June 2001

EU Proposes Emission Trading Scheme

A new plan being drawn up by the European Commission would require industry participation in a new CO2 emissions trading scheme. Under the proposed law, all major industries, with the notable exceptions of waste incineration and chemical production, would be compelled to begin trading CO2 credits by 2005. These allotments would be granted by member countries to industry based on current emissions.

The scheme is the beginning of an attempt by the EU to meet its target reductions under Kyoto. The Commission admits that capping and trading CO2 quotas will not directly reduce greenhouse gases. However, they believe that making quotas tradable will encourage industry to find cost-effective ways to reduce overall CO2 output.

The draft law also includes some hefty fines for those who exceed their ration of CO2 and cannot buy more credits. The commission is considering fines of $170 per ton of excess CO2 emission. The fine per ton is about 10 times what the Commission believes the future average per ton trading cost will be.

The European Commission wants the EU to set the standard for CO2 cap and trade systems. This would take advantage of the “flexibility mechanisms” that are allowed under Kyoto. By creating the pre-cursor to any international system, the Commission may have substantial impact on what the final rules would be.

Russia is extremely interested in the EU trading scheme because of the benefits it could reap if it were expanded internationally. The implosion of Russias economy reduced CO2 emissions far below their 1990 levels. Russia would be able to sell its “hot air” credits to foreign companies.

The draft law would not include any other greenhouse gases. The Commission decided that regulating methane, nitrous oxide, and the fluorinated gases would prove too complicated (Reuters, June 25, 2001).

Chinas Dubious CO2 Reductions

The New York Times reported in its June 15 issue that China reduced its emissions of CO2 by 17 percent between 1997 and 1999. The story, which appeared on the front page, was largely a broadside aimed at President Bushs statement that the Kyoto Protocol is “fatally flawed” because China, the worlds second leading emitter of greenhouse gases, is exempt.

Zhou Dadi, director of the Energy Research Institute of the central governments State Development Planning Commission, stated, “We already have one of the worlds best records in improving energy efficiency.” He also put the onus back on the U.S., “As an energy expert, I think we need a demonstration from a developed country to prove that a high living standard can be associated with lower carbon emissions,” he said. “Then China will follow that example or even do better.”

The Times story was based on a report by the Natural Resources Defense Council. The report states, “There is a good basis to argue that China has done more to combat climate change over the past decade than has the United States.”

Besides the dubious credibility of statistics from Chinas communist government, there are problems with these claims. As noted in Electricity Daily (June 27, 2001), the NRDC report says, “Chinas lower energy consumption is clearly the result of declining coal consumption, since other primary energy forms did not record such a drop. This reduction in coal consumption appears to be concentrated in direct uses household cooking and heating, for example since conversion of coal for power generation and other uses has remained stable.”

So, says Electricity Daily, “The only way this cut could be real is if people in China stopped cooking and heating their homes, since industrial and electric power coal consumption did not drop. Such an explanation is highly unlikely.”

“What is evident,” says Electricity Daily, “is that during this period the central Chinese government issued decrees designed to close many of the small local coal mines that supply domestic consumption. By far the most likely explanation is that these local mines simply stopped reporting production.”

Global Warming Insurance?

The Washington Post (June 26, 2001) has turned a virtual non-story into another global warming scare. According to the article, companies are buying weather insurance to guard against financial loss due to adverse weather conditions.

The story begins by discussing the Dallas-based Atmos Energy Co., which recently spent $4.9 million on weather insurance from Enron Corp. Enron began selling the insurance in 1997 in response to El Nio, a naturally occurring phenomenon in the Pacific Ocean that has produced several warm winters. Of course, warm winters are anathema to energy companies. Purchasing insurance to guard against a well-known, regularly occurring event such as El Nio makes good business sense.

The Washington Post, however, makes an absurd leap from good business practice to, “Thats the kind of practical response beginning to take place throughout U.S. industry as business leaders face up to the prospect of climate change.” It also tries to link El Nio to global warming, a link that has no basis in the scientific literature.

