Testimony before the Committee on Small Business, Hearing on the Kyoto Protocol

Good morning, my name is Marlo Lewis. As Vice President for Policy and Coalitions of the Competitive Enterprise Institute, I welcome your invitation to discuss climate change policy. CEI is a public interest group established in 1984 with a current staff of 35 and an annual budget of about $2.5 million. Located in Washington, D.C., CEI works to educate and inform policy makers, journalists, and other opinion leaders on market-based alternatives to government programs and regulations. CEI also engages in public interest litigation to protect property rights and economic liberty. CEI is supported by the voluntary contributions of foundations, corporations and individuals. We accept no grants from any government agency, nor do we accept grants from any other party that would compromise the principled positions we espouse.

Climate change policy is a major focus of the Competitive Enterprise Institute. Indeed, we have been active in the global warming debate ever since the issue first gained national prominence in the late 1980s. Former CEI environmental studies director Kent Jeffreys published a major monograph on the issue, titled "Why Worry About Global Warming," in February 1991. In 1992, along with the late Dixie Lee Ray, CEI President Fred Smith attended the 1992 Rio Conference as an observer and commentator. Our aim was to give intellectual aid and comfort to greenhouse skeptics in the U.S. and other delegations. Needless to say, CEI’s efforts to dissuade the Bush Administration from signing the Framework Convention on Climate Change were less than spectacularly successful. But we remain hopeful that cooler heads will yet prevail in this round.

In July 1997, CEI held a full-day conference on the economic and political implications of climate change policy. Later that year we published The Costs of Kyoto: Climate Change Policy and Its Implications, a book based on the papers written for that conference. We also produced a conference highlights video with the same title. In addition, CEI conducted a congressional staff briefing, published nearly a score of op-eds and columns, and participated in numerous media interviews, press conferences, and educational symposia on global warming.

Since May 1997, CEI has chaired the Cooler Heads Coalition, the climate change working group of the National Consumers Coalition, an alliance of some 28 pro-market public policy groups, headed by Consumer Alert. On behalf of the Cooler Heads Coalition, CEI publishes May Cooler Heads Prevail, a biweekly newsletter on the science, economics, and politics of the climate treaty debate. Also on behalf of the Coalition, CEI organizes a monthly science briefing for congressional staff and media.

Finally, let me note that CEI attended all eleven days of the Kyoto conference as an officially registered non-governmental organization. Fred Smith wrote daily commentaries that enjoyed wide distribution in the U.S. via e-mail and fax.

Mr. Chairman, I commend you for holding this hearing. The Clinton Administration is making ambitious plans to restructure the energy economies of America and the world. Global warming may or may not be real, and if real, may or may not pose risks to human health and safety. In contrast, the risks of global warming policy are undeniably real and, I will argue, unacceptably high.

I. Risks of Precaution

What are the risks of global warming policy? They include the following: the risk that energy rationing will devastate employment in major U.S. industries; the risk that rising consumer energy prices will depress the living standards of American families; the risk that new regulatory policies and higher energy costs will handicap small business; the risk that U.S. job and export losses will fuel protectionism (carbon tariffs or quotas to offset carbon leakage); the risk that fossil fuel restrictions will impair the readiness and training of the U.S. armed forces; the risk that non-elected, unaccountable bureaucrats will gain greater control over our lives and resources; the risk that public attention and resources will be diverted from more serious threats to U.S. and global welfare; the risk that increased government control over energy production and consumption will strengthen repressive institutions, particularly in the Third World and the former Soviet Union; and the risk that Kyoto’s anti-energy use policies will be extended to the developing world, condemning the world’s poorest nations to perpetual poverty.

The advocates of an international treaty ignore, deny, or downplay such risks. Invoking the "Precautionary Principle," they pretend that the only risks worth worrying about are those arising from economic activity. That the political regulation, suppression, or prohibition of economic activity might also carry serious and even lethal risks is a reality they seldom if ever address. Thus, in their view, the case for an international climate treaty is almost self-evident. The use of energy might be warming the earth. That warming might produce catastrophic results. The speed of this change might require immediate action. Governments might be able to prevent that warming by an aggressive global carbon withdrawal policy. Therefore, we must take action now to reduce emissions. We must not "gamble with the only planet we have." That they are gambling with the only economy we have never seems to trouble them.

