July 1999

An Early Start Will Cost a Little Less

In 1998, the Energy Information Administration released a report that estimated that complying with the Kyoto Protocol would cost the United States $64 billion per year. The study assumed that the U.S. would begin to comply with the protocol in 2005 and reach its target of reducing greenhouse gas emissions by 7 percent below 1990 levels by 2008 to 2012.

The EIA has just completed a new report at the request of House Committee on Science that would change the starting date from 2005 to 2000 to see if that would have any effect on the cost of reducing greenhouse gas emissions. EIA looks at a range of scenarios from an increase of emissions of 24 percent over 1990 levels (1990+24%) to the minus 7 percent (1990-7%) as required under Kyoto. The study finds that an “early start date reduces the carbon price in 2010 for each of the carbon reduction cases.” The 1990-7% case, for example, would see a reduction of the carbon price from $349 per metric ton to $310 per metric ton.

“With an earlier start date,” says the study, “the economy experiences a loss in gross domestic product beginning in 2000 as higher prices increase the prices of goods and services throughout the economy; however, the early start date smooths the transition of the economy to a longer run target.” The study finds that the “projected cumulative impacts” on actual GDP between the years 2000 and 2020 is over $2.6 trillion if reductions begin in 2005 and just under $2.5 trillion under an early start scenario.

The report also indicates that using a net present value calculation (discounting) the cumulative discounted impacts are larger in the early start cases. Using a 7 percent discount rate the EIA finds that impacts by 2020 will be nearly $1.3 trillion for the 2005 start and over $1.4 trillion for the early start. The report concludes, “although the cumulative impacts on GDP are similar, the early start cases involve a tradeoff. The peak impacts are less severe in the early cases, but they occur earlier.” There is little difference in the overall costs of the two scenarios. The report can be downloaded from www.eia.doe.gov.

Technology as a Long Term Solution

The Clinton Administration claims that the development of energy efficient technologies is the solution to the global warming problem. It also claims that the technologies necessary to meet the targets set under the Kyoto Protocol are already available and just need to be put into use.

A new report by the Business Roundtable (BRT) agrees that technology is the key, but only in the long run. The report reaffirms BRTs opposition to the Kyoto Protocol. The protocol, says the report, “does not include developing countries, it would have a negative impact on the U.S. economy and it would bring no significant global environmental benefit.”

Although new technology “constitutes the most effective response to concerns about possible changes in our climate,” says the report, “in the short term, there are no technologies that make plausible the goals sought by the Kyoto Protocol.”

The BRT also recognizes a role for government in developing new technologies, albeit a small one. “A central policy tenet is that governments cannot foster private sector technology advancement by picking winners and losers,” says the report. “Instead, a central role for government is to ensure its policies are coordinated and consistent, and that unintended regulatory, policy and tax impediments to innovation are remedied.”

The report also points out that a necessary prerequisite to innovation is robust economic growth. Without the financial means to invest in R&D, there is no technological progress. Moreover, developing countries will not be able to benefit from new technologies unless they become wealthier. The report can be downloaded from www.brtable.org.

Early Action Credits: Road to Kyoto

Early action crediting is being promoted as a way to protect industry in the event that the Kyoto Protocol or some other program to limit greenhouse gas emissions is implemented. But Jack Kemp, a distinguished fellow with the Competitive Enterprise Institute, told the House Government Reform Subcommittee on July 15 that early action crediting is an attempt to create a pro-Kyoto lobby within the business community. Credits acquired under early action would be worthless unless Kyoto is ratified.

David Ridenour, vice president of the National Center for Public Policy Research, and also representing the Cooler Heads Coalition, said that early action crediting would help big business at the expense of small business. “Since most small businesses and family farms lack the political contacts and clever lawyers necessary to negotiate credit deals with the Clinton administration and lack the financial wherewithal to make immediate reductions in their emissions, large businesses would likely garner the lions share of early credits.”

Kevin Fay, executive director of the International Climate Change Partnership, claimed that early action would not hurt small business. “A successful early action program will reduce the overall level of reductions required under any regulatory program. Companies that dont make early reductions will thus have fewer reductions to make and will benefit from the lessons learned by the early actors and the innovations and new technologies that have resulted from these experiments.” But the Kyoto Protocol caps emissions at 7 percent below 1990 emissions for the U.S. Any credit that is awarded now will be one less credit available when the compliance period begins.

