October 2004

Hong Kongs air quality is suffering as China continues to emphasize economic growth.  According to a Reuters article (Sept. 21), the autonomous regions air pollution hit a record high on September 14.  Most of the pollution, says Reuters, is attributable to coal-fired power plants in China along with traffic fumes.


 


Although Hong Kong itself has converted taxicabs to run on liquefied petroleum gas, Double-digit growth in individual car ownership in the neighboring province of Guangdong compounds the problem.  In power generation, CLP Holdings burned 50 percent more coal in 2003 than the previous year and also cut its use of gas as it discovered overestimates in reserves in the South China gas field.


 


Reuters also points out that, Chinas leaders are aware of the environmental price of breakneck growth but their main priority is to ensure a strong economy to help ease a labor glut.

After two days of hearings, the California Air Resources Board (CARB) on September 24 unanimously approved its plan to require automakers to reduce greenhouse gas (GHG) emissions from new cars and trucks sold in the State starting in 2009.  The regulations, which implement Assembly Bill 1493, signed into law by then-Gov. Gray Davis in July 2002, require automakers to reduce GHG emissions by 22 percent in 2012 and 30 percent in 2016.


 


The regulation sets fleet average standards measured in grams per mile of carbon dioxide (CO2)-equivalent emissions.  For passenger cars and light trucks, each automaker must ensure that the average emissions of the vehicles it sells in California do not exceed 323 grams per mile in 2009, 233 grams per mile in 2012, and 205 grams per mile in 2016.


 


AB 1493 requires CARB to achieve maximum feasible and cost-effective GHG emission reductions from new vehicles.  As Marlo Lewis of the Competitive Enterprise Institute and other critics have noted, however, it is not possible to achieve maximum feasible reductions without forcing automakers to substantially increase auto fuel economy.  Yet federal law prohibits states from enacting laws or regulations related to fuel economy.


 


CARB claims that its rule is cost-effective, arguing that fuel savings from the technologies automakers will deploy to meet the GHG standards will more than outweigh any increase in vehicle purchase price.  But this is a tacit confession that the rule is in fact fuel economy regulation by another name.


 


Sierra Research, Inc., in a report written on behalf of the Alliance of Automobile Manufacturers, finds multiple problems with CARBs cost-effectiveness calculation.  CARB inflated vehicle costs in the 2009 baseline (no regulation) case by unrealistically assuming universal adoption of expensive new technologies such as 5- and 6-speed automatic transmissions.  CARB used an unrealistically low markup factor to estimate how much retailers would charge for cars incorporating GHG-reducing technologies. 


 


In addition, CARB knocked 30 percent off the cost estimates of key technologies based on nothing more than its alleged experience and the potential for unforeseen innovations.  CARB forgot to take into account Californias 8 percent sales tax.  CARB overestimated fuel savings by using EPAs fuel economy model, which assumes slower average driving speeds and acceleration rates than prevail in California.  CARB implausibly assumed that consumers continue to value fuel savings years after most cars are sold or scrapped.


 


The net effect of such errors, according to Sierra Research, is that, The actual cost of the proposed standards will exceed an optimistic estimate of the present value of the fuel savings for an average California driver by approximately 200%.  Whereas CARB estimates a net lifetime saving of $1,703 for a new passenger car sold in 2016, Sierra estimates a net loss of $3,357.  The results of the proposed regulation can therefore be expected to include reduction in vehicle sales, longer retention of older vehicles on the road, and an increase in ozone precursor emissions.


 


Copies of the Sierra Research report may be obtained by calling (916) 444-6666.  CEIs comments on the final rule may be found at http://www.cei.org/pdf/4218.pdf.


 

In a letter to the Times of London dated September 22, former British Chancellor of the Exchequer Nigel Lawson (now Lord Lawson of Blaby) and other notables attacked the political consensus in the United Kingdom that action is needed now on global warming (see previous issue).


 


The letter said, Both the Prime Minister and the Leader of the Opposition made major speeches last week on climate change and the policies that are supposedly required to deal with it (reports, September 14 and 15).  It appears that, in this area, Tony Blair and Michael Howard are of one mind. They hold the same alarmist view of the world, and call for much the same radical and costly programme of action.



