Kyoto Negotiations

In Canada, Action Plan 2000 earmarked $210 million in government funding to promote technologies that reduced greenhouse gas emissions in industry and transportation and gave $125 million to cities to encourage use of such technologies.  Another $100 million went to promote foreign demand for these Canadian solutions.  Despite these efforts, Canadas greenhouse gas emissions in 2002 were the highest ever.  This puts Canada well off the mark of reducing emissions by 5.2 per cent from 1990 levels as called for in the Kyoto Protocol.

 We seriously underestimated the difficulty of getting reductions and overestimated the payoff from new technologies, said a senior official working on climate change.  Nevertheless, last month the Canadian federal budget allocated $1 billion more to support new environmental technologies.  Ottawa is also offering the one ton challenge, in which it calls on individual Canadians to reduce their greenhouse gas emissions by one ton.  (Toronto Star,  April 5 and 6).

At a July 2002 hearing on the Bush Administrations climate initiative, James Connaughton, Chairman of the Council on Environmental Quality (CEQ), testified that implementing the Kyoto Protocol would reduce U.S. economic output by up to $400 billion in 2010.  In contrast, a 1998 study done by President Clintons Council of Economic Advisers (CEA) found that the costs of implementing the Protocol would be $7 billion to $12 billion annually in lost output. 

The General Accounting Office has analyzed the stark difference between the two studies and concluded that there are two principal reasons for it.  First, the Bush Administrations estimate assumed that all reductions would be achieved domestically, while the Clinton Administrations estimate assumed that compliance would be largely achieved through the purchase of emissions reductions from other nations.  Second, the economic growth rate assumed by the Bush study (2.3 percent a year for 1995 through 2010) was higher than the growth rate assumed by the Clinton study (2.1 percent for the same time period), and thus forecast a higher level of emissions.  (GAO report, January 30, 2004).

The campaign web site of Senator John Kerry (DMass.) only briefly mentions what the presumptive presidential nominee of the Democratic Party would do about global warming if elected.  The issues section says, When John Kerry is president, the U.S. will reengage in the development of an international climate change strategy to address global warming, and identify workable responses that provide opportunities for American technology and know-how(http://www.johnkerry.com/issues/energy/).

However, in an October 2003 document, John Kerrys Comprehensive Vision for a Cleaner Environment, A Stronger Economy, Healthier Communities (http://www.johnkerry.com/pdf/long_enviro.pdf), he has much more to say.  On international arrangements he says:  Bushs abrupt and unilateral decision to abandon discussions with the world community on climate change was early evidence of this Administrations misguided approach to dealing with the community of nations. Dropping out of international implementation of the Kyoto Protocol was foolhardy then, and it is even more obviously foolhardy today. In our absence, many of our major trading partners in Europe and elsewhere have been working on the details of international programs to manage greenhouse gas emissions. American interests are on the sidelines, having no ability to influence the development of a system that will profoundly affect the global approach to resource protection and investment in climate change technologies.
 
The document notes that Kerry has demonstrated a long commitment to addressing climate change beginning as a participant at the Rio Earth Summit in 1992 that produced the U. N. Framework Convention on Climate Change and calls  climate change the globes most serious environmental challenge.  It continues: John Kerry will reinsert the United States into international climate change negotiations. He will reestablish our nations credibility and influence over the process.  The Kerry Administration will come to the international table with a serious domestic climate change program in hand.

That domestic program will be centered on a cap-and-trade program to limit greenhouse gas emissions.  The statement continues: John Kerrys plan recognizes that we must take immediate action to halt and reverse the growth in greenhouse gas emissions and reduce our carbon footprint while the economy expands. Leveraging pioneering state and regional programs, Kerrys plan calls for all major sources of greenhouse gas emissions to participate in a cap and trade emissions reduction program for CO2 and other greenhouse gases (not just utilities, as some have suggested), so that the power of the marketplace can be directed to encourage that the most cost-effective reductions be made, whether at coal-fired utilities or from automobile tailpipes.  This cap-and-trade program will reinforce other near-term initiatives that drive down emissions without reducing economic output.

In addition Kerry offers a predictable mix of measures to require energy conservation and efficiency, such as higher CAF standards for automobiles.  Kerry would also require increased use of renewable energy.  Subsidies for rural America are not neglected: We can capture emissions reductions opportunities in forests, rangelands, and farmland by providing financial incentive for no-till agriculture and maintaining and increasing natural carbon sinks such as forests and rangelands.

Finally, The Kerry plan will establish the Energy Security and Conservation Trust Fund to invest in the hydrogen economy and other promising technologies, with clear targets for increasing the number of hydrogen powered cars and trucks on the nations roads.  Because of the importance of coal to our energy mix, the Kerry Administration will actively support technologies that separate and sequester CO2 when extracting the energy from coal.