Fred Krupp, executive director of the Environmental Defense Fund, argued that early action would reduce carbon emissions while maintaining economic growth. Implementing Kyoto now, said Krupp, will reduce expected costs. Krupp argued that we must act now because “nine more years of unchecked greenhouse gas emissions increases represents an ever increasing environmental risk.”

EDFs Sweet Deal

The congressional hearings also revealed that EDF might possibly profit from early action credits. David Ridenour told the congressmen at the hearing that EDF, which helped write the Chafee early action bill, may be trying to position itself as a third party verifier of emissions reductions. He cited a report by the NonProfit Accountability Project, Crony Environmentalism, in which EDF is accused of a conflict of interest in supporting the Chafee bill.

The report alleges that the Environmental Resource Trust, an arm of the EDF, is positioning itself to run a greenhouse reduction pool. An ERT memo acquired by NPAP states, “a proposal had been made both to EEI (Edison Electric Institute) and the White House to provide early reduction credits for those companies that participate in a greenhouse gas reduction pool. The GHG reduction pool would: provide the government with a legal entity responsible for monitoring, tracking and reporting upon member companies emissions performance; enforce members GHG commitments; operate a GHG reduction trading system.”

Moreover, in early June EDF participated in a conference promoting early action legislation, sponsored by the Progressive Policy Institute. EDF presented a plan to monitor and verify greenhouse gas emissions.

In return for running the pool, the “ERT would receive fees in the form of greenhouse gas reduction credits from the utilities.” It is unclear whether ERT would sell the credits or retire them. Fred Krupp testified that ERT would retire the credits. If so this would contradict other statements made at the hearing that early action crediting would cut costs through emission trading.

Under early action proposals, companies that do not participate in early reductions would be able to choose among different compliance strategies in the event that Kyoto is ratified. They could either reduce emissions at the site or they could buy emission credits. If ERT retires the credits it receives for its services, that would reduce the supply of credits. The range of compliance strategies would be lessened for latecomers.

Finally, Krupp argued that by retiring emission credits EDF would not be profiting from its role as a third party verifier. But, as Ridenour pointed out, “the incentives such a system would provide to corporations to give and give generously to the EDF or similar organization,” should be of grave concern.

“Corporations,” said Ridenour, “will be tempted to pay tribute to environmental groups knowing full well that they are the final arbiters of who does and does not deserve emissions credits.” Crony Capitalism can be downloaded from http://users.erols.com/npap/crony.html.

Restrictions on Tightening CAFE Under Attack

One of the favorite policies of green activists is the Corporate Average Fuel Economy (CAFE) standards that require U.S. auto makers to keep the average fuel economy of their fleet below 27 mpg. Recently, however, the greens have been frustrated because the CAFE standard has not been tightened for years. They are especially upset about the increasing popularity of big trucks and sports utility vehicles that they claim are significantly contributing to global warming.

Moreover, Congress has inserted language into the annual Department of Transportation (DOT) appropriations bill since 1995 prohibiting them from changing the current CAFE standards. Environmentalists want to prevent that from happening again this year. Their first move is to push for a “sense of the Senate” resolution that would force the Senate to negotiate with the House over the matter, and to convince the White House that a veto of the DOT appropriations bill would be sustained.

Auto makers are upset about this development because now they must mount a lobbying effort against higher CAFE standards when they are making efforts to appear green (Wall Street Journal, July 16, 1999).

CO2 Estimates Adjusted Downward

Scientists have been basing their global warming predictions on the assumption that the concentration of greenhouse gases in the atmosphere will accelerate. Now they have discovered that the growth rate has declined by about 25 percent since 1980, which throws a kink into their projections. This has occurred even though CO2 emissions continue to increase.

Scientists have been predicting a doubling of atmospheric CO2 by 2050, but current trends suggest a doubling sometime after 2100. According to James Hansen, head of NASAs Goddard Institute for Space Studies, this new revelation shows that “our understanding of greenhouse gases is not all that good.” Hansen also said, “we really have to understand the cycles of these greenhouse gases if were going to reliably forecast whats going to happen in the next century” (The Christian Science Monitor, July 15, 1999).

Scientists have shown under the old assumptions about CO2 accumulation rates that we can wait 10 years before we do anything about global warming without any adverse effects. Now that CO2 is not accumulating as rapidly as thought, wouldnt it make sense to wait before we commit ourselves to drastic action? A few more years may give scientists enough time to determine if global warming is truly a threat.