Both leaders assert that prospective climate change, arising from human activity, clearly poses a grave and imminent threat to the world.  Such statements give too much credence to some current sombre assessments and dark scenarios, and pay no heed to the great uncertainties, which still prevail in relation to the causes and consequences of climate change.  There are no solid grounds for assuming, as Messrs Blair and Howard do, that global warming demands immediate and far-reaching action.


 


The actions that they call for chiefly comprise a range of higher targeted subsidies, and of stricter controls and regulations, to limit CO2 emissions.  These measures would raise costs for enterprises and households, both directly as consumers and as taxpayers. They would make all of us significantly and increasingly worse off.  There are no worthwhile gains to set against these costs.  It is absurd to argue, as the Prime Minister did in his speech (and Howard took a similar line), that such policies can unleash a new and benign commercial force.  The new opportunities created for high-cost ventures come as the direct result of suppressing opportunities for their lower-cost rivals: this is already happening in power generation.



It is not only the Prime Minister and Mr. Howard who are advancing questionable economic arguments.  We consider that the treatment of economic issues by the Intergovernmental Panel on Climate Change is not up to the mark. It is time for finance and economics ministries everywhere, including HM Treasury, to wake up to this situation and take action.


 


The letter was also signed by Wilfred Beckerman (Emeritus Fellow, Balliol College, Oxford), Ian Byatt (Director-General of Water Services, 1989-2000), David Henderson (Visiting Professor, Westminster Business School), Julian Morris (Executive Director, International Policy Network), Alan Peacock (David Hume Institute, Edinburgh), and Professor Colin Robinson (Emeritus Professor of Economics, University of Surrey).

On September 15, the Senate Appropriations Committee voted out an appropriations bill that included a provision to exempt the National Oceanic and Atmospheric Administration from following the requirements of the Federal Data Quality Act (FDQA).  After the provision came to light and attracted intense criticism, Senator Judd Gregg (R-N.H.), the subcommittee chairman in charge of the appropriations bill for the Commerce, Justice and State Departments (S. 2809), on September 23 announced that he would remove it from the bill (Greenwire, Sept. 24). 


 


The FDQA is meant to prohibit federal agencies from using or disseminating information that does not meet minimal standards of objectivity, quality, and utility.  NOAA is one of the principal scientific agencies in the federal government and is in charge of most climate research.


 


The clause was reportedly inserted by Senator Fritz Hollings (D-S. C.), the ranking Democrat on the subcommittee. It reads, Provided further, That section 515 of Public Law 106-554 and any regulations and guidelines promulgated under such authority shall not apply on or after the date of enactment to research and data collection, or information analysis conducted by or for the National Oceanic and Atmospheric Administration.

Acting contrary to the advice of the countrys top scientific and economic advisers, Russian President Vladimir Putins cabinet agreed in principle on September 29 to send the Kyoto Protocol to Russias parliament, the Duma, for consideration.


 


The decision was not accompanied by either a statement from the President in support of the protocol or any other explanation of why the decision has been taken.  Economy Minister German Gref, a supporter of the protocol, commented that implementing the protocol would involve hard work for the country and that it could be detrimental if the wrong method of implementation were chosen (Moscow Times, Sept. 27).


 


Chief Economic Adviser Andrei Illarionov said that the move was political in nature, Its a political decision.  Its a forced decision, and its not a decision we are making with pleasure.  At a press conference in Washington, D. C. on October 1, he called the Kyoto Protocol an assault on economic growth, the environment, public safety, science, and human civilization itself, but said that he was not able to comment on the political nature of the decision. 


 


Several commentators suggested that the move was a quid pro quo to the European Union in exchange for Russian entry to the World Trade Organization and visa-free travel for Russian citizens across the European Union (Independent, Oct. 1).  It has also been speculated that the decision to ratify is part of Putins charm offensive to lessen European criticism of his Chechen policies.


