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‘Reconstructing Climate Policy: Beyond Kyoto’ (AEI: 2003) Revisited

Reconstructing Climate Policy: Beyond Kyoto By Richard B. Stewart and Jonathan B. Wiener 193 pp., Washington, D.C.: American Enterprise Institute Press, 2003. This review was published in Regulation magazine (Cato Institute). MasterResource revisits Mr. Singer’s book review and asks: how does it read today?

What is it about academic economists that makes them salivate like Pavlovian dogs whenever they hear the magic words “market solution”? Sure, market-based solutions are always more efficient and less liable to be politically influenced than those based on command-and-control. But before we apply solutions, should we not first ask if there is a problem that needs to be solved?

And so it is with this book. The authors confidently assert the existence of a future climate problem more or less on faith, but they also see many difficulties with the 1997 Kyoto Protocol that is supposed to reduce emissions of greenhouse gases. So they propose a clever alternative to Kyoto — yet another solution to a non-problem.

They visualize a U.S.-China bilateral deal to limit emissions (mainly of carbon dioxide from fossil-fuel burning) that would operate in parallel with the Kyoto Protocol (which neither country plans to ratify). In their plan, the United States buys emission rights from an arbitrary excess quota allotted to China. The authors call it “headroom” but I call it a subsidy. The United States pays, China gets, and the atmosphere does not benefit because emissions continue essentially unabated.

Eventually and somehow, this U.S.-China deal is supposed to merge with Kyoto. Every nation in the world would then actually limit its emissions, and thereby save the climate, humanity, and Lord knows what else. What a pious hope!

Gentlemen’s Agreement

What else is wrong with the Stewart-Wiener scheme? Plenty, although it may be no worse than another dozen or so clever schemes thought up by other lawyers, economists, and policy analysts that are duly referenced in this volume but never critically discussed. Is there some kind of gentlemen’s agreement here?

All emission trading depends on having a “cap” – whether sectorial, national, regional, or global. Then, as emissions rise with population growth and economic prosperity, this kind of rationing creates a scarcity and imparts increasing value to emission permits.

The Pew Center keeps coming up with emission-trading schemes, and so do any number of academics in the United States and Europe. Resources for the Future published a cap-and-trade scheme with “soft” caps: whenever the price of permits becomes too high, the cap is relaxed and — Presto! — the price moderates.

In other words, the regulatory body can arbitrarily limit the value of the permits. And with political price control in place, why would anyone buy such permits?

Solution Without a Problem?

But enough of belittling esoteric schemes cooked up by would-be energy planners. Do we need to limit the emission of greenhouse gases at all?

First, there may not be a global warming problem. The climate history of the past century does not seem to be consistent with the greenhouse theory, throwing doubt on the predictions of appreciable future warming. And even if the climate were to warm, the consequences are more likely to be beneficial.

With the estimated cost of the Kyoto Protocol ranging from high to huge to ruinous (depending on the analyst), the cost-benefit analysis becomes pretty simple.

In any case, it is agreed by all that the Kyoto Protocol — even if punctiliously obeyed by all adherent (industrialized) nations — would have a negligible effect on reducing future warming. The reduction in calculated temperature by 2050 is only 0.02 C. If the United States were to participate, the reduction would rise to 0.05 C, which is also essentially unmeasurable. And of course, if adhering nations buy emission rights instead of reducing emissions, there would be no effect at all on the atmosphere and temperatures. Zilch.

Even supporters agree that the Kyoto Protocol is only a “first step” and that much more drastic reductions are required by all nations, developed and developing, to keep greenhouse gas levels from rising much further. A 60 to 80 percent cut is required instead of the five percent called for by Kyoto. (I could not find any reference to those facts in the book.)

Finally, it is not even clear that we should be reducing the accumulation of carbon dioxide in the atmosphere. It is not a pollutant and does not produce any adverse physiological effects. On the contrary, it is basic plant food and makes crops and forests grow faster with less water. (The American Enterprise Institute, publisher of the Stewart-Wiener book, earlier issued a study by Yale economist Robert Mendelsohn that documents the benefits of a warmer climate.)

So why reduce carbon dioxide levels? What does the Climate Treaty itself have to say? The 1992 Framework Convention on Climate Change (FCCC) is strangely uninformed about this question. Article 2 of the FCCC states only that “the ultimate objective is to achieve stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.”

The concern here seems to be with the stability of the climate against sudden and possibly irreversible changes. But the FCCC gives no indication what the greenhouse gas level should be, or even whether it should be lower or higher than the present level. Empirically, we do know that the climate underwent many abrupt changes during the recent ice age and has been relatively stable during the Holocene (the warm interglacial period of the last 10,000 years). I have argued, in a Hoover Institution essay and elsewhere, that the FCCC (properly interpreted) actually favors a warmer climate and therefore higher carbon dioxide levels.