Japans Odd Temperature Record

A new report by the Greening Earth Society (GES) reveals the difficulties of interpreting temperature data. Robert C. Balling, Jr., Director of the Laboratory of Climatology at Arizona State University, analyzed the temperature data from Japan that he obtained from the Intergovernmental Panel on Climate Change. The data, which begins in 1878, shows a curious pattern. From 1878 to 1947, the IPCC data shows a slight and statistically insignificant cooling of 0.18 degrees C. It also shows a statistically insignificant cooling of 0.09 degrees C from 1948 to 1998. Yet over the entire 121 year record, Japan warmed by 1.02 degrees C.

This is possible because all of the warming took place in one year, 1947 to 1948. Balling argues that “the temperature records from Kyoto and Japan can be interpreted a hundred different ways. One could fairly argue (a) Japan has warmed significantly over the past century, (b) Japan has warmed quickly in the most recent two decades, (c) 1998 is the warmest year on record for Japan, and (d) the greatest warming is occurring at night in the winter. All of these findings are broadly consistent with expectations from climate model simulations for increasing concentrations of greenhouse gases. From this perspective, the temperature record from Japan is another reason to support the Kyoto Protocol.”

On the other hand, the same temperature record could be used to argue that there is no justification for supporting the Kyoto Protocol since “without that jump, there is no warming in Japan.” Balling concludes, “in discussing the climate shortcomings of the Kyoto Protocol, one need look no farther than Japan to begin to see reasons many folks are skeptical about the scientific basis for the agreement. If the temperature record from Japan represents the type of facts the Protocol is built upon, its time to say sayonara to Kyoto.” The report can be found at www.greeningearthsociety.org.


  • The Climate Change Subcommittee of the Environmental Protection Agencys Clean Air Act Advisory Committee is holding a meeting to discuss policy issues with implementation of the Clean Air Act of 1990. The meeting will be held at the Marriott at Metro Center 775 12th Street NW, Washington, DC, July 26, 1999 at 1:00 p.m. Contact Lawrence W. Roffee at (202) 272-5434, ext. 14 for more information.
  • The American Enterprise Institute is sponsoring a conference, The Greening of Global Warming, featuring Robert Mendelsohn of Yale University. Mendelsohn claims that global warming will not be as harmful as previously claimed. The conference will be held on July 26 at 1150 17th Street, NW, 12th floor, Washington, D.C. Registration begins at 1:45 p.m. Contact Amy Wendholt at (202) 862-5847 for more information.

Court Ruling Defeats Kyoto

In May the federal appeals court invalidated the Environmental Protection Agencys standards for ozone and particulate matter on the grounds that they constituted an “unconstitutional delegation of legislative power.” According to Bonner Cohen in an article in Electricity Daily (June 28, 1999) this ruling also thwarts the “administrations plans to implement the Kyoto Protocol by regulatory means.” Cohen points out that “the manmade sources of ozone and particulate matter automobiles, coal-fired electric utilities, manufacturing plants, etc. are the same ones that produce manmade greenhouse gases.”

Cohen argues that the EPAs ozone/particulate standard was a “regulatory scheme that would also allow it to control emissions of greenhouse gases, even without Senate ratification of the global warming treaty.” This is right in line with other actions by the administration and the EPA. Cohen reminds us of an internal EPA document, titled Climate Change Action Plan that “contained no fewer than 39 different taxes and fees on energy the administration could impose under existing statutes, without having to get Congressional approval.” And the administration continues to try and bypass the Senate ratification in its attempts to reduce greenhouse gas emissions.

“The purpose of the whole exercise” was to “force the nations major metropolitan areas to reduce levels of ozone and particulates and greenhouse gases all within the same regulatory framework,” says Cohen. “Had the court not faulted the way EPA arrived at its new standardsthe country could well be on the way to implementing a treaty the Senate will probably never ratify.”

Global Warming Causes Extreme Legislative Fury

Several bills related to global warming are being promoted on Capitol Hill. The most recent is the Administrations package of energy efficiency taxes, introduced by Rep. Bob Matsui (D-Cal.). The bill is a $3.6 billion plan to give tax breaks to consumers who buy energy efficient homes, cars, water heaters, and rooftop solar systems. It also encourages the use of other renewable energies (U.S. Newswire, June 29, 1990).

Frank Pallone (D- N.J.) will introduce a bill that would create an emission trading system amongst electric power plants with caps on emissions. According to the BNA Daily Environment Report (July 2, 1999) the “bill would impose a cap and allow trading of nitrogen oxides, sulfur dioxide, and carbon dioxide emission allowances.” Also, it “would amend the Federal Power Act and require the Federal Energy Regulatory Commission to set standards for those pollutants cap levels.”

