Politics

Wallstrom replaced as EU Environment Commissioner

by William Yeatman on August 17, 2004

in Politics

Margot Wallstrom of Sweden has been promoted in the new European Union Commission to head the commissions communications efforts.  She has been replaced as Environment Commissioner by Stavros Dimas of Greece. 


Dimas, from the Greek conservative party New Democracy, is believed to be less personally committed to environmentalism than Wallstrom.  Recent months had seen Wallstrom argue publicly with Energy Commissioner Loyola de Palacio of Spain over the economic effects of the Kyoto Protocol.


Dimas appointment has already worried some in Europes powerful green movement.  Under the headline, All hope is lost, the Guardians environment correspondent John Vidal wrote (Aug. 18):


 If the European Commission really wanted to signal that it didn’t give a monkey’s [British slang for couldnt care less] about the environment then it would probably choose as its new environment commissioner an old, rightwing free-marketeer lawyer who used to work for the World Bank and had responsibility for Africa in the bad old 1970s.  Impossible?  Not in the slightest.  Welcome Stavros Dimas, 62, Greek economist, Wall Street banker, and conservative lawyer.  The fragile hopes of Europe‘s mountains, rivers, climate and forests rest on you.

AGs’ lawsuit strongly criticized

by William Yeatman on August 17, 2004

in Politics

Washington Post columnist Robert Samuelson strongly criticized the lawsuit recently launched by eight state Attorneys General against several electricity generators for creating a public nuisance by contributing to global warming (Aug. 11).


Samuelson concluded his argument, It’s easy to be against global warming but not easy to be for the things that might control it.  Barring some magical technological breakthrough, lowering U.S. emissions would require some or all of the following: tougher regulation or higher gasoline prices to force drivers into smaller and more fuel-efficient vehicles; restrictions on coal-burning power plants; encouragement of nuclear power; expansion of drilling for natural gas and more imports of liquefied natural gas; and regulations or tax penalties to discourage large homes.


No judge should try to impose new policies. These issues belong in the political arena, not the courts.  But even if the United States embraced tough anti-global warming policiesand other industrial countries did the samethe effect would be offset unless developing countries joined.  The Intergovernmental Panel on Climate Change has projected that greenhouse emissions will more than triple over the next century under business as usual assumptions.  Virtually all the increase occurs in developing countries.


Spitzer and his allies can’t change any of this. Their suit mainly allows them to advertise themselves to people who don’t know better. Here’s Connecticut Attorney General Richard Blumenthal sounding off:


Our lawsuit is a huge, historic first step toward holding companies accountable for these pernicious pollutants that threaten our health, economy, environment, and quality of life now and increasingly in the future.  The eventual effects . . . [will be] increasing asthma and heat-related illnesses, eroding shorelines, floods and other natural disasters, loss of forests and other precious resources.


Actually, this contains considerable distortion. In truth, no one knows how much the world will warm, exactly when or with what consequences.  Any self-respecting judge will dismiss this suitand do more. Because the only point is political self-promotion, the judge ought to require the attorneys general to pay court costs and defendants’ costs from their own pockets. There’s a name for what the attorneys general are making of themselves: a public nuisance.

International atomic agency regrets lack of progress on Kyoto

by William Yeatman on August 17, 2004

in Kyoto Negotiations, Politics

In a press release issued August 10 assessing the state of nuclear power worldwide, the International Atomic Energy Agency regretted the lack of progress on Kyoto.


The relevant section reads, From the viewpoint of the IAEA, no progress was made in 2003 on the Kyoto Protocol, which would help make nuclear powers avoidance of greenhouse gas emissions valuable to investors.  The next round of talks on energy and sustainable development is scheduled for the 13th session of the United Nations Commission on Sustainable Development in 20062007.


A large increase in the supply of energy will be required in coming decades to power economic development, the IAEA recognizes, projecting that to the year 2030 the part nuclear power will play in the global energy supply will first grow and then decrease.


The agency estimates a 20 percent increase in global nuclear generation until the end of 2020, followed by a decrease, resulting in global nuclear generation in 2030 that will be only 12 percent higher than in 2002.  Nuclear powers share of global electricity generation is projected at 12 percent in 2030, compared with 16 percent in 2002, the IAEA said.


The agency expressed concern that the nuclear expertise that exists today might not be passed on to the next generation of scientists and engineers, now that the rapid nuclear expansion of the 1970s and 1980s has leveled off.

Climate alarmist alert! New Princeton study warns of doom, promises the moon

by William Yeatman on August 12, 2004

in Politics

Washington, D.C. According to a new study appearing in the August 13 issue of the journal Science, We already have the technology we need to take the world off the path toward dramatic climate change. But a cursory glance at the advance summary reveals that the study, conducted by Princeton Environmental Institutes Carbon Mitigation Initiative (CMI), is completely out of touch with economic, political, and environmental reality.


