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Over the last year, industrial gas prices in Great Britain have risen by more than 50 percent, an increase that was kicked off with the governments new climate change levy that increased prices by 7 percent. Rising world prices contributed the remainder of the increase. The climate change levy has also increased the price of coal by 13 percent and electricity by 8 percent (Daily Telegraph, September 28, 2001).

Many businesses are feeling the impacts of the new tax. Carpetmaker Stoddard International has seen its operating profit fall 35 percent in the last half year, which chief executive Alan Lawson attributes in part to the climate change levy. The companys energy costs rose by 250,000 pounds sterling, some as a result of the levy. “The principle is fine but the actual levying of it is penal, especially at a time when we are facing currency costs and threats of cheaper imports from countries which dont have the climate change levy,” said Lawson (The Herald (Glasgow), September 28, 2001).

The Engineering Employers Federation in Great Britain conducted a survey of 550 engineering firms and found that the costs of the climate change levy would exceed 100 million pounds sterling. “Our figures prove that the Government was wrong when saying the levy would not impact on competitiveness because it is imposing an ever greater burden on manufacturing at a time when it is already in recession,” said Martin Temple, EEFs director general (Belfast Telegraph, September 24, 2001).

EU Bows to Industry Pressure

The European Union has been devising an emissions trading scheme to trade greenhouse gas permits, that is scheduled to take effect in 2005. According to Reuters (October 2, 2001), “The EU executive originally aimed to propose the regulations in July but was persuaded to redraft them in a more business-friendly form after intense lobbying from industry.”

Firms within the EU have demanded the changes because they fear that the plan would put them at a competitive disadvantage with U.S. firms. “The latest draft bows to several industry demands by halving the proposed fines, allowing the Commission to exempt certain sectors temporarily and enabling member states to give firms extra emission credits in special market conditions.”

Fines for noncompliance were reduced from 200 euros to 100 euros per excess ton of CO2 emitted. If permit prices go too high, then governments can issue extra permits. Governments can also temporarily exempt certain sectors during the first three years of the program if they can demonstrate that they can reduce the same amount of emission by other means.

The ability of governments to issue additional permits is very problematic and is likely to short circuit the trading that would take place otherwise. Increasing the supply of permits not only defeats the cap, but it also decreases the price of existing permits, thereby harming the firms holding them.

EU to Propose Aviation Fuel Tax

The European Union is pushing for a tax on aviation fuel for international flights at a meeting of the International Civil Aviation Organization currently underway in Montreal. Under a long-standing international agreement, aviation fuel for international flights is exempt from taxation. Environmentalists claim that this is a major subsidy to the airline industry.

The EU says that if an agreement cannot be reached it may and unilaterally impose a tax on internal EU flights or impose a tax on airfreight (ABC News, September 15, 2001).

Environmentalists Defeated on Two Fronts

Local residents of a small rural community in Great Britain have succeeded in defeating the construction of a biomass power plant. The proposed wood-fueled power plant, costing 10 million pounds sterling, was turned down by the North Wilshire District Council following an appeal by Ambient Energy, the company behind the plan.

Ambient Energy argued that the power plant would produce enough energy for 10,000 homes without creating greenhouse gas emissions. But a group organized by Cricklade residents, known as BLOT (Biomass Lumbered on our Town) argued that the plant, that would include two 80 foot chimney stacks and two 50 foot burners would be an eyesore, and create an increase of traffic of heavy trucks. Rodney Baker, the planning inspector said, “The scheme would have a noticeable and harmful effect on the character and amenity of the landscape” (Western Daily Press, September 17, 2001).

Residents of Eugene, Oregon have voted by a greater than 2 to 1 margin to reopen a downtown pedestrian mall to vehicle traffic (Associated Press, September 19, 2001). The margin of the vote is surprising in that Eugene, home of the University of Oregon, is known throughout the Northwest as the Peoples Republic of Eugene for its leftist politics.

The pedestrian mall was the centerpiece of a 1971 urban renewal plan that was supposed to “bring new life to the citys center, providing shoppers with a progressive, car-free city core geared to pedestrian traffic” (The Oregonian, September 17, 2001). The anti-car plan backfired, however, as businesses fled to the suburbs due to decreased sales.