This approach to policy making is both morally irresponsible and logically inconsistent. Precautionists demand assurances of no harm only with respect to actions that government might regulate, never with respect to government regulation itself. But government intervention frequently boomerangs, creating the very risks precautionists deem intolerable.

Examples abound. Federal fuel economy mandates force auto makers to produce smaller, lighter, less crash-resistant cars, causing thousands of highway deaths per year.1 FDA regulations delay the availability of life-saving therapies, killing tens of thousands over the past two decades.2 Banning DDT revived malaria epidemics in the developing world, afflicting 2.5 million people in Sri Lanka alone.3 Furthermore, a large body of literature documents that regulation can kill just by misdirecting resources and squandering wealth. Precautionists ignore the obvious connection between livelihoods, living standards, and lives – as if jobs and income were not the chief safety nets for most of the world’s people. Even in a relatively wealthy country like the United States, every $5 million to $10 million drop in economic output is associated with an additional statistical death.4

Making people poorer is seldom a good way to make the world safer, healthier, or cleaner. Yet the Kyoto Protocol would require America to reduce its emissions of greenhouse gases, chiefly carbon dioxide from fossil fuel combustion, 31% below the level projected for 2010.5 There is no feasible way to accomplish such drastic emissions cutbacks without draconian cutbacks in energy use; and no way to put America on an energy austerity diet without depressing economic growth. WEFA, the respected economic forecasting firm, estimates that meeting the U.S. Kyoto target would reduce average family income in the year 2010 by $2,700, reduce annual economic output by $300 billion, and destroy more than 2.4 million jobs.6

II. Critique of the Global Warming Hypothesis

Mr. Chairman, Kyoto apologists would have us believe that the "consensus of scientists" has spoken, that global warming poses a "mortal threat" to human life,7 and that we must therefore waste no time making preparations and plans to de-carbonize the U.S. and other national economies. In reality, the case for an international climate treaty rests on an ensemble of hypotheses that are highly questionable.

Those hypotheses may be summarized as follows. First, man’s increased use of fossil energy is warming the earth significantly. Second, the impact of such warming will be catastrophic and rapid. Third, the scheme to coordinate global energy use reductions worldwide is feasible and effective. Fourth, if we do it smart, it won’t cost much. Finally, energy rationing will provide greater safety than concerted efforts to make societies freer, wealthier, and, thus, better able to ride out the shocks and surprises of an unknown future. Note that the mere fact that the Earth might be warming, or that mankind might be causing such warming, does not in itself clinch the case for an international climate treaty.

Let’s examine the case for a climate treaty through a series of questions.

First, are industrial emissions having (in practical, not just in statistical terms) a significant impact on global climate? Those arguing in the affirmative rely on computer models that simplify or ignore many key variables (water vapor, clouds, solar radiation), cannot "hindcast" the past century’s climate, and cannot replicate current climate without considerable tweaking or "fudge factors."8 The modest 0.54o C warming observed during the past 110 years is within the historic natural range of climate variability, and may well be a recovery from the Little Ice Age of 1550-1850.9 Approximately 70% of that warming had already occurred before 1945 – prior to the largest buildup of greenhouse gases.10 Greenhouse theory predicts that most of the warming will occur in the higher latitudes, yet various weather stations record a cooling trend in the North Atlantic since the late 1950s.11 Furthermore, U.S. Weather Satellites – the most accurate and comprehensive measuring system in the world – show no warming trend since 1979 when the satellite program began. Yet this was a period of rapidly increasing greenhouse gas concentrations.12 Fluctuations in solar activity correlate strongly with fluctuations in global temperature over the past 240 years, suggesting that the sun may be responsible for some or most of the warming observed over the past century.13 The real world evidence for human-induced global warming is dubious at best.

Next, suppose the data did suggest a "discernible" human influence on global climate – so what? There is no a priori reason to assume that global warming, on net, would be harmful rather than beneficial. Millions of America’s senior citizens adapt to climate change every decade – when they move from the Snow Belt to the Sun Belt. Thomas Gale Moore of the Hoover Institution shows through extensive historical data that mankind prospered in periods warmer than today, and suffered in colder. For example, in the Medieval Climate Optimum of 1000-1200 AD the world was 2-3oF warmer than today, yet this was a period marked by significant increases in agricultural output, commerce, trade, longevity, and population. Europe experienced milder weather and fewer outbreaks of epidemic diseases than in either the cold, dank "Dark Ages" or the subsequent Little Ice Age.14

Greenhouse theory itself predicts that most warming would occur at night, in winter, and in the higher latitudes. Such a warming pattern would likely lengthen growing seasons and, by reducing the temperature gradient between the tropics and the poles, possibly reduce extreme weather events. Furthermore, higher levels of carbon dioxide cause plants to grow faster, stronger, and more profusely, boosting agricultural yield and enhancing wildlife habitat.15 Thus, it is not clear that global warming is something that should be prevented, even if that were easy to do and cost little. Spending trillions to avoid better weather and a greener planet would make no sense at all.