If global warming led to a situation where energy companies were confronted with a long string of warm winters or ski resorts with a long string of winters with inadequate snowfall, then they would simply go out of business. Theres no way these companies could afford the premium to insure against a long-term shift in climatic conditions. Thus, if catastrophic global warming were a serious threat, rather than seeing an increase in the sales of weather insurance, wed see a decrease.

Carbon Tax Proposals Overseas

Japan and the European Union are proposing to use taxes to lower CO2 emissions in order to comply with their obligations under Kyoto. A new report from the Central Environment Council in Japan says that creating a tax on CO2 could bring as much as a two percent reduction in emissions below 1990 levels. The tax would be around $240 per ton of CO2 emitted. The report also noted that the CO2 tax would reduce GDP by almost one percent (Japan Times, June 21, 2001).

The EU is also experimenting with tax proposals to reduce CO2 emissions (Financial Times, June 22, 2001). Instead of taxing CO2 emissions themselves, Belgium is using its presidency of the EU Commission to push a unified EU tax on energy usage. By making energy use more costly they hope to reduce demand. Also the energy tax would improve the bottom line of the EU budget. Under the proposal the revenue from the tax would flow directly to the EU, bypassing the member states.

Belgiums tax proposal highlights inter-EU tensions. So far energy tax proposals have been strongly opposed by Spain and Britain who do not want to see an EU standard set. However, Belgium has signaled that they are willing to go ahead without unanimous support.

300-million-year Record of CO2 Levels

There has been a lot of hand wringing over increasing atmospheric concentrations of carbon dioxide. The increase is relatively small when compared to historic levels. Preindustrial concentrations were about 280 parts per million. Currently concentrations are about 370 ppm. A study in the May 17 issue of Nature shows that CO2 levels were much higher in the past.

The studys authors constructed a 300-million-year record of CO2 concentrations using “stomatal abundance from fossil leaves of four genera of plants that are closely related to the present-day Gingko tree.” Two periods of low (meaning less than 1,000 ppm) CO2 concentrations were discovered, which corresponded to two known ice ages. During most of the Mesozoic era (the period from 65 to 259 million years ago), CO2 levels were between 1,000 and 2,000 ppm, with occasional peaks that reached levels higher than 2,000 ppm.

Results from the middle Miocene, a warm period about 10 million years ago, failed to show high CO2 levels. The researchers suggest that the warming may have occurred due to “episodic methane outbursts.”

Uncertainties in Climate Science

In a recent issue of Climatic Change (49: 2001), Dr. Gerald North, Distinguished Professor of Meteorology and Oceanography at Texas A&M, used a book review to discuss the major uncertainties in climate science. The book, Global Warming: The Hard Science, was written by L.D. Danny Harvey.

North noted that twenty years ago the National Academy of Sciences produced a study that stated that, “If the CO2 concentration of the atmosphere were doubled, the new temperature after equilibrium would be 1-3 degrees C higher.”

“It is now two decades later,” wrote North, “and we still have approximately the same or even greater uncertainty for the sensitivity of climate to such an external forcing. In spite of all our increased understanding of [the] climate system over this period, we have not managed to narrow this uncertainty.”

One reason is that, “Climate modeling and simulation do not form a science in the classical sense. We cannot formulate a hypothesis and then proceed to test it in the laboratory. We have a complicated system with only a finite history of empirical information about it far from enough, in fact.”

North notes another problem in the modeling community. “The range of uncertainty is not an easy thing to assess. It seems to be mainly derived from an intercomparison of the models produced by different scientific groups around the world. This is a very poor means of arriving at the real uncertainty, since the models are rather similar to one another and probably even more like each other than like nature.”

Using our fastest computers, North points out, it would take a month to run a point-by-point simulation of a one second evolution of the atmospheric motions within a one-kilometer cube. “Hence, one is forced to the familiar procedure of parameterization and the inevitable fudge factors. We simply cannot get around it.”

“Finally,” wrote North, ” on the behavioral side the modeling groups cannot escape the external pressures from politicians and other pressure groups. It is very difficult to announce results that make your group an outlier. First, the modeling groups must answer to funding authorities, and these figures invariably hate the anomalous report. Other groups outside the line of authority and the scientific community also apply pressure to find the answer acceptable to their group. Leaders of the modeling groups will seek the protection of conformity. Hence, I suspect that the error bars on climate sensitivity are already artificially narrow because of this multiplicity of effects.”