“If you do it and it doesnt work, then you change it. And they never changed it,” said Bill Combs, Jr., who moved his shoe store from the downtown mall in 1990. “No traffic. No cars. That was the problem. They essentially killed retail downtown.”

New Jersey Initiates Voluntary Cap and Trade Program

The state of New Jersey has unveiled a voluntary cap and trade program for carbon dioxide emissions. According to John J. Fialka of The Wall Street Journal, the program creates incentives for companies, government agencies, and individual consumers to trade credits for emissions.

The plan is the brainchild of former Governor Christine Todd Whitman, who led a task force to calculate the expected costs of rising sea levels in 1994. This effort led current New Jersey state environmental minister Robert Shinn, Jr. to conclude that reducing greenhouse gas emissions would be the most cost-effective approach to abating the rise in sea levels in 1997.

After making this announcement, Shinn conducted an audit of existing voluntary greenhouse gas reduction programs in New Jersey and concluded that the state could reduce its emissions to 3.5 percent below 1990 levels by 2005. This led him to demand the states seven largest utilities to develop a standardized measurement system for their emissions. In addition, he persuaded nine major companies with headquarters in the state to sign a “covenant of sustainability” under which they promise to monitor and reduce emissions.

The “carrot” of the program is funded through the “societal benefit charge” imposed on electricity users through the states electricity restructuring. This fund, used to compensate individuals and companies that participate in the trading and reduction program or install energy-efficiency or renewable energy equipment, is expected to generate more than $358 million over the next three years.

New Jersey joins Massachusetts as the only states currently regulating carbon dioxide emissions. New York, New Hampshire, North Carolina, Florida, and Illinois are considering similar programs (Wall Street Journal, September 11, 2001).

 Artful Bias or Outright Deception?

The IPCCs assessment reports and especially its summaries for policymakers have been criticized from many quarters and have been shown to contain many errors and weaknesses. One of the most recent criticisms, and perhaps the most devastating, is the one authored by Dr. David Wojick, president of Climatechangedebate.org, who has a Ph.D. in mathematical logic and philosophy of science.

In the report, The UN IPCCs Artful Bias, Wojick analyzes the Summary for Policymakers (SPM) for Working Group I, which deals with the science, of the IPCCs Third Assessment Report. According to Wojick, the SPM “is an artfully constructed presentation of just the science that supports the fear of human induced climate change. It is as one sided as a legal brief, which it resembles.” Wojick goes on to argue, “A line by line analysis of the SPM reveals that all of the science that cuts against the theory of human interference with climate has been systematically omitted.”

The first problem that Wojick presents is that the IPCC ignores the errors in the surface temperature data. The SPM claims, “The global average surface temperature has increased over the 20th century by about 0.6 degrees C.” The certainty expressed in this statement, says Wojick, is unwarranted.

Despite the many problems with the surface temperature record, the IPCC only briefly mentions the urban heat island effect and claims that all errors have been taken into account, without explanation. But as Wojick explains, “There is no way to correct for most measurement errors, including the urban heat island effect. The magnitude of these errors, which may be quite large, is simply unknown. The supposed corrections that have been made to date are merely guesswork.”

Moreover, the temperature data that we have is not a random sample of the Earths surface, but a “convenience sample,” or data that is the most convenient. The IPCCs “reference to data gaps,” says Wojick, “suggests that sometimes a station did not record, or the data is bad, not that there is in actuality no data for most of the earth, most of the time. So the fact that we merely have a convenience sample is either omitted, or cleverly disguised.”

The importance of this point is that the IPCC has calculated its confidence levels as if it had a random sample. Given that the sample is not random, the margin of error in the data is much larger than suggested by the IPCC.

Other problems with the IPCCs SPM is how it glosses over the “profound contradiction” between the satellite temperature record and the surface record, the huge uncertainties with regard to aerosols, the omission of natural sources of greenhouse gas emissions, and the inadequate treatment of the chaotic nature of the Earths climate. The full critique can be found at www.john-daly.com.