All of the foregoing suggests that the Kyoto Protocol is not only ineffective but also counterproductive. Nevertheless, diplomats and technical experts from 180 nations have been meeting endlessly for the past decade to argue about minutiae like the specifications of “sinks” for carbon dioxide and, of course, about the desirability and procedures of “emission trading.”

Convergence

A historical footnote is in order here. We need to remember the mind-set of the Clinton/Gore White House that engineered adoption of the Kyoto Protocol in 1997. Recall, for example, Under Secretary of State Timothy Wirth repeating Gore’s claim that “the science is settled” on global warming. And former Secretary of State Warren Christopher, in a speech at Stanford University in 1996, announcing that global warming was the single most important threat facing the United States in the 21stcentury.

Clinton/Gore never submitted the Kyoto Protocol to the Senate for ratification. (They were well aware that the Senate’s Byrd-Hagel resolution against any Kyoto-like protocol had just passed unanimously in July 1997.) But they tried to make ratification more palatable by proposing unlimited emission trading that would have allowed the United States to continue more or less in a business-as-usual fashion while buying surplus emission permits from Russia. This fudge was, of course, opposed by Greens and by many Europeans who wanted to see the United States undertake actual emission cuts and feel the consequent economic pain.

The whole matter came to a head at the sixth Conference of the Parties (to the Kyoto Protocol) in The Hague in November of 2000. But as the U.S. position softened and the United Kingdom, true believers in the Kyoto process, tried to broker a deal, the position of “Old Europe” hardened. French President Jacques Chirac, in particular, took a radical stance, telling delegates, “France proposes that we set as our ultimate objective the convergence of per-capita emissions.”

Convergence is based on the idea that everyone in the world should have the right to emit carbon in equal amounts — so requiring a vast decrease in the amount emitted by industrialized nations and a massive increase in the amount emitted by the Third World. Chirac admitted that Kyoto therefore represented “the first component of an authentic global governance.”

French intransigence killed the UK-brokered deal to allow progress on Kyoto. British Deputy Prime Minister John Prescott blamed continental European politicians in no uncertain terms: European ministers should have taken a chance and made the change, he said. “That’s what I decided to do and everyone was with us until we got into those Euro-ministers and they split.” He was especially critical and even insulting to the French environment minister.

The irony of it all is that the Europeans made all those concessions to Russia and Japan at the 2001 Conference of the Parties in Marrakesh, hoping to induce them to ratify Kyoto. Japan did so, but Russia continued to hold out. By then it was too late to get the United States aboard; George W. Bush had been elected president on a platform that included opposition to the ratification of the Kyoto Protocol, which he pronounced as “fatally flawed.” In September of 2003, Russia refused to ratify, with President Putin terming the Protocol “scientifically flawed,” an even more accurate description. And without the US or Russia, Kyoto cannot reach the magic 55 percent threshold needed to go into effect.

Social Engineering

We have now come full circle. The Stewart-Wiener scheme is really a variant of the concept of convergence. And as is well recognized, the concept depends crucially on whether it sets a national quota or a per-capita quota for rapidly developing nations, where population policies are often enforced by their governments. The authors do not spell out the political and social consequences of the two alternatives, nor do they specify the choice of carbon-dioxide limits or the political path for making that choice. It does not require much imagination to recognize the risks inherent in giving authoritarian governments the incentive to control their populations’ fertility and access to energy. We are no longer talking about climate policy, but about international social engineering.

——————-

S. Fred Singer is professor emeritus of environmental sciences at the University of Virginia and president of the non-profit Science & Environmental Policy Project in Arlington, Va. He is the author of Hot Talk, Cold Science: Global Warming’s Unfinished Debate (Oakland, Calif.: The Independent Institute, 1999). Singer can be contacted by e-mail at singer@sepp.org.

8 comments

1 Mr November { 01.11.12 at 6:16 am }

“First, there may not be a global warming problem. The climate history of the past century does not seem to be consistent with the greenhouse theory, throwing doubt on the predictions of appreciable future warming. And even if the climate were to warm, the consequences are more likely to be beneficial.”

Utter nonsense. We’re already seeing the results of global warming, and it’s not a net positive:

http://www.skepticalscience.com/global-warming-positives-negatives.htm

And how is an ever warmer global climate given ever more GHG emissions in any way inconsistent with greenhouse theory? That’s greenhouse theory distilled. And make no mistake, every metric for climate is pointing to an increase in temperature. More graphs:

http://www.skepticalscience.com/big-picture-global-warming.html

“But the FCCC gives no indication what the greenhouse gas level should be, or even whether it should be lower or higher than the present level.”