 


Although Russian ratification is now likely, Prime Minister Mikhail Fradkov, believed to be an ally of Illarionov on the issue, explained that he expected heated debate on the issue in the Duma.  Outlining the considerations he thought the Duma would take into account, Konstantin Kosachev, head of the foreign affairs committee, told Interfax news agency, The economic factor would have a decisive role, environmental considerations would come second, and political expediency would matter less (Sept. 30).


 


Moreover, the second chamber of parliament, the Russian Federation Council, seems hostile to the proposal.  The head of the economic policy committee of the Council, Oganes Oganian, told Interfax (Oct. 1), There are a lot of representatives of various business organizations, including aluminum, oil and energy ones, among the senators. These people are opposed to ratifying the document because these organizations will have to fork out for the environment.


 


Kosachev initially suggested that the ratification debate would not take place until December, but there are indications that a vote is planned this month.  Sergei Vasilyev, head of the National Carbon Union, however, told Greenwire (Oct. 1) that, The Duma could slow down the process in order to win concessions from other participant countries.  He went on, It would mean that until the Europeans give valid and reliable guarantees to Russia, they will not have their Kyoto Protocol.


 


The Bush Administrations reaction to the decision was relaxed.  Harlan Watson, the administrations chief climate change negotiator, told The Wall Street Journal (Oct. 1), It was up to Russia to decide what it was going to do. From our point of view, it really didn’t make any difference whether Kyoto entered into force or not.


 


If the Duma approves ratification, the Kyoto Protocol will come into effect ninety days after official notification of Russian ratification is received by the UNFCCC secretariat.  This will be too late for the tenth Conference of the Parties, scheduled for mid-December in Buenos Aires, to become an official Meeting of the Parties. 

Dr Kevin Anderson and Richard Starkey are developing a system called Domestic Tradable Quotas (DTQs).  Under this system, every UK citizen would have a ration of carbon emissions which they could trade in a market.
 
David Fleming, credited with coming up with the idea, explicitly tied the idea to the hugely unpopular rationing of commodities during and after the Second World War.  He said, When I was a child, in the years after the war, I didnt like sweets [candy] and sold my sweet ration to other children.  I suppose, in a sense, Ive been thinking about DTQs all my life.
 
Dr Anderson said, DTQs are a viable approach to carbon taxes.  As people make their choices the system will help drive the market to lower carbon approaches.  Weve all seen how protests can bring the country to a halt if the price of petrol increases by just a few pence.  DTQs could nurture much-needed public supportits all about giving people choices.
 
The idea has been proposed to Parliament by means of a ten-minute rule bill (which means it stands little chance of becoming law).  A second reading in the House of Commons is scheduled for this month.  (Innovations Report, Sept. 21)

See also our article on page 5 in the paper edition of EU Reporter for the week of 27-30 September entitled: “Orwellian Energy Saving Plan May Not Be Doomed In The Long Term”. To download the PDF version click here.

Sentiment regarding “the environment” doesn’t seem to be a major factor in voters’ minds as they weigh the decision whether to cast their ballots for President Bush or for John Kerry.

But for those of you still undecided about which candidate will do a better job on Iraq, homeland security, and other issues, you may also want to factor in the candidates’ records and attitudes on environmental issues.  


Bush has been roundly criticized on environmental issues since he took office. But this criticism has largely come from left-leaning environmental activists and their supporters in academia the vast majority of whom didn’t vote for Bush in 2000 and, moreover, probably wouldn’t vote for a Republican under any circumstance. 


When Bush proposed more stringent regulations for arsenic in drinking water   something the two-term Clinton administration never got around to doing the environmental community ran a television ad campaign implying that the president was actually going to permit more arsenic in drinking water.


“May I please have some more arsenic in my water, Mommy,” asked a child in one of the commercials.


John Kerry, in a recent interview with Grist Magazine, also characterized the more stringent arsenic rules as part of an “unbelievable series of backward measures.” 


So I pay no attention to what so-called environmentalists say about Bush. Their attacks usually don’t present the facts fairly and are designed to politicize issues and polarize voters. 