No Rise in New England Hurricanes

Another peer-reviewed scientific study of hurricanes has failed to find a trend in hurricane activity in the United States, let alone a link between hurricane activity and global warming. The study, published in Ecological Monographs (71: 2001), looks at hurricane data from 1620-1997.

What the authors found was that, “there was no clear century-scale trend in the number of major hurricanes.” They did find that there were more lower intensity hurricanes reported in the 19th and 20th centuries than there were in the 17th and 18th centuries. But the authors attribute the difference to “improvements in meteorological observations and records since the early 19th century.” Also, the data from the last 200 years show that there were five of the strongest category hurricanes reported in the cooler 19th century and only one reported during the 20th century.

Announcements

  • The Skeptical Environmentalist Looks at Global Warming and the Kyoto Protocol

Professor Bjorn Lomborg will speak at a Cooler Heads Coalition congressional and media briefing from noon to 1:30 PM on Thursday, 4th October, in Room HC-5 of the U. S. Capitol. Lomborg is author of the Skeptical Environmentalist, which was published in the U. S. this month by Cambridge University Press and which has received rave reviews. Those wishing to attend the briefing must Rsvp to Michael Mallinger at CEI: telephone (202) 331-1010, ext. 254, or e-mail: mmallinger@cei.org. Please give your name, affiliation, phone number, and e-mail address.

A Greener Planet

A new study slated to appear in the September 16 issue of the Journal of Geophysical Research-Atmospheres has found that warmer temperatures and elevated levels of carbon dioxide have led to a greening of the northern hemisphere. Contrary to conventional wisdom, which portrays global warming as an unmitigated disaster, this new study confirms what numerous other studies have found; that many benefits may result from a warmer planet.

A press release from the American Geophysical Union explains that, “Researchers using satellite data have confirmed that plant life above 40 degrees north latitude (New York, Madrid, Ankara, Beijing) has been growing more vigorously since 1981 due to rising temperatures and buildup of greenhouse gases, and Eurasia seems to be greening more than North America, as existing vegetation is more lush for longer periods of time” (www.enn.com).

One of the researchers, Ranga Myneni, of Boston University, “suggested that these results are indicative of a greener greenhouse. This is an important finding because of possible implications to the global carbon cycle, he said. Further, Myneni said, under the Kyoto Protocol, most of the developed countries in the north can use certain vegetation carbon sinks to meet their greenhouse gas emissions reduction commitments. If the northern forests are greening they may already be absorbing carbon dioxide. Myneni said, As to how much and for how long, that needs more research.”

Warming and Cooling in Alaska

Global warming alarmists have repeatedly pointed to warmer temperatures in Alaska as a major sign that significant global warming has already arrived. Recent research, however, has found that Alaska has undergone similar periods of warming before man began to burn fossil fuels.

In a study in the August 21 issue of the Proceedings of the National Academy of Sciences, Dr. Feng Sheng Hu, a professor of plant biology and geology at the University if Illinois, and his co-authors, constructed a continuous 2,000-year temperature record of the area by analyzing sediment samples from Farewell Lake, near the northwest foothills of the Alaska Range. What they found was that there were two periods of warm climatic conditions that occurred in A.D. 0-300 and 850-1200, which were also characterized by dryer than normal conditions.

An article about the study noted that Dr. Hu and postdoctoral associate Will Turner did a follow up study that found that forest fires were more abundant during the Little Ice Age than during warming periods, contradicting global warming predictions (www.news.uiuc.edu/).

Etc.

  • The Los Angeles Times (September 1, 2001) reports that the San Fernando Valley is experiencing its coolest summer since 1987. According to Tim McClung, a Weather Service meteorologist, “The average temperature in downtown Los Angeles in July was 71 degrees, 3.9 degrees below the normal average of 74.9. The average August was 72 degrees, 4 degrees below the average of 76.”

 Wind Power Cheaper than Coal?

“The cost of wind energy is now less than that of coal.” With that startling declaration, Mark Z. Jacobson and Gilbert M. Masters, with the Department of Civil Environmental Engineering at Stanford University, conclude that the U.S. could meet its Kyoto target by replacing 59 percent of coal energy with between 214,000 and 236,000 wind turbines (Science, August 24, 2001).