 


The forthcoming study claims that each of 15 recommended strategies could eliminate up to 1 billion tons annually of carbon emissions by 2054, though by not considering their costs the authors make their recommendations useless as public policy proposals. The study basically says that if you coerce everybody to use a lot less energy and dont care about the cost, you can significantly reduce emissions, said Competitive Enterprise Institute Senior Fellow Marlo Lewis. We needed Princeton University to tell us that?


 


CMIs Strategy 1 is to double the fuel efficiency of 2 billion cars from 30 to 60 mpg. However, the average passenger car in the U.S. got 21.4 mpg in 1999, and the average light truck 17.1 mpg, so CMI is really proposing to triple fuel economy. Dont they know how politically difficult it is to mandate even small mpg increases? Their proposal would either eliminate todays most popular vehiclesSUVs, pickups, and large sedansor price them out of reach of working families, said Lewis.


 


CMIs Strategy 2 is to decrease the number of car miles traveled by half. But the U.S. population could easily increase by half or more by 2054. This strategy is tantamount to rationing carscommuters and soccer moms should just love it.


 


CMI Strategy 5 is to replace 1,400 coal electric plants with natural gas-powered facilities. But America is already facing a multi-billion dollar natural gas supply crunch. This strategy would wreak havoc upon consumer electricity bills.


 


CMI Strategy 9 is to add double the current global nuclear capacity to replace coal-based electricity. This proposal should go over big with the no-nukes environmental establishment.


 


CMI Strategy 10 is to increase wind capacity by 50 times relative to today, for a total of 2 million large windmills. The word boondoggle was invented for just such proposals, and in case CMI has not heard, theres a growing grassroots backlash against wind farms.


 


CMI Strategy 13 is to increase ethanol production 50 times by creating biomass plantations with an area equal to 1/6th of world cropland. This strategy is a prescription for decimating millions of acres of forest and other wildlife habitat. I thought environmentalists liked trees and wildlife, but I guess these days anyone can qualify as long as they embrace the Kyoto agenda of climate alarmism and energy rationing.


 


 









Energy Expert Available for Interviews


Marlo Lewis


Senior Fellow


202-669-6693 mobile


marlolewis@adelphia.net

Recently seen in: The Wall Street Journal, Gannett News, Roll Call, & International Environment Daily, among others.


 


CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government.  For more information about CEI, please visit our website at www.cei.org

Great Britain at sea over global warming programs

by William Yeatman on August 3, 2004

in Politics

A new report from Cambridge Econometrics finds that, “The [British] governments 20 percent domestic carbon-reduction goal is likely to be missed by a large margin” (Bloomberg News, July 30). The forecasters suggest that emissions will only be 12.3 percent down on 1990 levels. Emissions from power generation will drop by 5.5 percent, but emissions from domestic and transportation sources will rise.

The study also found that United Kingdom participation in the controversial European Union emissions-trading plan alone won’t be enough to cut British emissions to the government target, although it did conclude that the UK is “expected easily to meet its target under the Kyoto Protocol” (to reduce emissions by 12.5 percent by 2012 from 1990 levels).

Cambridge Econometrics also concluded that emissions from road transport will rise by 14 percent by 2010 from 1990 levels.

In related news, the Guardian reported (July 29) that the UK government is to, “press on with plans to build 120,000 homes in the Thames Gateway flood plain despite accepting the increased chance of flooding disasters due to global warming.” The announcement said that, “New homes on floodplains would have to be sited and designed to ensure that they were flood resilient.”

This action, placing current needs over future worries, may reflect the current state of public opinion in the UK. A BBC poll (taken in mid-July to coincide with a series of BBC television programs pushing the alarmist case on global warming) found that climate change finished at the bottom of a list of seven “important issues” facing the UK, below even immigration. Of the respondents, 53 percent thought Britain would be affected “only a little” or “not at all” by climate change. Finally, while most respondents said that they would be willing to change their lifestyles to combat global warming, only low-cost options were popular. A mere 37 percent would be willing to pay more for gasoline.

CCSP to look at satellite/surface temperature disparity

by William Yeatman on August 3, 2004

in Politics, Science

The Bush Administrations Climate Change Science Program is beginning the first of 21 major climate assessments despite a fiscal crunch. The first assessment addresses the long-running debate over whether discrepancies exist between warming rates at the Earths surface and readings taken from the middle troposphere, where most weather occurs.

The apparent difference between the rate of warming at the Earth’s surface and the middle layer of the atmosphere has proven to be one of the most enduring issues of contention in climate change science. Computer models used to simulate climate conditions predict faster warming in the mid-troposphere than on the ground, while observations taken from satellites and weather balloons have contradicted those predictions by showing that the surface has warmed at least twice as fast as the atmosphere since 1980. This disparity has led many to criticize computer model results, which are the bedrock of climate change projections, as unreliable.