Keen observers will have noticed that one of John Kerrys key campaigning points recently has been the current high price of gasoline.  According to a study by the American Council for Capital Formation in 2000, the Kyoto Protocol would add 71 cents to the price of each gallon.

Russian President Vladimir Putin’s chief economic adviser, Andrei Illarionov, has formally recommended that Russia reject the Kyoto Protocol.  Ratifying Kyoto, he said, would mean setting up bodies to limit economic growth not only on a national level, but also on a supranational level. An organ of legal interference in the internal affairs of the country would be created.

The Kyoto Protocol, Dr. Illarionov explained, is based on flawed science which claims there are man-made factors behind global warming.  He believes that Russias economy will grow so fast over the next decade that emissions will increase substantially.  If Russia agrees to Kyoto it would have to constrain economic growth or be forced to buy emissions quotas from other nations.
 
Dr. Illarionov went further when speaking to journalists on April 14.  He said, First we wanted to call this treaty an interstate Gosplan, but then we realized that a Gosplan is much more humane, so we should call the Kyoto Protocol an interstate gulag.  In a gulag, people were at least given the same rations, which did not lessen from one day to the next, but the Kyoto Protocol proposes decreasing rations day by day.

The Kyoto Protocol is a death treaty, no matter how strange this seems, because its main purpose is to stifle economic growth and economic activity in countries that assumes obligations under this protocol.  Some reports suggested that Dr Illarionov even compared the treaty to Auschwitz.  (Reuters, Interfax).

The British Governments Sustainable Development Commission is worried that the United Kingdom will not be able to meet its Kyoto targets because its economy is behaving in too American a fashion.  The Commission, chaired by former Green Party head Jonathan Porritt, frets in a report to Prime Minister Tony Blair released April 14 that, American-style patterns of growth in aviation, road transport and fuel use are wholly unsustainable and will damage the quality of life of present and future generations.

Mr. Porritt remarked that, while economic growth has been faster in the UK than any other European country, this is accompanied by much greater inequality in income, and a long-hours, high-pressure employment culture more characteristic of American society.  The report calls on the UK government to use taxation to affect the price of energy and fuel and calls for ministers to adopt more “joined up” thinking over the next five to 10 years.  (Daily Telegraph, Apr. 14)

The Connecticut state legislature is currently considering SB.595, which aims to reduce the states greenhouse gas emissions using Kyoto-like measures.  The bill has passed out of a joint committee and has the backing of the Governor.  Section 3 of the bill seeks to mandate reductions in greenhouse gas emissions to 1990 levels by 2010; 10% below 1990 levels by 2020; and 75% to 85% below 2001 levels by 2050 (unless another year is set). 

 A study by Charles River Associates for the American Legislative Exchange Council brings home the effects of the bill on the quality of life of Connecticut residents.  The study finds, A conservative estimate is that costs per Connecticut household of meeting these caps would be between $700 and $1300 per year over the next three decades, accompanied by the loss of about 20,000 jobs.  Connecticuts state product would be reduced by about 1.3% from baseline levels by 2020, and these losses would either remain stable or grow, depending on whether costs of sequestration level decline or remain constant.  The states budget problems would be worsened, with lower wages and incomes leading to a loss in tax collections of about $250 million per year by 2010.  Moreover, the bill would directly impose costs on the state to set up the trading system, and would raise energy costs for state and local governments.

Lewis Andrews of the Yankee Institute in Connecticut goes further, saying in an op-ed that the bill could cost Connecticut as much as $8.1 billion.  He concludes, Connecticut facing record budget deficits due to lower-than-expected revenues in 2002 and 2003 should not adopt an overly ambitious greenhouse gas reduction program that costs taxpayer dollars, destroys jobs, and does nothing to protect the environment.

 Copies of the Charles River Associates study are available by request from the American Legislative Exchange Council (www.alec.org).

Several members of the European Union are having a hard time complying with the EU Commissions deadline for filing their detailed plans for meeting Europes Kyoto targets. The German government was rocked by open political warfare between the governments Socialist Party Economics Minister, Wolfgang Clement, and its Green Party Environment Minister, Juergen Tritten, until Chancellor Gerhard Schroeder personally intervened on the side of Clement.

Tritten had proposed emissions reductions from the current level of 505 million metric tons per annum to 488 million tons in 2005-2007 and to 480 million tons in 2008-2012. Clement, a key figure in Schroeders unpopular but necessary economic reforms, had objected strongly to these targets, saying, “Growth isn’t possible that way. I can’t support that as Economy Minister” (Reuters, Mar. 26). Schroeder decided on minimal cuts in the near future, with a target of 503 million tones in 2005-2007, followed by a deeper cut to 495 million tons in 2008-2012 (AP, Mar. 30).