How do they come to this conclusion? They point out that the direct cost of energy from a new coal power plant is about 3.5 to 4 cents per kilowatt-hour (kWh). But, claim the authors, there are many costs associated with coal use that are not accounted for.

“Coal-mine dust kills 2,000 U.S. miners yearly, and since 1973, the federal black lung-disease benefits program has cost $35 billion,” say Jacobson and Masters. “Coal emissions also cause acid deposition, smog, visibility degradation, and global warming; its particles increase asthma, respiratory and cardiovascular disease, and mortality.” Including these costs, say the authors, increases the cost of coal to 5.5 to 8.3 cents per kWh.

Wind power, on the other hand, only costs 3 to 4 cents per kWh. There is no mention of externality costs associated with wind power, however. Many of the costs that are attributed to coal are dubious, to say the least. Linking asthma to particulate pollution seems weak, since asthma rates have been going up even while particulate concentrations have fallen.

Moreover, most experts attribute the rise in asthma to higher levels of indoor air pollution. The harmful effects of acid deposition have been greatly exaggerated, and there is no evidence of any costs associated with higher carbon dioxide levels or global warming.

Glen Schleede, president of Energy Market and Policy Analysis, Inc., has heavily criticized the report. He notes several external costs associated with wind power that are ignored by Jacobson and Masters, including scenery impairment, noise, property value losses, the need for massive infrastructure investment to transport electricity from remote wind farms, and the provision of backup power to alleviate intermittency problems associated with wind power.

Moreover, the assumptions behind the analysis are wrong. Schleede points out, for example, that Jacobson and Masters assume that windmills have a capacity factor of between 35.8 and 39.6 percent. In reality, capacity factors are much smaller. Schleede assumes a 30 percent capacity factor (which is still higher than that currently seen in practice) to determine that it would take as many as 366,000 wind turbines to replace 59 percent of coal power.

Finding suitable sites for so many windmills (which are 300 ft. tall) would pose serious difficulties. Schleedes full critique, “Science article is wrong in claiming that wind energy is cheaper then coal,” can be found at www.heartland.org.

Speaking of costs, a proposed wind farm on a remote hillside in northeast Scotland has met with significant resistance. According to the September 1 issue of the Independent (London), “Accusations of foul play, misinformation, environmental destruction and dirty tricks have abounded in a fight over the siting of 21 turbines, each as large as a 30-story block of flats.” Worries about the adverse effects on local property values are a major concern to property owners in the area.

Renewable Energy Cant Compete in UK

Britains energy regulator, Ofgem, has told the government that more subsidies may be required for renewable energy if it is to meet the stringent greenhouse gas targets it has set for the country, according to the Financial Times (September 1, 2001). Britain has set a goal of reducing greenhouse gas emissions by 23 percent below 1990 levels by 2010, and it wants half of those reductions to come through the use of renewable energy.

After implementing the New Electricity Trading Arrangements (NETA) five months ago, there has been a drop in wholesale electricity prices of 20 to 25 percent for large power generators and a drop of 17 percent for smaller generators including renewable energy generators.

Producers of renewable energy claim that the new arrangement has harmed them disproportionately relative to the rest of the electric power industry, mainly because they are unable to predict power output due to the intermittency problems that plague renewable energy. NETA “requires power producers to forecast output four hours in advance, and to buy any shortfall at premium prices.”

Ofgems chief executive, Callum McCarthy, is unapologetic. “Put simply, reliable plant commands a premium under NETA, as the majority of electricity customers want a reliable source of supply and the electricity system needs to be kept in balance to maintain the security and quality of supply” (Daily Telegraph, September 1, 2001).

“If for wider environmental reasons the government wishes to encourage forms of renewable generation whose output is less predictable or less reliable,” said McCarthy, it should “consider additional support to these types of generators” (Financial Times).