The uncertainty, North concluded, “does not excuse inaction by policymakers.” He says that virtually all scientists believe that global warming is real and manmade and that this consensus should be acted upon in “prudent” ways. He fails to define what he means by prudent, however.


  • Barbra Streisand has taken it upon herself to scold her fellow Californians on energy conservation. The crisis has left her “wondering why the citizens of California have not been called on and encouraged to play our part in helping deal with this problem” (www.barbrastreisand.com).

In “A Call to Conserve,” she suggests that Californians turn up their air conditioning thermostats to 78 degrees, wash clothes with cold water, use a clothesline rather than a clothes drier, and do several other things to save energy.

Streisand seems oblivious to the hypocrisy of the owner of several multi-million dollar homes preaching about conservation. When asked whether she planned on following her own advice, a spokesman for Streisand said, “She never meant that it necessarily applied to her” (New York Times, June 20, 2001).

Writing in the June 23 issue of the Daily Telegraph (London), Mark Steyn published his alternative suggestions in “A Call to Celebrities to Conserve.” They include: “6) another good way to conserve energy in the evenings is to remove the bulbs from the maids room.”

Heres an energy conservation tip from your friendly Cooler Heads staff. Refrain from buying any of Streisands hats, t-shirts, mugs, CDs or any of the other merchandise available on her website.

Informal Talks Hit Early Snags

Informal talks are being held this week in the Hague in preparation for the resumption of COP-6 in the Bonn in mid-July. The talks were hastily arranged by COP-6 president Jan Pronk to figure out how to continue negotiations on the Kyoto Protocol in the face of U.S. opposition. Early press reports suggest that bickering has broken out between the parties.

Interestingly, although President Bush has rejected the Kyoto Protocol, he has sent a delegation, led by Kenneth Brill, to participate in the negotiations. It is not clear what roll the Bush Administration intends to play in further talks.

According to a June 26 Agence France Presse article, part of Pronks proposal is for the industrialized countries to provide one billion dollars per year to help developing countries adapt to global warming. Although Russia has managed to obtain a concession to halve the contribution of former communist countries to the fund, the Eastern European countries are apparently still opposed to the plan. “This will be a big problem for getting the treaty ratified,” a source in the European Union said.

Another obstacle is the reluctance of Japan to proceed in the negotiations without U.S. cooperation. On June 27, the BBC reported that Japans environment minister Yoriko Kawaguchi, criticized Pronks plan and reiterated that U.S. participation is still essential to make Kyoto succeed. Pronk and the EU have offered several concessions in an attempt to convince the Japanese government to ratify Kyoto without the U.S.

The informal Hague talks began with a meeting of the Group of 77 developing nations. They are scheduled to meet later in the week with the industrialized nations to try to resolve their remaining differences.

Knollenberg Provision Survives

During floor debate in the U.S. House of Representatives over the FY 2002 transportation appropriations bill (H.R. 2299) on June 26, the Knollenberg provision, which prohibits any federal action to implement or prepare to implement the Kyoto Protocol prior to Senate ratification, survived efforts to eliminate or weaken it. This is the latest of a series of similar attempts over the past two years.

After an attempt to eliminate the provision failed, Reps. John Olver (D-MA) and Wayne Gilchrest (R-MD), offered an amendment that would have exempted any activities authorized under existing law from the Knollenberg provision. However, they then agreed to withdraw their amendment before it came to a vote.

According to Environment and Energy Daily (June 27, 2001), the bill that passed the House Appropriations Committee on June 13 does not include language blocking the administration from raising Corporate Average Fuel Economy standards. “Congressional sources said there was no mention of CAFE standards in the list of amendments expected to be offered to the bill on the floor, though that does not mean one will not be offered,” according to the article.

UK to Evaluate Nukes

Fearing they will not be able to meet their Kyoto target, Britain has begun an energy needs review. According to a June 26 Financial Times article, the review will focus heavily on nuclear power.