Third, why rush? Kyoto apologists warn that we must take action now, lest the buildup of greenhouse gases wreak irreversible havoc on nature’s delicate balances. Yet precisely because carbon dioxide emissions may linger in the atmosphere for a century or longer, it makes no practical difference in the long run whether carbon withdrawal policies are implemented now or a decade or more from now. Indeed, according to climate modeler Thomas Wigley, delaying action until 2020 would yield only 0.2oC additional warming in the year 2100.16 That’s too small a difference to affect any discernible human or environmental interest.

Some greenhouse partisans urge immediate action on economic grounds. They argue that reducing emissions will be less expensive if we get started sooner rather than later to meet Kyoto’s targets and timetables.17 But that begs the question of whether Kyoto’s initial commitment period of 2008-2012 is not itself overly ambitious, or "too much, too soon," even if one were assume that some kind of climate treaty is a good idea. Former National Academy of Sciences officer Rob Coppock favors international controls on greenhouse gases but fears Kyoto will be counterproductive. Requiring nations to make significant reductions in a little more than a decade will force firms to invest in costly retrofits, delaying adoption of newer, cleaner, more energy-efficient technologies. Not only will premature turnover of capital equipment impair firms’ ability to make deeper cuts over the long term, it will intensify resistance to the Protocol.18 Coppock finds this problem so serious that he thinks the Conference of the Parties should consider scrapping Kyoto and start over if they can’t agree to stretch out the compliance period.

Fourth, if industrial civilization is dangerously altering global climate, can any treaty stop it? The Kyoto accord in itself would do nothing to mitigate climate change, since it exempts the developing countries, which will be the major emissions source in the next century. Patrick Michaels notes that even if all industrial countries faithfully meet their Kyoto targets, the amount of warming averted will be a miniscule 0.19oC by the year 2047 (if, that is, we assume the validity of the National Center for Atmospheric Research’s newest climate model). Ground-based measurements probably could not verify that such a small change had actually occurred.19

Of course, we often hear that Kyoto is just a first step, a foundation for future agreements embracing more nations and requiring deeper cuts. But that makes the whole climate change prevention agenda seem all the more utopian, since no agreement in history approximates the complexity of the Kyoto Protocol. Kyoto does not propose to ban a specific substance manufactured by a few specialized companies but to regulate levels of the most pervasive byproduct of industrial civilization. Nations would have to control the energy budgets of their citizens, monitor all industrial and agricultural activities, and restrict mobility. They would continually have to increase scope and stringency of their regulatory efforts. And they would have to do so in a coordinated manner. Is there any reason to believe that this ambitious scheme would function more coherently, efficiently, or fairly than does its parent organization, the United Nations?

Conceivably, the U.S. could bully or bribe some developing countries to sign the Kyoto Protocol, but what is the likelihood that the agreement would be enforced? The benefits of emissions reduction are distant, diffuse, and speculative, whereas the costs are immediate, local, and real. Every party will thus have strong incentives to cheat. The UN can’t enforce simpler agreements on arms control or human rights. Why would nations that routinely evade or flout other international commitments scrupulously deny themselves the benefits of affordable energy and economic growth?

Any global emissions reduction treaty would be akin to a super-OPEC, which in its own way for its own purposes has long sought to curb energy use. From time to time, largely when war or national policy has disrupted energy markets, OPEC succeeded somewhat in restricting global energy consumption. Mostly, however, OPEC has failed. Although OPEC members would all benefit from actual curtailment of energy output, their self-interest encourages each to produce more energy. Consequently, while all OPEC members express support for the energy curtailment program, most individually expand output. Non-OPEC countries have no clear and direct common interest in reducing energy use, or in coordinating energy reduction policies. Thus, one would expect even less success with a Kyoto style agreement.