Greens Release a Slew of Global Warming Reports

In what appears to be a major concerted effort, several Green activist organizations have released reports warning about the dangers of global warming, and the media are reporting them with the same seriousness they would peer-reviewed scientific papers. Greenpeace (see below) has released a report that claims that coral reefs could disappear in the next 100 years.

The Environmental Defense Fund (www.edf.org) is claiming that New York City could experience serious problems resulting from climate change. For example, sea level rise could threaten lower Manhattan with “frequent flooding by the end of the next century.” The report gets even more specific. “The foundations of Battery Park City and the World Trade Center would be flooded regularly. The East River would flood Bellevue Medical Center, the FDR Drive and East Harlem between 96th and 114th Streets. Storms would flood much of Coney Island, submerging or creating islands of residential communities there and in Staten Island nearly annually,” and so on.

The report also predicts that the number of days over 90 degrees Fahrenheit would increase from 13 to between 38 and 80 days per year, leading to increased mortality due to heat stress among the elderly. It also claims that children could be at risk “because of health risks due to air pollution.”

Finally the report argues that “global warming may increase the frequency of extreme weather events, including both prolonged periods with little precipitation and periods of heavy downpour and snowfall, leading both to more droughts and more inland floods.” One scenario described by the report could have 100-year floods occurring every 3 to 11 years in New York City by 2100. Higher sea levels could also push salt water further up the Hudson River threatening the citys water supply.

The Pew Center on Global Climate Change (www.pewclimate.org) has also released a report claiming that temperature rise due to manmade greenhouse gas emissions could occur more rapidly than previously thought. According to the report, the presence of SO2 in the atmosphere serves to cool the planet. But SO2 is regulated to reduce acid rain deposition. As more countries restrict the emission of SO2, temperatures could rise.

The report says that the 1996 edition of the IPCC report used predictions of SO2 emissions from 1992 which projected a doubling of SO2 over the next century. The new projections show only a slight rise in emissions for the next 100 years. Eileen Claussen, executive director of the Pew Center said, “the data and likely impacts outlined in this study should encourage concrete steps to reduce greenhouse gas emissions” (BNA Daily Environment Report, June 30, 1999).

Red Cross Sees Global Warming Green

It is no secret that the global warming scare has become a cash cow for many groups and individuals. Green groups use the issue to convince contributors to give larger donations and scientists of many disciplines try to make their work relevant to global warming in order to get a share of the federal governments yearly $2 billion global warming giveaway.

Now a major humanitarian organization, Red Cross International, has jumped on the bandwagon. A new report by the Red Cross argues that global warming will increase major disasters, and that the Red Cross will need more money to pay for it. The report claims that there will be more droughts and that “marginal areas” will become “uninhabitable” in 20 years. It also says that the “one in 50 year hurricane may return one in ten years.” Disappearing mountain glaciers will cause rivers to dry up and there will be changes in disease patterns affecting millions (The Electricity Daily, July 2, 1999).

The Red Cross does many good things, but adopting the most extreme scenarios of the radical green movement to raise money diminishes its credibility. It would do well to consult the scientific literature. There is no evidence of an increase of more extreme weather, more droughts, more floods or any of the other scenarios presented by the Red Cross.

A Complete Temperature Record

Long term, continuous and uncorrupted temperature records are difficult to find. One such record does exist at an agricultural experiment station, known as Rothamsted Experimental Station, in southeastern England. The station has been taking temperature readings every day at 9 a.m. since 1878 using thermometers very similar to the ones we use today. The 121-year record is continuous with no missing data and the landscape has remained largely agricultural over the entire period.

The data, analyzed by Robert Balling, director of the Office of Climatology at Arizona State University, shows rising temperatures from 1878 to 1950 and then cooling until the 1980s. The last decade, says Balling, “has been dominated by high temperatures. The total record shows a warming trend of 0.71 degrees C.”

Balling also found that “winter warming of minimum temperatures accounts for more than 40 percent of all warming observed at Rothamsted; summer maximum temperatures account for only 10 percent of the warming,” meaning that most of the warming occurs at night and in winter. Also, 92.5 percent of the warming in the record occurred before 1950.

Scientists at the station have also collected rainfall data during the same period and also began collecting data on sunshine and cloud cover in 1915. These records show that both sunshine and rainfall have increased slightly during the last 84 years. Balling concludes that as a result of these changes together with increases in atmospheric CO2 concentrations that “crops there now perform better than their ancestors in the days of Lawes and Gilbert (founders of the station)” (World Climate Report, July 5, 1999).