The point of the FCCC was to get everyone on the same page to set the stage for the process which led to Kyoto. Thus, it’s not surprising that it doesn’t provide a number. The number (CO2 concentration, presumably) wasn’t even really known twenty years ago. We now have 20 more years of science to draw from, with all reputable climate scientists agreeing on “lower” and most agreeing on “350 ppm CO2 to prevent the worst results.”

2 Lionell Griffith { 01.11.12 at 7:54 am }

A market is a free people freely exchanging values to mutual advantage. The so called “market solution” has the exchange of value for something having no value all to be manipulated by the whim and gun of Government. This is NOT a market precisely because of the lack of freedom and the lack of mutual advantage for the parties involved . The exchange would not occur without the gun of Government forcing it to happen.

A name does not make the thing. A thing is what it is.

3 fsinger { 01.11.12 at 8:16 am }

My book review in Regulation drew the expected angry response from the authors. On reflection, nearly a decade later, I would not change a word. While CO2 has been increasing more rapidly (thanks to China), global temperatures have not.

4 Ed Reid { 01.11.12 at 9:56 am }

Arguably, China’s current approach to CO2 emissions is also a “variant on the concept of convergence”, in which China’s per capita emissions converge with US per capita emissions, not as the result of a reduction in US per capita emissions, but rather as the result of China’s increasing per capita emissions.

I find it fascinating (and more than mildly amusing) that, after $billions spent on research and 17 COPs, there is still no agreement on the percentage reduction in global annual carbon emissions the parties “believe” must be achieved to avoid the perceived impending catastrophe, no less any agreement to actually take the steps necessary to achieve the reduction. For that, I believe, we can all be thankful.

I am also continually amused that the “market-based” mechanisms touted by the advocates are always relied upon after the imposition of some new “command and control” action imposed on the markets. For example, while a “trade” is a market-based mechanism, the “cap” which necessitates it is pure “command and control”.

5 Lionell Griffith { 01.11.12 at 11:10 am }

Ed,

I appreciate that you put the word “trade” in quotes thereby indicating it is not really a trade. However,”trade” as you use it is also NOT a market mechanism. A market is made up of trades that are voluntary exchanges of values. The so called Government enforced “trade” is extortion and nothing but extortion even if the Government pretends it is justified by some quasi legal fiction.

Again, if it is not voluntary on the part of all parties, it is neither a trade nor a market. Especially when judged by essentials rather than superficial characteristics disconnected from the underlying reality.

6 Ed Reid { 01.12.12 at 9:35 am }

Mr November { 01.11.12 at 6:16 am },

Applying the “concept of convergence” with “350 ppmv” would appear to require convergence to a global vegan commune of greatly diminished population. I am hardly surprised that the portion of the population of the globe which currently enjoys relative liberty, freedom and prosperity has not rushed to embrace the program.

Kyoto and 17 COPs later, the process appears to have caused the nations of the globe to divide themselves onto three pages, rather than all getting on the same page. The developed nations (page 1) have developed and applied advanced technologies to improve efficiency and reduce emissions. The developing nations (page 2) demand access to those advanced technologies “on the cheap”. The undeveloped nations (page 3) merely demand the profits from the sales of those advanced technologies. Somehow, that does not appear to be a promising formula for agreement.

7 rbradley { 01.12.12 at 9:53 am }

Mr. November:

We have had posts at MasterResource on the nonsequitur of jumping from a human influence on climate, anthropogenic global warming, to that being a problem–much less a problem that government can effectively address. See Ken Green’s “Five Climate Questions for Richard Mueller” and Marlo Lewis’s “Response to David Appell: Is Climate-Policy Activism Merited?,” and my own “Lindzen on Kerry Emanuel’s Climate Alarmism, Non-Sequitur.”

Isn’t it time for the ‘incredible break machine’ of capitalism to help us adapt to whatever the future holds, climate-change and otherwise?

8 Ed Reid { 01.12.12 at 11:21 am }

Lionell,

A government imposed “cap” is a command and control mechanism.

I do not understand the ability to “trade” money for emissions allowances among companies affected by the “cap” as a “government enforced” trade. The companies are required to do something by the “cap”. The ability to “trade” allows those companies for whom the costs of emissions reductions exceed the cost of emissions allowances in the market to purchase the number of allowances required to comply with the law. The ability to “trade” allows companies for whom the necessary control technologies are not commercially available, or for whom the design, installation and commissioning of the required control facilities is a long process, to avoid penalties imposed for breaching the “cap” by purchasing excess allowances from companies for whom emissions reductions can be rapid and inexpensive..

I acknowledge that the trades would not be contemplated, no less made, in the absence of a law setting the “cap”. However, there in no requirement that the trades be made, on either the buyer or the seller.

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