Fifth, how much will it cost? Council of Economic Advisors Chairman Janet Yellen maintains that the net costs of Kyoto "are likely to be small" – if the Administration’s diplomatic and domestic policy initiatives carry the day. Specifically, she claims that with developing country participation, robust emissions trading, federally-stimulated energy conservation improvements, joint implementation and the clean development mechanism, Kyoto should cost the United States only $7 billion to $12 billion per year in 2008 to 2012. For the average household, energy costs would rise by no more than $70 to $110 per year.20 Commenting on Dr. Yellen’s analysis, one witness at an earlier hearing could not help recalling the old Depression Era jest: "If we had some ham, we could make ham and eggs – if we had eggs." It is questionable whether any of the ingredients presupposed in the Administration’s estimates will ever materialize.

To repeat, Kyoto will require the United States to reduce its emissions 31% below the level otherwise predicted for 2010. Kyoto would legally obligate the U.S. to cut 552 million metric tons of CO2 per year by 2008-2012.21 As the Business Roundtable points out, that target is "the equivalent of having to eliminate all current emissions from either the U.S. transportation sector, or the utilities sector (residential and commercial sources), or industry."22 What this suggests is not, as the Administration says, that if we "do it dumb," Kyoto will be "costly," but that unless fundamentally transformed by emissions trading, developing country participation, joint implementation, the Climate Change Technology Initiative, and the rest, Kyoto is a prescription for economic disaster. What then is the likelihood that this amazing transformation will occur?

Emission trading has the potential to bring down compliance costs, but by how much is anybody’s guess. The larger the market, the greater the number of countries participating, the greater the likelihood U.S. firms will be able to purchase relatively inexpensive emissions permits abroad rather than make expensive emissions reductions at home. But only nations that accept binding emission limits are eligible to participate in trading, and the Kyoto Protocol excludes developing countries – the richest potential source of inexpensive emissions credits – from binding commitments.

At the Kyoto conference, the developing country bloc known as the G-77 Plus China overwhelmingly rejected a provision (Article 10) that would have allowed individual developing nations voluntarily to accept binding targets. As the Business Roundtable observes, "It seems unlikely that these same countries that refused to permit the inclusion of a voluntary ‘opt-in’ provision in the Protocol would now reverse course and accept binding reductions."23 Yet unless the developing country bloc does reverse course, the cost-reducing potential of trading will be greatly diminished.

Emission trading may be severely constrained for other reasons as well. A trading system can be viable only if there are credible mechanisms to monitor trades, keep the books, and punish cheating. Why play by the rules if no one else does, if other countries are free to undercount emissions for domestic producers, or to issue permits exceeding their national quota? Kyoto, however, creates no monitoring and enforcement machinery for emissions trading. It leaves to future conferences the task of setting up the institutions required to audit emissions trades and punish emissions violators.

Article 17 of the Kyoto Protocol states that emissions trading "shall be supplemental to domestic actions for the purpose of meeting quantified emissions limitation and reduction commitments…." As the Business Roundtable notes, it is unclear at this stage how much of its target the U.S. would be able to meet through "supplemental" emissions trading and how much it would have to meet through "domestic actions." The EU, for example, intends to push the position that no party should be allowed through trading to meet more than 10%-50% of its emission reduction target.24 At its recent conference, the Group of Eight – the U.S., Japan, Germany, United Kingdom, Canada, France, Italy, and Russia – endorsed the use of emissions trading and other market mechanisms "to supplement domestic actions" – suggesting that only part of a nation’s target can be met through trading.25

Similar difficulties surround other elements of the Administration’s scenario. Under Article 6 (joint implementation), U.S. firms may earn emissions credits by helping companies in other industrial countries reduce their emissions or enhance greenhouse gas-absorbing "sinks." But here again, only projects "supplemental" to domestic actions would qualify – implying an upper limit to the credits attainable from joint implementation. Moreover, to earn credits, joint implementation projects must be "additional to any that would otherwise occur." Yet those that would "otherwise occur" are apt to be the most profitable investments. If credits can only be earned through economically unattractive ventures, then "joint implementation will have very limited value."26

Under Article 12 (the clean development mechanism), the U.S. may earn credits by reducing emissions in developing countries. But such reductions may count only against "part" of our Kyoto obligation, and how large a part will not be determined until after the Protocol enters into force.27 Also, a project may qualify for clean development credit only if the investment would be "additional" to any that would occur otherwise. In short, like emissions trading and joint implementation, the CDM in practice may be far less "market-based" and "flexible" than it is cracked up to be.