Science Magazines Summer Silliness

This summers silly season has not generated anything approaching last summers top-of-the-front-page claim by the New York Times that “The North Pole is melting” because of global warming. The Timess story by John Noble Wilford was based on only one sourcea press release from a global warming nut, albeit one with an academic post at Harvard. As reported in the August 23 and September 6, 2000 issues of Cooler Heads, the story was obviously ludicrous and the Times was quickly forced to retract it.

Although nothing so delightful has been concocted for this Augusts hottest days, Science Magazine is trying to entertain. In its August 17 issue, Science published an article on “Hidden Health Benefits of Greenhouse Gas Mitigation.” The article claims that more people die from air pollution than from traffic accidents in New York City, Mexico City, Sao Paulo, and Santiago, Chile. Reducing fossil fuel use to cut greenhouse gas emissions would therefore have the additional immediate benefit of saving lives and improving health.

There are several problems with the “study.” First, improving air quality has already been accomplished in cities like New York, where fossil fuels are still consumed in huge quantities, but few people now die because of air pollution. Second, the study doesnt mention that cutting fossil fuel use will either be enormously expensive or force people to use much less energy, both of which have serious health consequences. Moreover, reducing fossil fuel use is by far the most expensive way to reduce air pollution.

Third, it is highly doubtful that more people die from air pollution than from traffic accidents in all but a few big cities in developing countries. And in most of those cities, the worst air pollution comes from things like using charcoal or cow dung for cooking. Using more fossil fuels in those cities could cut air pollution.

Fourth, the study implies that all greenhouse gases are pollutants. This last point was picked up by Paul Recers story for the Associated Press (August 16, 2001). Recer, whose title is given in the byline as AP Science Writer, lists carbon dioxide as one of the pollutants causing people to die prematurely.

Climate Scientists Meet in Halifax

More than eighty atmospheric scientists are attending the first “International Conference on Global Warming and the Next Ice Age” at Dalhousie University in Halifax, Nova Scotia, Canada this week. Sponsored by the Canadian Meteorological and Oceanographic Society and the American Meteorological Society, the conference is one of the few to bring together large numbers of scientific supporters and skeptics of global warming alarmism for debate and discussion.

The Halifax Chronicle-Herald reported (August 22, 2001) that Dr. Petr Chylek, professor of atmospheric science at Dalhousie, “organized the conference so that theories on climate change other than conventional thoughts about global warming could be discussed.” Dr. Chylek decided to hold the event after reading a newspaper story that cited scientific research claiming that the Greenland glaciers were melting because of global warming, whereas his own research showed that earlier temperature increases had not led to melting.

Dr. Chylek further explained that many of his peers believe that natural factors such as solar radiation and variation in climate patterns are contributing to global warming. He asserted, “Scientists who want to attract attention to themselves, who want to attract great funding to themselves, have to find a way to scare the publicand this you can achieve only by making things bigger and more dangerous than they really are.”

Dr. Greg Holloway, professor of oceanography at the Institute of Ocean Studies in British Columbia, pointed out that many past periods of dramatic climate change such as the ice ages occurred without significant human influence. “Everybodys ready for more evidence of global warming and not as ready for the scientific balance which is what you are receiving here.”

Etc.

  • The Skeptical Environmentalist: Measuring the Real State of the World by Bjorn Lomborg was published in Britain on August 15 by Cambridge University Press. CUPs American edition is due on September 15. Lomborg, who is a professor of statistics at Aarhus University in Denmark, re-examines many of the controversial environmental claims originally made by Julian Simon and concludes that Simon got most things rights. Lomborg backs up his own conclusions with a huge amount of documentation.

Considering the amount of environmental heresy the book contains, it is astonishing how favorable the press reaction has been. The Economist (August 4, 2001) and the New York Times (August 7, 2001) ran long, flattering pieces on Lomborg and his book, which expands and updates the 1998 Danish version. The ever-so-politically-correct Guardian in London ran a three-part series by Lomborg.

The books longest chapter is devoted to global warming. Although Lomborg accepts the IPCCs assessment reports, his conclusions are more in line with the Cooler Heads Coalition.