The most notable environmental decision Bush has made so far was his decision to pull the U.S. out of the economic dance-of-death known as the Kyoto protocol, the international treaty on global warming. The president and Kerry actually agree on this issue, although Kerry told Grist that he would like to re-open the treaty’s negotiating process to fix the treaty’s flaws. 


The difference between the candidates is that Bush has rightly raised questions about the “science” underlying global warming hysteria and is not at all interested in an international treaty, whereas Kerry would embrace a treaty an agreement that likely would significantly hamper the U.S. economy if he could do so without paying a heavy political price. 


Bush also gets credit for clamping down on the perpetual regulation machine known as the Environmental Protection Agency. The EPA spent the Clinton administration years issuing the most expensive environmental regulations ever air quality standards costing as much as $100 billion per year that will produce no tangible health or environmental benefits and scaring the public about chemicals in the environment.  


But the EPA’s rulemaking process under Bush has been significantly slowed because the administration’s own environmental initiatives on air pollution and mercury from power plants, for example, are opposed by environmentalists. The resulting gridlock has prevented the issuance of costly, junk science-based rules that produce few-to-no benefits to the public. Short of dismantling the EPA in favor of a more rational approach to the environment the preferred solution the president has done the next best thing by bollixing up the EPA rulemaking process.


I don’t think he planned it that way, but I won’t argue with that success. 


As to Kerry, you really only need to know three things about him to see what he’d do on the environment. 


First, Kerry has a 96-percent lifetime voting record on environmental issues as determined by the League of Conservation Voters. That means that Kerry rubber-stamps every piece of environmental legislation that comes down the pike, regardless of its merits or costs. 


Second, in a Kerry administration, I suspect that the decision-making on the environment would be handed over to his wife, Teresa Heinz-Kerry, much the same way the health care issue was handed to Hillary Clinton during the early part of the Clinton administration. The environment is a hot-button issue for Teresa, and I doubt he’d turn down the billionaire who made his presidential campaign possible. 


What that probably means is that environmental extremists will once again have free reign over the EPA.  As head of the $1.2 billion Heinz Foundation, Teresa has given more than $6 million to the Tides Foundation and Tides Center which, in turn, funds groups like GreenpeaceEnvironmental Working Group, Natural Resources Defense Council and the Sierra Club and millions more to other environmental groups. I would expect Teresa to hand these groups the keys to the EPA, as well. 


Finally, when asked by Grist Magazine  whether his Harley-Davidson motorcycle was an environmental “vice” because motorcycle tailpipe emissions are “worse than cars,” Kerry responded, “I haven’t heard that about my Harley. But if it’s a vice, it’s one I don’t think I can quit. Sorry.” 


Meanwhile, Kerry wants us to take the bus to reduce air pollution. After all, the more of us that do opt for mass transit, the less guilty he can feel about tooling around on his Harley, Teresa’s gas-guzzling luxury yacht and her Gulfstream V jet. 


It may seem unfortunate that the choices on the environment boil down to regulatory gridlock versus a mindless regulatory frenzy, but that is the reality. I know which I prefer. 


Steven Milloy is the publisher of JunkScience.com, an adjunct scholar at the Cato Institute and the author ofJunk Science Judo: Self-Defense Against Health Scares and Scams(Cato Institute, 2001).


Jeffrey Sparshott’s otherwise excellent article “Putin Cabinet approves signing of Kyoto protocol” (Business, Friday) unwittingly promotes the alarmist view that carbon dioxide emissions (one of the “greenhouse-gas emissions” he mentions)are necessarily “pollution” and, consequently, that the United States is the “world’s heaviest polluter.”


    A clear, odorless gas that is nontoxic to humans at many times current atmospheric levels, CO2 neither fouls the air, impairs visibility, nor contributes to respiratory disease.  


More important, CO2 is the basic building block of the planetary food chain, and rising concentrations help most plants grow faster and bigger, use water more efficiently and resist pollution and other environmental stresses.  The ecological benefit of an atmosphere richer in CO2 is well-nigh universal, because all animals depend, directly or indirectly, on plants as a food source. Empirical studies suggest that the 100 parts per million increase in atmospheric CO2 content over the past 150 years has increased mean crop yields by significant amounts: for example, about 60 percent for wheat, 33 percent for fruits and melons, and 51 percent for vegetables.