Critics of the new study question its value. “The big challenge is, are they going to say anything different than the academy concluded a couple of years ago?” asked Anthony Janetos of the H. John Heinz III Center for Science, Economics, and the Environment, referring to a 2000 National Research Council study on the temperature data that concluded that both surface and satellite data sets were accurate, but did not account for the disparity.

The study does have supporters, such as John Christy of the University of Alabama at Huntsville, who along with colleague Roy Spencer developed the satellite temperature dataset. Christy believes the CCSP research is essential to take into account the peer-reviewed studies that have been published in the past two to three years. “An update at a minimum is what’s needed on this issue,” Christy said.

The study will be completed despite the tight monetary crunch the CCSP must deal with. Janetos believes “the prospects for a lot of new funding are really quite dim.” This is largely because the Bush Administration’s fiscal year 2005 budget request for the National Oceanic and Atmospheric Administration would eliminate the government’s abrupt climate change research program as well as cut its paleoclimatology laboratory by half, potentially compromising the agency’s ability to conduct climate research (Greenwire, July 28).

Kerry campaign issues energy plan

by William Yeatman on August 3, 2004

in Politics

The presidential campaign of Senator John Kerry (D-Mass.) released a fourteen-page energy policy paper on August 2 that emphasizes reducing Americas dependence on foreign oil. “An Energy Independent America” argues that, “Dependence on foreign oil is a security problem because it forces us to rely on volatile regions ruled by some of the world’s most authoritarian regimes. We believe a strong America must no longer rely on the cooperation of regimes that may not share our values, and we are not willing to risk a future in which our young men and women might have to risk their lives to protect Mideast oil supplies.”

Energy independence has been a favorite rallying cry across the political spectrum for some years, but ignores the fact that crude oil is a global commodity and therefore prices are set in a global market.

The Kerry campaign plan also calls for $10 billion in taxpayer funding for clean coal technology research and the use of “flexible, market-based strategies” to lower nitrogen oxides (NOx), sulfur dioxide (SOx), carbon dioxide (CO2), and mercury emissions from such facilities. “Flexible, market-based strategies” would appear to mean that Kerry supports cap-and-trade programs for carbon dioxide emissions and the various air pollutants. Senator Kerry voted for the Lieberman-McCain Climate Stewardship Act on October 30, 2003, which would have put a cap on CO2 emissions.

The proposal also states that as President Kerry would “update and strengthen” fuel-efficiency standards and provide incentives for automakers to build more efficient automobiles and for consumers to purchase these automobiles. This appears to be a retreat from Kerrys earlier call to increase corporate average fuel efficiency (CAFE) standards to 36 miles per gallon from the current 27.5 mpg by 2015. Such a requirement would place many drivers lives in danger as automakers would be forced to produce smaller, lighter vehicles.

The plan re-iterates Kerrys goal of a 20 percent renewable portfolio standard by 2020 for electric utilities and an expansion of the production tax credit for wind and biomass energy sources (Greenwire, Aug. 3).

On the campaign trail in West Virginia, Senator John Edwards (D-N. C.), Kerrys vice presidential running mate, emphasized the Democratic tickets support for coal. “For us, coal is an enormous part of our energy strategy for America. We need to be investing in clean coal technology, which is not happening now. We want to make sure people who work in coal now keep their jobs (Wheeling News Register, Aug. 1). The Bush campaign suggested that Kerrys “rhetoric doesnt match his actions.”

UN considering global carbon tax

by William Yeatman on August 3, 2004

in Politics

The United Nations is studying proposals for global taxes as a means to generate sources of financing for development in poor countries. The proposals being considered include a carbon tax on fuel use, a tax on currency transactions (the Tobin tax), an arms sales tax, a global lottery, and a tax on international airline travel.

U. N. Under Secretary-General Jose Antonio Ocampo, head of the department of economic and social affairs (DESA), believes the study will be ready by this September. He recognized that, “Some key countries are very strongly opposed to these proposed global taxes [but] a number of developing countries are giving them careful consideration.”

France and Germany, backed by Chile and U. N. Secretary-General Kofi Annan, signed a declaration in January re-launching the concept of taxing arms sales and financial transactions to boost funding for global development efforts in combating poverty and hunger. The declaration also supported the United Kingdoms proposal to “frontload” development aid through capital markets via an International Finance Facility (IFF).