Here is just one sample: “Is it not curious, then, that the typical reporting on global warming tells us all the bad things that could happen from CO2 emissions, but few or none of the bad things that could come from overly zealous regulation of such emissions? And this is not just a question of the medias penchant for bad news, as discussed in chapter 2, because both could make excellent bad news.”

Bush Team Developing Kyoto Alternatives

The Bush Administration is in the process of developing domestic alternatives to the Kyoto Protocol to present to UN climate negotiators at their November meeting in Marrakech, according to the Wall Street Journal (August 20, 2001).

The article by Jeanne Cummings reports that President Bushs proposals will involve a number of domestic initiatives, including additional funding for research on the causes of global climate change, for technologies to sequester carbon dioxide, and to study the regional impact of global warming.

Bushs adoption of a domestic plan is viewed by many as a response to criticism he has received from Senate Majority Leader Tom Daschle (D, SD) and House Democratic leader Richard Gephart (D, MO). In a recent speech at the Woodrow Wilson International Center for Scholars, Daschle addressed Bushs refusal to negotiate at the UNs recent climate talks in Bonn: “Instead of asserting our leadership, we are abdicating it. Instead of shaping international agreements to serve our interests, we have removed ourselves from a position to shape them at all.”

White House Chief of Staff Andrew Card said recently on NBC’s Meet the Press: “I’m optimistic that we’ll have initiatives that we can go to Marrakesh and talk about with the world leaders that will show that we’re serious about solving the problem [and] that the Kyoto solution is really not a solution at all.”

President Bush has a cabinet-level task force working on the global warming issue. The task force, which met the week before Congress went on recess and included Sen. Chuck Hagel (R, Neb.) and Rep. Billy Tauzin (R, La.), gave the President positive feedback on his domestic alternatives, Card said.

Japan and U. S. will Talk

The governments of Japan and the United States have agreed to hold ministerial talks on the Kyoto Protocol in late September. According to Yomiuri Shimbun (August 6, 2001), the Japanese delegation will try to persuade the U. S. either to rejoin the protocol or to present an alternative international agreement at COP-7 in Marrakesh beginning on October 28.

CNN reported on August 9 that Japanese officials are now leaning toward ratifying Kyoto with or without U. S. participation. The Japanese government has wavered over what to do ever since the Bush administration walked away from Kyoto in March.

According to CNN, a Japanese Foreign Ministry official said that, “It isnt the United States we are concerned about. [The problem] is the details of the treaty, which have not been decided.” Another official added, “We have to know what we will be ratifying, and we were unable to draw out such details at Bonn.”

Claims of Chinese Emissions Cuts are Disputed

A new pair of studies challenges the Chinese governments claim of significant reductions in greenhouse gas emissions. In an August 15 story in the Washington Post, John Pomfret reports that a study funded by the World Bank questions the Chinese governments statistics asserting that Chinese coal consumption fell during 1999.

In addition, the U.S. Embassy in Beijing stated according to the Post that the Chinese government lied about the number of coal mines it shut down and about the speed with which it replaced coal with gas-based and hydroelectric power over the last five years.

This news casts doubts on a pair of reports claiming China has made progress in cutting carbon dioxide emissions. The Lawrence Berkeley National Laboratory stated in April that since 1996, Chinas energy output fell 17 percent and its carbon dioxide emissions fell 14 percent. The European Unions office in Beijing reported that China increased its energy efficiency and reduced its coal consumption by 30 percent over the same period.

These conclusions, promoted in a press release/report by the Natural Resources Defense Council, were cited by Erik Eckholm in a front-page New York Times story on June 15. We love to say it: We told you so. In the June 27 edition of Cooler Heads, David Wojick of Electricity Daily pointed out that, “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.” The U.S. Embassys report supports Wojicks conclusion stating that Chinese greenhouse gas emissions have dropped “little, if at all.”

The Chinese government confirmed that its estimates regarding coal reductions may have been too high. Zhou Dadi, director of the Energy Research Institute and the governments State Development Planning Commission, said that the United States Embassy is right to question their numbers, but that “we are clearly decreasing our coal consumption.”