The powerful German environmental movement reacted furiously to the news. Greenpeace energy policy expert Sven Teske told the German news wire DPA (Mar. 30) that the agreement “has nothing more in common” with the Greens’ policies.

“With this compromise, Red-Green [the ruling SPD-Greens coalition] has bowed out from climate protection,” Teske said. DPA concluded, “Clement, by rigidly defending industry’s interests, had cast a dark taint on the credibility of German climate policy, the Greenpeace expert charged.”

The argument seems to have affected Herr Schroeders attitudes towards energy suppression agreements like Kyoto. On March 26, he publicly questioned whether the EU should go ahead with its plans to implement Kyoto targets in the absence of Russian ratification. Reuters reported (Mar. 26) that he told a news conference, “We hope that Kyoto will be ratified, for example by Russia. But if that doesn’t happen, it will distort competition at the expense of European and especially German economy.” Reuters went on, “Without giving a direct answer, he asked: What happens with the emissions trading system if Kyoto is not ratified?”

litionRepresentatives Wayne Gilchrest (RMd.) and John Olver (DMass.) introduced on March 30 a House version of S. 139, the Climate Stewardship Act, known as the Lieberman-McCain bill after its two chief Senate proponents. Ten Republicans and ten Democrats joined as original co-sponsors of H. R. 4067.

The bill was referred to the Science Committee and to the Energy and Commerce Committee. One of the co-sponsors is Rep. Sherwood Boehlert (RN.Y.), chairman of the House Science Committee. However, Rep. Joe Barton (RTex.), the new chairman of the Energy and Commerce Committee, has a long record of opposition to energy-rationing legislation. A weaker version of S. 139 was defeated on the floor of the Senate last fall by a vote of 43 to 55.

According to the New Zealand Herald (Mar. 20), New Zealands recipients of emissions credits may be unable to sell them in their biggest potential market, the European Union.

The newspaper points out that, “The rules proposed by the European Commission, and now adopted with some amendments by the European Parliament’s environment committee, would shut out from the European emissions trading system credits arising from Kyoto forests – those planted since 1990 on land not previously forested – because they do not achieve permanent emission reduction from sources.”

New Zealand had been expecting to use these credits to cover growth in its emissions and provide a further 50 million metric tons of credits to sell to Europe. As an example, one company, Meridian Energy, sold credits it had received as a subsidy for its wind farm operation to the Netherlands government at NZ$10 a ton.

The Herald quoted Federated Farmers president Tom Lambie as suggesting, “If New Zealand was unable to sell credits to the Europeans, it raised a question about whether New Zealand should remain a party to the protocol.”

The European trade group for auto manufacturers has voiced its objections to EU emissions reduction plans privately. According to Scotlands Sunday Herald (Mar. 21), “A confidential memo from the European Automobile Manufacturers Association to the Environment Commissioner, Margot Wallstrm, claims that the proposed cuts will seriously damage the industry. The association represents Ford, General Motors, DaimlerChrysler, BMW, Fiat, Renault, Peugeot Citroen, Volvo, Volkswagen and four others.”

The Herald says that the memo suggests that the emissions cuts from 165 grams of CO2 per kilometer in 2002 to 120 by 2010 would raise the cost of a car by 2,700 (nearly $5,000) at an annual cost to the EU of 33.5 billion ($60 billion).

The memo states, “Car buyers are not prepared to pay any extra for cleaner, more environmentally-friendly cars. An over-ambitious carbon dioxide reduction policy that is essentially only car-technology focused, would impose massive additional costs per car along with tremendous negative societal costs for the EU economy, and would threaten the competitiveness of the European car manufacturing industry. Adverse impacts for the EU economy would include: a move of car production to non-EU countries, disappearance of large/premium cars, plant closures, sizeable job losses, decreased trade balance, reduced income tax and lowered economic growth.”

The memo was backed up by one from the Japan Automobile Manufacturers Association, which represents Nissan, Honda, Toyota, Mazda, Mitsubishi, Suzuki, Yamaha and six other car makers. The Japanese memo says, “Considering the increasing trend towards globalization, competition in todays automobile industry is getting extremely fierce. We advise that the economic situation of this key industry be taken into account when considering the introduction of increased environmental legislation.”

Environmental groups reacted angrily to the documents. Duncan McLaren of Friends of the Earth Scotland told the Herald, “The EC must stand up to the car industry on this issue. If the industry fails to deliver on its promises then the EC should legislate to force it to cut pollution. Past experience tells us that the threat of legislation is the best way to stimulate real improvements and technological innovations.”