The European Union is divided on the establishment of an IFF, with EU Commissioner Poul Nielsen stating at UNCTAD XI in June 2004 that, “A sleight of hand with the rules of public finance – that mortgages future aid programmes – is no substitute for the hard political task of securing and sustaining the will to provide increased aid, now and for many years to come. This leads me to say that the IFF is really not the right way to go. Fighting global poverty is not something we should leave to be paid for by our children and grandchildren.” (www.ipsnews.net, Aug. 2).

Alarmist Canadian Minister fired

by William Yeatman on August 3, 2004

in Politics

Following his narrow victory in the Canadian general election, Prime Minister Paul Martin has fired global warming alarmist Environment Minister David Anderson from his cabinet.

Mr. Anderson reacted angrily to his rejection. The Vancouver Sun reported (July 30), “The Victoria MP said he believes Mr. Martin’s advisers gave in to demands from the National Post, the Calgary Herald, the Alberta government, and pro-business lobby groups that all wanted him fired from cabinet.”

Terence Corcoran, editor-in-chief of the Financial Post, reacted, “The National Post and the Financial Post have certainly published many columns and commentaries on Mr. Anderson’s global warming crusade, but to imagine that our newspaper also somehow joined a backroom cabal to apply pressure on Mr. Martin to dump Mr. Anderson is sheer fantasy.”

Mr. Anderson has said that he will now work with the left-wing New Democratic Party on certain environmental causes. The new environment minister is Stphane Dion, M.P., a former senior research fellow at the Brookings Institution in Washington, D.C.

Guess your liability!

by William Yeatman on August 2, 2004

in Politics, Small business

In these days of corporate scandal, who can argue against full disclosure on financial statements?  But now comes one cockeyed movement that pushes the concept to extremes.  It would require executives to guess potential liabilities from environmental and social problems that just might affect their companies, and list them on balance sheets.

 I can envision, for instance, that an oil company like Royal Dutch/Shell, as supplier of fuels that supposedly contribute to global warming, would have to report the potential environmental liabilities.  How much?  A ready estimate can be derived from the movie The Day After Tomorrow.  As the film ends, half the U.S. population lies frozen beneath a gigantic ice sheet.  So lets say $100 billion.  Or maybe $10 trillion is a better number.

 See how ludicrous this gets?  Remarkably, this movement is drawing support from Wall Street.  In June Goldman Sachs and Morgan Stanley endorsed a report of the United Nations Global Compact that calls upon regulators to require a minimum degree of disclosure and accountability on environmental, social and governance issues from companies, as this will support financial analysis.

 The Rockefeller Family Fund, the Turner Foundation and the United Steelworkers have also signed on to the balance-sheet responsibility movement. California Treasurer Phil Angelides wants his states public pension funds to push for accurate corporate environmental accounting.  The Rose Foundation for Communities & the Environment, in Oakland, Calif., has already asked the SEC to mandate disclosure of financially significant environmental liabilities.  These activists arent trying to improve the reliability of Moodys bond ratings.  They are out to influence corporate behavior.

 Yes, environmental and social liabilities can be hugewitness Superfund, asbestos and breast-implant costs.  In todays world of strict, joint and several liability, where almost anyone can be assigned fiscal responsibility for almost anything, conservative accounting would seem to require the disclosure of all the future damage that could be done by tort lawyers, The problem is coming up with a number.

 A federal judge in California just gave a green light to a class action on behalf of 1.6 million women who worked at Wal-Mart anytime since December 1998.  The plaintiffs accuse the retailer of denying women equal pay and opportunities for promotion.  Should Wal-Mart have anticipated this suit?  Should its 2004 balance sheet have included a liability of, say, $104 million (the amount Home Depot paid in 1997 to settle similar suits) or maybe $176 million (what Texaco agreed to pay out in 1996 to settle a race-discrimination class action)?  Wal-Marts bigger, though.  How about a few billion dollars?

 Note that American and United Airlines, Boeing and the owners of the World Trade Center are all being sued (by families who opted out of the September 11th Victim Compensation Fund) for failing to take measures to prevent the attacks.  Maybe juries will size up damages in the billions.  Should AMR, UAL, and Boeing be listing massive conditional liabilities on their quarterly reports?

 There are an infinite number of possible futures and thus an infinite number of possible asset/liability estimates.  Which of the myriad low-probability (but possibly high-cost) risks should be incorporated on companies balance sheets?  At what point does the noise introduced by adding more and more low-accuracy valuations destroy the informational value of accounting itself?  In mandating the disclosure of information about less-likely risks, dont we run the risk of omitting information about more-likely risks?

 Assets and liabilities that cant be connected to historical transactions or tradable contracts have no assignable market value.  Goodwill is like that.  If it isnt from an arms-length acquisition, the number you might put on this asset is entirely arbitrary.  So investors are better off if the asset is not counted.  So, too, for liabilities that are to be plucked from the air.  Accounting is not a field in which we want to encourage fanciful thinking.

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