Global Warming Destroys Coral Reefs?

A new report by Greenpeace claims that global warming will destroy the worlds great coral reefs by 2100 if something isnt done to stop it. The report states that “Coral reefs could be eliminated from most areas of the world by 2100,” and that even the Great Barrier Reef could be dead within 30 years. The report also claims that even if measures to reduce greenhouse gases are taken it may still take 500 years for the reefs to recover (www.greenpeace.org).

The New Scientist (July 3, 1999) reports a different mechanism for the ill health of coral reefs. Dick Barber of Duke University says that drought in the Sahel region of Africa has increased atmospheric dust fivefold. The dust carries viruses, bacteria, and fungi that can kill coral. The dust also carries iron that stimulates the growth of algae that can smother reefs. Barber does not claim, however that his theory contradicts the theory that global warming is killing reefs. He argues that “warming leaves the coral more vulnerable to disease.”


  • Ross Gelbspan, the author of The Heat is On now has an internet sight called The Heat is Online (www.heatisonline.org) to promote his global warming views. The website has a multimedia presentation, and a 6,000-word overview, which claims that “this new era of climate change could well be the most profound threat ever facing humanity.” The website also “catalogues the last four years of increasingly frequent and severe extreme weather events all over the world,” as well as provides short synopses of scientific findings and offers solutions. Finally, the site “documents a pervasive and very successful industry campaign of deception and disinformation.”

A Flexible Policy is the Best One

The Kyoto Protocol is widely seen as an excessive policy that has little chance of being implemented. According to Warwick McKibbin and Peter Wilcoxen of the Brookings Insitution, the Kyoto Protocol is “a policy that is very strict in principle but completely ineffective in practice is neither prudent nor realistic.” McKibbin and Wilcoxen argue that the large scientific uncertainties make it unlikely that the Kyoto Protocol will be accepted.

The authors argue, however, that since “it is quite clear that human activity is raising global concentrations of carbon dioxide,” and that “virtually no one is suggesting that we can emit as much carbon dioxide as we want into the atmosphere without adverse consequences,” we must do something. Policies should include four key features: CO2 reductions should be cost effective, companies adversely effected by restrictions should be compensated, there should be domestic and international consensus for the policy, and there should be a mechanism to ensure that a core group of countries continue to carry out emission reductions even if others reject compliance.

The policy they propose “is an international system of emissions permits and fees for the use of fossil fuels.” The authors propose that governments give businesses a certain number of permits. If a business needs more permits, it can purchase them. The authors suggest that the permits be sold at $10 per ton of carbon, which would translate into $6.50 per ton of coal and $1.40 per barrel of crude oil. The “user fee” would be set by international agreement. The authors argue that this is a sensible policy because it gives a clear economic incentive to reduce emissions. Businesses that reduce emissions sufficiently can sell their permits.

This proposal, however, is nothing more than a carbon tax dressed in sheeps clothing. The only difference is that it is a tax that can be avoided, making it more acceptable to business. Moreover, it is widely admitted that even the draconian Kyoto Protocols effect on the climate will be too small to detect. McKibbin and Wilcoxens proposal would do nothing to slow global warming. The main effect of the policy would be to further governments ambitions to control the worlds energy use.

SO2 Trading Not a Good Model

The Clinton Administration has argued that an international emission trading system would significantly reduce the cost of complying with the Kyoto Protocol. It justifies this claim by pointing to the U.S. acid rain program, which it credits with using emission trading to reduce the cost of lowering the SO2 emissions. A new policy brief by the Competitive Enterprise Institute argues that the acid rain program is not as successful as advertised and does not support the contention that emission trading will reduce the costs of emissions reductions.

The administration argues that the acid rain program has reduced emissions below the required regulatory cap and has done so at very low cost, about $100 per ton of SO2 reduced. According to the brief, however, economists have estimated that the true cost of the acid rain program has been about $187 to $210 per ton. Moreover, the program is supposed to reduce total emissions to 9 million tons by 2002. That goal will not be reached until between 2005 and 2012, according to economists at MIT.

Finally, it is doubtful whether the acid rain program can be credited with SO2 reductions. Demographic changes in electricity demand, according to one researcher, may have lead to reductions even in the absence of the acid rain program. Others have pointed out that railroad deregulation greatly reduced the costs of using low sulfur coal, saving money for the electric utilities while reducing SO2 emissions. The On Point policy brief can be found at www.cei.org.