from any massive expansion in nuclear power.  Renewables play a role, but a small role.  After all, many greens also oppose wind powers. The greens demand power without any costs.  I stated in California a few years ago: “You in California, like the Europeans, are so moral, noble. Aware of the horror of hydropower (the damming our beautiful rivers), the risks of nuclear power, not just for ourselves but our children’s children’s children, and the damages caused by carbon-based fuels (smoke, health damages, destroying the climate of our planet). You’ve decided to ban nuclear, to ban hydro and carbon energy and rely on electricity instead.” Unfortunately, many Kyoto enthusiasts are similarly utopian.

There is, however, another form of insurance we should consider—the insurance available to wealthier, more technologically advanced nations. We should ensure against risks, but the insurance policy of suppressing energy is too costly. Europe and United States are very energy intensive economies. We have cars, air-conditioning and heating, televisions, computers, and other energy using appliances. Most of the world uses little energy. They have no cars or appliances—they cook over wood fires. If they are to obtain our lifestyle vastly more energy must be used. In today's world that means more carbon emissions, more greenhouse gasses will be generated. Whatever the consequences might be for our planet, a better strategy is needed to address whatever risk that might entail to accelerate economic wealth and technological growth.

Consider that one European nation, Holland, has addressed adverse climate changes for the three hundred years. Since the last Ice Age, the sea has been rising. Sea levels have risen, Holland has faced increasing threats of flooding. They have addressed that problem by becoming wealthier and more technologically sophisticated, And they have addressed their climate change problem while becoming one of the wealthiest countries in the World. Compare that to Bangladesh, which also suffers from climate disturbances.  Storms in Bangladesh destroy not only property, but also kill tens of thousands of people. Nature is not different in Holland than in Bangladesh.  Rather, their nations differ in their ability to work with nature to defend themselves, to ensure a better world.

The debate in Europe has started. I think there are more questions you might want to ask over the next few months. EU Commissioner Palacio has begun the debate. I urge that she go a little further, exploring the scientific and political reasons for seeking an adaptation rather than an energy suppression approach.