Energy minister Brian Wilson will chair the review, much to the chagrin of Greenpeace, who said it was like “putting a fox in charge of the hen coop.” Wilson, an advocate of nuclear power, said the review will be finished by the end of the year and will focus on the role of nuclear, coal, gas, oil, renewable energy, combined heat and power and enhanced energy efficiency.

The Labor Party had pledged not to build any nuclear stations, but this could mean the end of that pledge. The party would rather break promises than abandon the unachievable Kyoto Protocol. In order to meet Kyotos targets, Wilson thinks Britain should reduce its carbon emissions. “In the longer term we will need to reduce our carbon emissions further in order to play our part in meeting the challenge of global warming.”

Currently, Britain is heavily dependent on gas and some think the country should diversify. Gas prices have doubled in the past year because the main producers tie their gas prices to oil prices. Because they rely heavily on one source, consumers are very aware of gas price fluctuations.

This dependence on gas has led to the energy review. The plan aims to meet “the challenge of global warming while ensuring secure, diverse and reliable energy supplies at a competitive price.” For all of their posturing on Kyoto, it seems even European countries will find it difficult to meet their targets, as there is much opposition to nuclear power in Britain. Friends of the Earth UK said nuclear technology is dangerous and uneconomic. With that ringing endorsement, the review steams ahead.

Former Clinton Aides Now Admit Kyoto Would Be Costly

Amidst major criticism from both domestic environmental groups and European officials, President Bush is receiving aid and comfort from an unexpected source former Clinton Administration officials. Bush has stated that the U.S. will not comply with the Kyoto Protocol because it is “fatally flawed” and would impose undue economic hardships on the country.

Now, according to the June 12 issue of USA Today, “Economists from the Clinton White House now concede that complying with Kyotos mandatory reductions in greenhouse gases would be difficult and more expensive to American consumers than they thought when they were in charge.” This change in tune from the Clintonites is part of the reason that Bush decided to reject Kyoto.

The Clinton Administration was overly optimistic about the costs of Kyoto because its economic analysis was based on unrealistic assumptions. It assumed, for instance, that China and India would accept emissions reduction limits and that they would be able to fully participate in an unlimited international emissions trading system. China has made it clear, however, that it will not accept commitments, and the European Union has remained opposed to unlimited emissions trading.

The Clinton Administration also assumed that industry and consumers would rapidly adopt energy efficient technologies without subsidies. Without Chinas participation, for instance, costs would double under the Clinton analysis. According to Joseph Aldy, who assisted in developing the Clinton estimates, “We always thought the (emissions) targets were very ambitious. But the thing that made us really uneasy about our analysiswas that if our assumptions didnt come true, you could come out with costs that were much, much higher.”

While in office, however, the Clinton Administration never explicitly stated its assumptions, nor did it express any misgivings during several congressional hearings on the matter.

Kyoto = Millions of Lost Lives

Dr. Bjorn Lomborg is causing apoplectic fits across Europe with his recent book, The Skeptical Environmentalist. His views on the Kyoto Protocol are particularly heretical.

The Times of London (June 12, 2001) began its story on Lomborgs views as follows: “The cost of limiting carbon dioxide emissions far outweighs the damage that global warming will eventually do to the world and merely postpones the problem for six years, Bjorn Lomborg, an environmental statistician, has calculated. As a result, he argues, trillions of pounds that might otherwise be spent on fighting poverty and malnutrition and improving infrastructure in developing countries will be wasted.”

Lomborg is an associate professor of statistics at the University of Aarhus in Denmark. He is also an environmentalist and a former member of Greenpeace. His book was originally published in Danish, but has been translated into English and will be published by Cambridge University Press in August.

The Times story continues that Lomborg bases his conclusions on a “four-year audit of a massive set of environmental indicators.” If the Kyoto Protocol is implemented, “millions of lives will be lost that could otherwise be saved and the eventual impact of climate change on the Third World will be much worse as countries will be less equipped to adapt.”