    Were it not for the extra CO2 put into the atmosphere by fossil fuel combustion, many people now living might not exist or many forests now standing might have been cleared and turned into farmland or both.  Far from polluting the planet, CO2 emissions are greening the Earth, enhancing biodiversity and global-food availability.
    
    MARLO LEWIS
    Senior Fellow
    Competitive Enterprise Institute
    Washington

Les ravages provoqus par quatre ouragans en Floride et dans les Antilles cet t ont suscit des prdictions fantastiques de dtraquement climatique qui serait du l’conomie capitaliste. La ratification du protocole de Kyoto par le gouvernement Russe risque non seulement d’entraner des cots conomiques nfastes et mal compris pour l’conomie mondiale, mais ce protocole est fond sur des interprtations fort contentieuses de donnes scientifiques, et qui font l’objet de vives critiques. Tel sont les conclusions d’un rapport publi jeudi 30 septembre par un institut de recherches conomiques Bruxelles. Le rapport intitul un mythe concernant le rchauffement de la terre, http://institutmolinari.org/pubs/note200410fr.pdf publi dans la srie des notes conomiques de l’Institut Economique Molinari, examine le dbat sur les thories du rchauffement de la terre, et considre les cots de l’imposition des modalits du protocole de Kyoto sur l’conomie mondiale.


Commentant sur le rapport, Ccile Philippe, prsidente de linstitut dclare :


Insister que les changements climatiques actuels seraient dus au rchauffement de la terre cause par l’homme n’est pas plus srieux que blmer le gouvernement parce qu’il pleut. Les mesures proposes par le protocole de Kyoto vont refroidir l’conomie mondiale, sans pour autant protger l’environnement.


 Le dbat au sein de la communaut scientifique propos du changement climatique semble, en fait, loin dtre clos. Plus de 18.000 scientifiques ont sign la ptition lance par linstitut des sciences et de la mdecine de lOregon aux tats-Unis, manifestant son opposition au protocole de Kyoto.


 Ccile Philippe rsume ainsi :


On peut donc se demander quel peut-tre le fondement dun protocole qui propose dengloutir des milliards de ressources pour lutter contre la cause mal identifie (la production dmissions de CO2 par lhomme) dun problme qui nexiste peut tre pas (le rchauffement climatique). Sil est vident que lmission de ces gaz a fortement augment, on est aujourdhui loin de savoir quels peuvent en tre les effets. Le cot de lutter contre ces missions est lui, certain.

The destruction caused by four hurricanes in Florida and the Caribbean this summer has provoked sensational claims of climate changes caused by the capitalist economic system. The ratification of the Kyoto protocol by the Russian government risks not only damaging and economic costs for the global economy that are not fully understood. The protocol itself is also based on highly contentious interpretations of scientific evidence that are the object of serious criticism. These are the conclusions of a report issued on Thursday 30 September by a Brussels based think-tank. The report titled Earth warming myth http://institutmolinari.org/pubs/note200410.pdf published as part of the Institut Economique Molinari’s Economic Notes series examines the debate surrounding differing theories about global warming, and considers the costs of implementing the terms of the Kyoto protocol on the world economy.


Commenting on the report, Ccile Philippe, the institute’s President stated:


“To insist that current climate changes are the result of man-made global warming is no more plausible than blaming the government for rainfall. The measures proposed by the Kyoto protocol will cool down the global economy, without necessarily protecting the environment.”


 The debate within the scientific community concerning climate change is far from settled. More than 18,000 scientists have signed the petition launched by the Oregon institute of sciences and medicine, in the USA, to demonstrate opposition to the Kyoto protocol.


 Ccile Philippe sums up the debate:


“One wonders what the basis is for a treaty that proposes to swallow billions of dollars in resources to struggle against the ill-defined cause (the production of CO2 emissions) of a problem that may not exist (global warming). If it is clear that the emission of “greenhouse gases” has increased, we are far from knowing today what the real effects could be. The cost of restricting these emissions is however, all too clear.”