David Montgomery of Charles River Associates raises additional concerns about the Administration’s cost estimates. According to Montgomery, Dr. Yellen has looked only at the "direct" costs of compliance, ignoring the "ripple effects" of higher energy prices throughout the economy. Furthermore, Dr. Yellen apparently assumes that the $6.3 billion Climate Change Technology Initiative would increase the annual rate of energy efficiency improvement from 1% to 1.25%, yielding an additional 40% boost in energy efficiency over the next 12 years at no cost.28 Yet, as Montgomery notes, "Increasing the annual rate of efficiency improvement from 1% to 1.25% gives only a 4.5% improvement in energy efficiency over 12 years, not 40%. This is a simple compound interest calculation."29

III. Insurance Options – Prevention or Resiliency?

Confronted with such objections, greenhouse advocates emphasize precautionary considerations and compare the Kyoto Protocol to an insurance policy. Yes, my home will probably never be vandalized, consumed by fire, or destroyed by an earthquake or a flood. Nonetheless, I would be foolish not to purchase homeowners’ insurance. Similarly, Kyoto supporters argue, I am foolish if I am unwilling to invest in energy rationing policies that might possibly help avert a disaster of planetary proportions. There are two main flaws in this line of argument.

First, whether or not an insurance policy makes sense partly depends on the price of the premium. It is possible to spend too much on insurance. A homeowner’s policy so expensive that it effectively prevents the insured from purchasing health insurance, replacing the faulty brakes in his car, making safety improvements in his home, or saving for his retirement is probably a bad investment. The Administration assures us that the premium payments associated with the Kyoto Protocol will be relatively small, but, as noted, several respected private sector analysts disagree.

Second, an insurance policy worthy of the name should help make the insured whole after some unfortunate event has struck. Kyoto can do nothing of the kind. Quite the contrary, whatever resources we apply to prevent climate change are resources we cannot use to adapt to climate change if and when it occurs. Kyoto is all premium and no coverage.

This last point leads to a question that should be at the heart of the global warming debate. Which type of societal insurance policy is likely to deliver the most protection? Should we try to prevent global change by rationing energy and further politicizing economic and technological development? Or should we try to increase mankind’s ability to adapt to change by reducing political barriers to enterprise, invention, and innovation?

Wealthier, more technologically advanced societies are better able to anticipate, withstand, and recover from climate change, extreme weather events, and other natural disasters. There is no evidence that extreme weather events are becoming more frequent or severe in this century.30 But let’s assume for the sake of argument that rising levels of atmospheric carbon dioxide will warm the planet in ways that increase the number and intensity of severe storms. What type of insurance policy would offer the most protection under such circumstances?

Florida and Bangladesh both experience tropical storms. When a typhoon hits Bangladesh, tens of thousands of people may die. In contrast, when a hurricane strikes Florida, there may be tremendous property damage, but comparatively little loss of life. The reason is not that typhoons are worse than hurricanes but that Florida is wealthy, Bangladesh poor. In Florida, homes are built to withstand high-velocity winds. A developed infrastructure is in place to provide early warning, continuous communication, medical services, and emergency relief. Also, car ownership is widespread, allowing people to drive to safer locales before the storm hits. In short, richer is safer. This suggests that the proper goal of policy is to make more of the world like Florida and to shun political schemes that might damage our mobility, prosperity, or technological prowess. The best insurance policy against both man-made and natural disasters is greater wealth and technological sophistication.

A better approach to dealing with the potential hazards of climate change is a Resiliency Strategy. Policy makers would work to eliminate the fiscal and regulatory barriers that impede wealth creation, innovation, and intelligent adaptation. A Resiliency Strategy is clearly superior given the uncertainties surrounding the global warming hypothesis. Many catastrophes may await us in the next century: new viral plagues, increased earthquake activity, an errant meteor, nuclear terrorism, biological or chemical warfare, even global cooling. The resources of money, effort, and attention available to address such crises are limited. Mobilizing the nations of the world and spending vast sums to fend off one possible threat that may prove to be non-existent is hardly a prudent insurance policy. In contrast, making societies wealthier and freer is inherently desirable, and would better prepare us to survive the various potential threats that might materialize in the 21st century.