EU Claims Kyoto Will Be Painless

The European Union can easily meet its Kyoto targets, according to a report by the European Climate Change Programme. The report says that, “There are sufficient potential cost-effective measures to cut emissions of greenhouse gases by twice the target set for the 15 nation EU under Kyoto” (Financial Times, June 12, 2001).

Reuters (June 12, 2001) reported that according to a European Commission official, the total cost to the EU to meet its Kyoto target of reducing greenhouse gas emissions to 8 percent below 1990 levels by 2012 would be 3.7 billion euros per year or about .06 percent of GDP.

It is unclear how the ECCP defines “cost effective.” Given that Kyoto would have almost no effect on predicted global temperatures and hence virtually no benefits, any cost would seem to outweigh the potential benefits.

“These results increase our credibility,” said Margot Wallstrom, the EU environment commissioner. “I hope they will encourage the European Council to restate its commitment to meeting the Kyoto target even if the US withdraws from the process.”

Just before this good news from the EU was released, UPI (NewsMax.com, June 6, 2001) reported that European Union leaders had failed to agree on a EU-wide energy tax. The proposed tax is the main tool to reduce energy consumption and thereby meet the Kyoto targets.

Insurers Not Worried About Global Warming

Proponents of government policies to fight global warming often cite concerns of the reinsurance industry companies that insure the insurers as evidence that catastrophic global warming is real. Indeed, some major reinsurance companies have expressed concern over global warming, but others have pointed out that the upward trend in insurance claims due to natural disasters is almost entirely due to greater economic development in disaster-prone regions, not to global warming.

An article in the May 31 issue of the Palm Beach Post reports that Floridas property insurers arent really concerned about global warming. “At State Farm we do not see global warming as an issue that drives anything,” said Tom Hagerty, the companys Florida spokesman. “We have not changed any of our plans or policies on the basis of global warming information or on the various hurricane activity forecasts.” Frank Nutter, president of the Reinsurance Association of American said, “The industry doesnt treat it as a serious issue. Its not factored into rating decisions.”

Bush Reaffirms Opposition to Kyoto, Proposes Alternatives

President George W. Bush made a major policy statement on global warming and the Kyoto Protocol on June 11, immediately before flying off to a week of meetings with European leaders. Although the speech may have been intended to assure European leaders that he is committed to taking action on global warming, his strong, reiterated opposition to the Kyoto Protocol drew immediate criticism throughout Europe before Air Force one landed in Madrid.

Bush said that the Kyoto Protocol was “fatally flawed in fundamental ways” and “unrealistic.” He noted, “Many countries cannot meet their Kyoto targets. The targets themselves are arbitrary and not based upon science.”

He stated clearly that he accepted that the global mean temperature had “risen about 0.6 degrees Celsius over the past 100 years.” But he went on to emphasize that major scientific uncertainties remain. “We do not know how much effect natural variations in climate may have had on warming,” and hence the influence of manmade emissions; “how much our climate could or will change in the future” or “how fast change will occur or even how some of our actions could impact it;” and “no one can say with any certainty what constitutes a dangerous level of warming and therefore what level must be avoided.”

Opposing Kyoto does not mean that the U.S. will drop out of the ongoing negotiations process. The administration will attend COP-6.5 in Bonn, Germany in July. President Bush proposed several actions, including two research programs, the Climate Change Research Initiative, to further study global warming, and the Climate Change Technology Initiative, to subsidize the development of technologies to reduce greenhouse gas emissions. These programs resemble ongoing Clinton Administration programs.

He also stated that these are only the first steps that the administration will propose in the next few months. Inside EPA reported on June 8 that options under active consideration include several cap-and-trade systems for reducing carbon dioxide emissions and a crash program to develop technology to sequester carbon dioxide from hydrocarbon combustion.

COP-6 President Presents Plan

Mr. Jan Pronk, president of the UNFCCCs sixth conference of the parties and Dutch environment minister, released a “consolidated negotiating text” on June 11. It is meant to serve as the starting point for the resumption of COP-6 in Bonn, Germany, July 16-28. The 180 or so pages may be downloaded at www.unfccc.de. Pronk has also scheduled preliminary informal discussion June 25-28 in the Hague.

