March 2008

Ted Nordhaus has posted an analysis, “The ‘Serious Business’ of Kyoto: EU to ‘overshoot’ its emissions reductions targets? Read between the lines”. In it he rightly takes the EU to task for overselling its Kyoto GHG emissions reduction activities, which overselling is exported here in an effort to get the U.S. to leap aboard the sinking policy ship of carbon cap-and-trade. In short, Nordhaus brings to the fore the reality that the EU’s claims to leadership and success on the GHG reduction front come with footnotes that stand little if any chance of being more than assumptions that proved embarrassing in hindsight.

This particular 2007 report to which he refers, incorporating emissions through 2005, is risible for its spin. For example, they somehow lowered their projection of future emissions from the year before, after emissions turned upward, strongly in 2006 (because of a good economic year). The European Environment Agency (EEA) was aware of this but won’t officially report it, as a bloc, until June 2008, so told a whopper.

So, we all know the EU isn’t a straight shooter on the issue, but some people in relevant positions work quite hard to ignore this. As such, Nordhaus’s post is useful because he realizes the EU is all smoke and mirrors, and coming from him or a similar “breakthrough” type is the only way, it seems, for the greens and policymakers to see that things are not as they are sold and in fact are going badly wrong (to the extent they don’t actually know this, that is).

But there is more smoke and more mirrors than Nordhaus indicates. He focuses on the EU’s projected “reduction” by 2012 of 11% below 1990 GHG emission levels, describing it as oversold for two principal reasons: political decisions unrelated to Kyoto (UK “dash for gas” and shuttering East German industry post-reunification, accounting for most of the promised “reduction), and a cocktail of implausible overperformance by states, policies, and Kyoto programs. This analysis is factually correct and derives from the EEA’ own express assumptions.

While Nordhaus gets the gist of Europe’s fudging, paper shuffling and exaggerated optimism, any analysis must recognize that performance to date informs us that emissions will be nowhere presumed levels, and why that is so. His focus on the EU’s projection with no apparent reference to actual performance grants the projection more credit, if admittedly arguendo, than it deserves under any reasonable scrutiny even by the EEA’s own telling. The EU says that if it just coasted from today, its existing measures “will” yield an average reduction over 2008-12 of 4% below 1990. A host of implausible “ifs” – the products of some of which, such as ETS reductions, are also styled as things that “will” occur – would bring them to the touted über-performance.

But the 4% figure that “will” occur regardless is of course patent nonsense given the EU’s admitted (if, again, not advertised) emissions increases in two out of every three years since Kyoto was agreed in 1997 leaving them, as of a year ago, at best  at or about 1990 emission levels, with emissions rising. (Note: this report to which Nordhaus refers claims that emissions as of 2005 were -2% below 1990 levels; I have demonstrated that this is the product of serially changing their 1990 baseline years after the fact, favorably and, regardless that this will prove no longer true when 2006 figures are finally released by Brussels, barring more funny business with their numbers).

Reading between Nordhaus’s own lines, how the EU may actually be doing as opposed to simply how they are doing it does seem to have struck him as something to wonder about in the back of his mind if not look into. He does say things like “The reality is that EU policies have, to date, accomplished little by way of actual emissions reductions,” but unless one conjures up imagined emissions avoided, there is just no way for this to be anything other than far too indulgent of EU spin: emissions aren’t down, economy-wide or among ETS-covered sectors. Since Kyoto was agreed and these policies started piling up in Europe, emissions are rising steadily. The ETS did not change this and in fact proved an embarrassment. Dimas even admitted that he could identify no emissions reduction for which the ETS could claim credit.

Had Nordhaus looked at how the EU’s promise compares to performance, specifically, as opposed to vaguely guessing that it likely isn’t all that hot, he would have seen the so-called reduction that he accepts arguendo is actually to date no such thing, with CO2 emissions particularly egregious (in the face of EU rhetoric), at about 5% over 1990 levels through 2006 (this will be updated and formalized by EEA in June, but sufficient member state data is out now to support this assessment). The EEA assume — as they long actually projected — that this is the year they will wrench their trajectory from upward-ticking to a starkly downward one. That, then, would presumably get them down, over the course of‘08-‘12, to some point below 1990, from which the cited administrative agenda items will clean up the difference and even over-performance. In truth EEA’s own performance figures reveal that the EU will buy at minimium the entirety of their “reduction” over Kyoto’s 5-year period. A strict reading of various Kyoto provisions, for example involving ”supplementarity”, reveals that this should be problematic.

One key data point not necessary for my conclusion but certainly underscoring it is the revelation that the UK’s claimed reduction to date of 12% below 1990 levels (with emissions rising, btw) was off by, oh, about 12%.

 But again it is material to note precisely how outrageous the EEA’s projected reduction of up to 11% below 1990 levels is, which is best done by noting where emissions are now and where they quite obviously are going: remember, for a decade the EEA has been telling us that this is the year that emissions will turn downward. For a decade they have proven wildly unreliable. There is no reason in the record to believe that the claims in the report Nordhaus reviewed are any different. In short, this analysis isn’t factually wrong, but with the appropriate context could be more right.