Disingenuously, greenhouse lobbyists often argue that, at a minimum, we should pursue a "no regrets" policy – do things that should be done in any event. What they have in mind, however, are coercive conservation measures to reduce America’s allegedly "wasteful" use of energy. I say "allegedly" because such analysts typically confuse energy efficiency with economic efficiency. When energy is relatively abundant and inexpensive, as it is in the United States, forcing individuals and businesses to use less of it is likely to be a net waste of resources. The mere fact that a business may save money in the long run by investing in energy conservation proves nothing, unless that investment has a higher rate of return than other investments the business could have made with the same money.31 Profit-seeking firms continually search for ways to reduce costs, turn waste streams into assets, and do more with less. When investing in energy efficiency makes good business sense, firms will do so without being coerced or jawboned by political authorities. "To suppose otherwise is to assume that if free money were lying around on the sidewalk, businessmen would be too dumb (or lazy) to pick it up without a government planner twisting their arms or bending their ears."32

A true "no regrets" policy would involve government-cutting reforms like de-regulation, elimination of subsidy programs, and privatization of state-owned enterprises. We should eliminate the political preferences and subsidies that encourage certain fuels (coal, ethanol, solar) to be used rather than others that are more efficient. We should deregulate electricity generation and transmission to allow the most efficient (and typically least-polluting) firms to expand output. We should remove all regulatory barriers that now stifle innovation (for example, government restrictions on biotechnology pose major threats to our ability to produce more weather-robust crops and to fend off future insect infestations). We should encourage such free-market reforms throughout the world (by, for example, eliminating World Bank and other foreign aid programs that shore up oppressive regimes). Finally, we should encourage free trade to strengthen domestic pressures for sensible fiscal and regulatory policies. This would accelerate a shift away from wasteful material and energy policies, lightening mankind’s footprint on the planet.

Evidence for the superiority of the Resiliency Strategy is suggested by the fact that while in 1992 all the developed countries agreed to voluntary reductions of greenhouse gas emissions, only Germany and Great Britain were successful. It is ironic that these two countries, which most avidly support stringent international political controls over the world’s energy consumption, achieved their reductions by liberalizing and de-politicizing their energy markets. Germany ended support for the inefficient East German energy sector, and Great Britain stopped subsidizing her coal industry.

Whether the future will be warmer or colder, wetter or drier, stormier or more tranquil, some risks will increase and others will decline. Hampering the ability of private markets to respond to changing conditions serves no bona fide public interest. Indeed, it can be destructive. Stanford University’s Stephen Schneider suggests that those who oppose precipitous action to avert global climate change are willing to run an uncontrolled experiment on the only planet we’ve got. Yet Schneider and those who join him in calling for dramatic emission reductions are willing to run an uncontrolled experiment on the only civilization we’ve got.

The proper question to ask is: Should we seek to stop change or should we improve our abilities to adapt to an ever-changing world? America and the world will certainly face catastrophic risks in the future; whether these will be climatic, tectonic, biological, or political is unclear. Since we cannot be sure which risks will prove dominant, we ought to improve our generic ability to survive and recover from whatever dangers the future may hold. Rather than herd America’s entrepreneurs, inventors, and workers into some elite’s politically-correct industrial policy scheme, we should remove political impediments to production, market-driven innovation, and rapid adaptation.

The greatest risk of current carbon withdrawal policies is that they will fail to achieve any useful result while imposing major costs on the world’s economy. The economic repercussions will fall most heavily on the poor at home and abroad. Starving the world of energy is all too likely to produce a world of more starving people. The risks of climate change are speculative; those of climate change policy are all too real. Once this is realized, it is likely that few policymakers here or abroad will rush to join the global warming bandwagon. The road to Hell, we all realize, is often paved with good intentions. The global warming debate illustrates that maxim very well; even a baby step on this destructive path should be avoided.