Pronks proposed negotiating text makes significant concessions to the position of Japan. It might therefore be concluded that Pronks strategy is to isolate the United States by drawing Japan into full support of the Kyoto Protocol.

NAS Report Confuses Public

The National Academy of Sciences released a rush report reviewing global warming science on June 7. Done at the request of the Bush Administration by a panel of 11 prominent scientists (of whom six are members of the NAS), it was immediately and uniformly hailed by the major print and broadcast outlets as confirming global warming alarmism and therefore a slap in the face to the Bush Administration.

What the report actually says, however, is difficult to determine. The opening summary begins with a fairly strong statement that, “Greenhouse gases are accumulating in Earths atmosphere as a result of human activities, causing surface air temperatures and subsurface ocean temperatures to rise. Temperatures are, in fact rising. The changes observed over the last several decades are likely mostly due to human activities, but we cannot rule out that some significant part of these changes are also a reflection of natural variability.”

The report also states, “Despite the uncertainties, there is general agreement that the observed warming is real and particularly strong within the past 20 years. Whether it is consistent with the change that would be expected in response to human activities is dependent upon what assumptions one makes about the time history of atmospheric concentrations of the various forcing agents, particularly aerosols” (emphasis added).

It goes on: “The predicted warming of 3 degrees C (5.4 degrees F) by the end of the 21st century is consistent with the assumptions about how clouds and atmospheric relative humidity will react to global warming” (emphasis added).

On the other hand, once you get beyond the summary, the report itself is full of qualifications and expressions of uncertainty. For example, “Because there is considerable uncertainty in current understanding of how the climate system varies naturally and reacts to emissions of greenhouse gases and aerosols, current estimates of the magnitude of future warming should be regarded as tentative and subject to future adjustments upward or downward.”

It also notes, “Because of the large and still uncertain level of natural variability inherent in the climate record and the uncertainties in the time history of the various forcing agents (and particularly aerosols), a causal linkage between the buildup of greenhouse gases in the atmosphere and the observed climate changes during the 20th century cannot be unequivocally established.” A comprehensive listing of the caveats has been produced by Dr. Ken Green of the Reason Public Policy Institute and can be found at www.rppi.org.

The press downplayed the reports caveats. CNNs Michelle Mitchell stated that the report constituted “a unanimous decision that global warming is real, is getting worse, and is due to man. There is no wiggle room.”

In a June 11 Wall Street Journal op-ed, one of the scientists who helped prepare the report objected to the way it was treated in the press. Dr. Richard S. Lindzen, the Alfred P. Sloan professor of meteorology at MIT, said that the report says nothing of the sort. There are three things that scientists can agree upon, said Lindzen: 1) global mean temperatures have risen 0.5 degrees C over the last century; 2) atmospheric concentrations of carbon dioxide have increased over the last two centuries; and 3) carbon dioxide is a greenhouse gas.

“But,” he said, “we are not in a position to confidently attribute past climate change to carbon dioxide or to forecast what the climate will be in the future. That is to say, contrary to media impressions, agreement with the three basic statements tells us almost nothing relevant to policy discussions.”


Scientists in Australia have developed a vaccine for sheep and cattle that would reduce the amount of methane a greenhouse gas they emit by about twenty percent. The drug, which inhibits methane-producing organisms in the animals digestive tract, is now ready to undergo testing (BBC News, June 7, 2001).

Global warming and even the next ice age are minor problems compared to higher solar radiation that may make the Earth too hot to support life in about a billions years. Luckily, NASA is working on how to prevent the catastrophe.

Londons Observer reported on June 10 that Dr. Greg Laughlin of NASAs Ames Research Center and two colleagues have proposed using the same methods being discussed to prevent asteroids or comets from hitting the Earth to instead bring an asteroid or comet very close to Earth. If done just right, the procedure would transfer some gravitational energy to Earth and move it to an orbit farther away from the Sun.

Dr. Laughlin is quoted as saying, “It is basic rocket science,” but admits that the slightest miscalculation could result in a life-sterilizing collision. NASA, however, has several hundred million years to work on getting it right.