More Hot Air
By Richard B. Stewart and Jonathan B. Wiener

Reconstructing Climate Policy: Beyond Kyoto
193 pp., Washington, D.C.: American Enterprise Institute Press, 2003
Reviewed for Regulation magazine by S. Fred Singer

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 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 21st century.

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.
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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).

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