United Kingdom Adopts Internal Cap-and-Trade Scheme

On August 14, the United Kingdoms Department for Environment, Food, and Rural Affairs (http://www.defra.gov.uk/) announced the adoption of a “voluntary” greenhouse gas emissions trading scheme to take effect in April of 2002. The programs goal is to cut carbon dioxide emissions by two million tons per year by 2010. Although participation in the program is described as voluntary, companies that join but fail to achieved their promised reductions will face economic sanctions.

Firms that join must either pledge to make cuts or purchase emissions allowances from other companies. The actual emissions trading scheme is scheduled to take effect in 2005.

The UK government has pledged to provide up to 215 million in subsidies over the next five years to companies that participate. Companies that fail to meet their reduction targets will be forced to forfeit their subsidies and face more stringent targets in subsequent years.

United Kingdoms Environmental Minister Michael Meacher stated, “The UK climate change program could cut greenhouse gas emissions to 23 percent below 1990 levels by 2010. I expect our scheme to make a significant contribution and at the same time benefit both business and the environment by stimulating and financially rewarding innovation and investment.”

In a related move, the Department for Environment, Food, and Rural Affairs adopted a new set of energy efficiency standards for British electricity and gas suppliers on August 17. Its new program, entitled the Energy Efficiency Commitment, will require energy suppliers to reduce energy consumption by a target amount of 64 terrawatt hours. The program is expected to cut carbon dioxide emissions by about 0.4 million tons per year.

The department has also mandated that energy suppliers ensure that at least one half of energy savings are achieved by reducing fuel consumption among poor households. It expects the program will save the average consumer 10 per year on gas and electricity.

The Energy Information Administration (EIA) recently released a new study entitled “Strategies for Reducing Multiple Emissions from Electric Power Plants.” This study measures the costs of imposing simultaneous caps on power plant emissions of nitrogen oxides (NOx), sulfur dioxide (SO2), mercury (Hg), and carbon dioxide (CO2).

This new report by EIA follows up its December 2000 study on the projected costs of a three pollutant approach. It also sheds light on the prospective costs of recent legislative proposals, including H.R. 1335 (the Clean Power Act of 2001) and S. 1131 (the Clean Power Plant and Modernization Act of 2001) which advocate a four pollutant approach.

In the report, EIA points out that over the next 20 years NOx emissions are expected to rise slowly, SO2 emissions are expected to remain at year 2000 levels, and CO2 emissions are expected to increase steadily. The agency explains that, due to expanding electricity demand, a growing dependency on natural gas and the construction of a small number of new coal-fired power plants will cause CO2 emissions to rise.

The agency states that the effects of capping CO2 emissions at 1990 levels or at 7% below 1990 levels will force people to pay higher prices for electricity. Specifically, the report says “Electricity prices are projected to be much higher when CO2 emissions are capped than when NOx, SO2, or Hg emissions are capped43 percent higher in 2010 and 38 percent higher in 2020 than projected in the reference case. Consumers are expected to reduce their electricity consumption by 8 percent in 2010 and 12 percent in 2020 when faced with higher electricity prices.”

In addition, the agency explains that electricity prices could be substantially higher if natural gas prices turn out to be higher than projected. If CO2 caps are imposed, both domestic production and imports of natural gas must grow to meet electricity demands. Specifically, production of 0.8 trillion cubic feet from domestic sources and 2.3 trillion cubic feet from imports must be added over the next 20 years to meet the increased demand. This would require domestic natural gas producers to achieve record levels of output from 2005-2010 and would represent a serious challenge for the industry.

Therefore, the adoption of a four-pollutant approach would introduce serious uncertainty into Americas energy infrastructure. As unexpected fluctuations in natural gas prices contributed to the California electricity crisis, uncertainty in markets for coal, natural gas, and renewables could cause unanticipated problems for consumers. As the report states: “History does not offer clear guidance as to how the various markets might respond to changes as large as those required by the proposed emissions targets.”

In conclusion, a four pollutant approach to reducing power plant emissions would introduce tremendous uncertainty into the viability of American electricity markets. Dropping CO2 from the program would do a great deal to strip away some of this uncertainty and ensure that consumers can obtain the electricity they demand during the 21st century.