1Robert W. Crandall & John D. Graham, "The Effect of Fuel Economy Standards on Automobile Safety," 32 Journal of Law & Economics 97, 109-10 (1989). 2Sam Kazman, "Deadly Overcaution," Journal of Regulation and Social Costs, August 1990. 3Frank Cross, "Paradoxical Perils of the Precautionary Principle," 53 Washington & Lee Law Review, 851 (1996), p. 891. 4Cross, "Paradoxical Perils," p. 919, "When Environmental Regulations Kill: The Role of Health/Health Analysis," 22 Ecology Law Quarterly, 729 (1995). 5U.S. Energy Information Administration, "World Energy Consumption," International Energy Outlook 1998, p. 13. 6Mary Novak, Testimony Before the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs, April 23, 1998. 7Albert Gore, Jr., Earth in the Balance: Ecology and the Human Spirit (Boston, New York, London: Houghton Mifflin, 1992), p. 325. 8Richard Kerr, "Greenhouse Forecasting Still Cloudy," Science Vol. 276, 16 May 1997, pp. 1040-42. 9Roger Pocklington, "Oceanography and Inferences from Time Series," in Laura Jones, ed., Global Warming: the Science and the Politics (Vancouver: The Fraiser Institute, 1997), pp. 49-51. 10Robert Balling, "Global Warming: Messy Models, Decent Data, and Pointless Policy," in Ron Bailey, ed., The True State of the Planet (New York: The Free Press, 1995), p. 91. 11Pocklington, "Oceanography and Inferences." 12Roy Spencer and John Christy, "Precise Monitoring of Global Temperature Trends from Satellites," Science 247 (1990): 1558-62, and updates. 13Sallie Baliunas and Willie Soon, Astrophysical Journal, 450, 1995, pp. 896-901; "The earth’s climate: Solar rash and earthly fever," The Economist, February 21st, 1998, pp. 81-82. 14Thomas Gayle Moore, Climate of Fear: Why We Shouldn’t Worry about Global Warming (Washington, DC: Cato Institute, 1998), pp. 43-67. 15Shirwood B. Idso, "The Biological Consequences of Increased Atmospheric Concentrations of CO2," in Laura Jones, ed., Global Warming, pp. 141-180. 16T.M.L. Wigley, R. Richels, &J.A. Edmonds, "Economic and environmental choices in the stabilization of atmospheric CO2 concentrations," Nature, Vol. 379, January 18, 1996, pp. 241-43. 17Rep. Henry Waxman, "Climate Change Facts: Five Myths about Developing Countries and Climate Change" (Dear Colleague, March 25, 1998). 18Rob Coppock, "Implementing the Kyoto Protocol: The Kyoto Protocol will be a worthwhile agreement only if it adopts a long-term strategy in its implementation plan," Issues in Science and Technology, Spring 1998, p. 70; The Business Roundtable, The Kyoto Protocol: A Gap Analysis, May 1998, p. 8. 19This estimate is based on the newest model of the National Center for Atmospheric Research. Pat Michaels, "The Consequences of Kyoto," Cato Institute Policy Analysis, No. 307, May 7, 1998, p. 10. 20Dr. Janet Yellen, Testimony before the House Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs, May 19, 1998. 21EIA, International Energy Outlook 1998, p. 13. 22BRT, Gap Analysis, p. 5. 23BRT, Gap Analysis, p. 16. 24Ibid., p. 25. 25BNA Daily Environment Report, May 19, 1998. 26BRT, Gap Analysis, p. 23. 27Ibid., p. 28. 28In her March 4, 1998 testimony before the House Commerce Committee, Dr. Yellen states that the CCTI "could lead to declines in the permit price of approximately 40 percent." 29David Montgomery, Testimony before the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs, May 19, 1998. 30Chris W. Lansea et al., "(1996) Geophys. Res. Let. 23, 1693-1700. The IPCC states, "…overall, there is no evidence that extreme weather events, or climate variability, has increased, in a global sense, through the 20th century, although data and analyses are poor and not comprehensive. On regional scales, there is clear evidence of changes in some extremes and climate variability indicators. Some of these changes have been toward greater variability; some have been toward lower variability." IPCC, Climate Change 1995, The Science of Climate Change, Cambridge University Press, p. 173. 31Jerry Taylor, "Energy Conservation and Efficiency: The Case Against Coercion," Cato Institute Policy Analysis No. 189, March 9, 1993. 32Rep. John E. Peterson, "Rep. Waxman’s Mythical Facts" (Dear Colleague, May 19, 1998).



Neither I, Marlo Lewis, Jr., nor The Competitive Enterprise Institute (CEI) has received any federal government funding which directly supports the subject matter on which I am appearing before the Committee. No money has been received in any amount from any Federal Grant (or subgrant thereof) or contract (or subcontract thereof) by me or CEI during the current and two preceding fiscal years from the Department of Energy, Environmental Protection Agency, or the National Oceanic and Atmospheric Administration relating to global change research, nor has any money been received from any other Federal agency.