THE POLITICAL ECONOMY OF CLIMATE CHANGE

The Intergovernmental Panel on Climate Change (IPCC) will soon release its 4th Assessment Report. This report will again warn that atmospheric temperatures are due to rise this century with harmful consequences for the planet's ecosystems. The IPCC will recommend that the world embark on an urgent effort to rein in greenhouse gas emissions to diminish these harmful effects.

However, regulatory efforts to reduce greenhouse gas emissions cannot succeed and governments, especially in the developed world, should not attempt them. Adapting to climate change, should it occur, is the only feasible strategy. Governments in the developed world should focus their efforts on policies that will ease adaptation to higher temperatures rather than waste effort and resources on attempting to prevent climate change from occurring.

Let us assume that the IPCC's predictions are valid. How should governments and societies respond? Government regulations in the developed world to cap or reduce greenhouse gases are a lost cause and should be abandoned. Unless China, India, and other rapidly expanding economic centers in the developing world fully participate in greenhouse gas reduction efforts, regulatory schemes in the west will simply displace economic activity from the "clean" developed world to the "dirty" developing world, making the global greenhouse gas problem worse, not better.

This recent article from the Washington Post described how Europe's greenhouse gas "cap and trade" scheme shifted production from some of Europe's cleanest factories to far dirtier factories in China and Morocco. And TCS Daily's Nick Schulz told the story about how a German steel mill was disassembled, shipped to China, and reassembled, and now produces steel in China without any greenhouse gas constraints.

Will developing countries ever volunteer to meaningfully cut back their greenhouse gas emissions? Governments in developing countries face publics eager to attain the standards of living they observe in the developed world. Restraining economic growth or imposing additional environmental costs are not likely to be sustainable political positions with populations already aware of their poverty.

An indication of this recently arrived from China, soon to be the greatest greenhouse gas emitter. After consulting with local and provincial governments, China's government delayed indefinitely its national action plan on climate change. Political stability seems to trump global warming.

What if, against all indications, the developing world suddenly agreed to restrict, through government action, its greenhouse gas emissions? Enforcement and compliance would then become concerns. Assuming that there is a significant cost attached to greenhouse gas reduction (lower output, or higher capital or operating expenses), there is then a strong incentive to cheat on compliance. The atmosphere is a "commons"; a greenhouse gas cheater would get all of the benefits of lower production costs, while passing on the consequences of cheating to the rest of the world. There would be no incentive for any one actor to fulfill his greenhouse gas reduction promises. What if cheaters, either countries or localities, could be reliably identified? Could some world body impose punishments on cheaters? What punishments? Trade sanctions? Trade sanctions punish the punisher as much as the punished.

With the incentive for cheating so strong and the likelihood of cheating so widespread, a "cheaters' trading bloc" would likely form, reducing or eliminating the pain of any punishment the virtuous non-cheaters might wish to impose. How about punishing greenhouse gas cheaters with military action? I will wait for someone else to propose war as an answer.

Unless there is a stunning political and cultural transformation in the developing world in the direction of economic self-denial, halting the rise of greenhouse gases in the atmosphere through government action will simply not occur. The solution to greenhouse gas emissions may occur for others reasons such as technology improvements or market action, but these solutions would make the discussion of global warming as a public policy problem moot.

Responsible statesmen should acknowledge the futility of trying to use government action to reduce greenhouse gas emissions. They should focus their efforts on preparing for climate change rather than attempting to avoid it.

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THE LEGO-FICATION OF HEAVY INDUSTRY

President Bush recently reiterated his opposition to mandatory caps on greenhouse gases. He argued that unless rapidly rising economies such as China and India also agree to caps, then any steps the US takes are in vain. "Unless there is an accord with China, China will produce greenhouse gases that will offset anything we do in a brief period of time," Bush has said. The administration's critics claim the president is using China as a convenient excuse to maintain the status quo. Let's assume Bush's critics are right and that his argument is a rhetorical dodge. And let's assume that when Bush leaves office his successor embraces a significant regulatory assault on production of greenhouse gases (either through a cap-and-trade program or through stiff taxes on carbon). What is likely to happen?

A glimpse comes courtesy of James Kynge's extraordinary book, "China Shakes the World: A Titan's Rise and Troubled Future - and the Challenge for America." Kynge tells the astonishing story of the Thyssen Krupp steel mill. This Ruhr River valley mill once employed 10,000 people in Dortmund, Germany. For many years after World War II it was one of the country's largest steel producers. But competitive pressures from overseas killed the town's steel industry, and those jobs disappeared.

Those German jobs may be all gone, but the German mill itself is still alive and kicking and churning out steel. But instead of doing it on the banks of the Ruhr, it is on the banks of China's Yangtze River. Just a few years ago, over one thousand Chinese descended upon the Ruhr valley. "They bedded down in a makeshift dormitory in a disused building in the plant and worked twelve hours a day, seven days a week throughout the summer. Only later, after some of the German workers and managers complained, were the Chinese workers obliged to take a day off, out of respect for local laws."

In less than one year, they successfully disassembled the plant and shipped the 275,000 tons of materials and equipment to China. A manufacturing entrepreneur and a former peasant farmer named Shen Wenrong had purchased the plant and reassembled it 5,600 miles away. This is what could be called the Lego-fication of heavy industry. It made economic sense for Shen to do this because he had access to all the relatively inexpensive labor needed to run a big steel production facility; he just needed western technology. And so he bought it in Germany, broke it down as if it were a gigantic Lego set, and reassembled it in China. And he pulled this off faster and cheaper than it would have taken him to build an entirely new plant.

Serious discussions are now underway in Washington and other capitals about making the emission of greenhouse gases, such as those typically generated by heavy manufacturing industries, very costly. Supporters of increasing the cost of emissions argue that this will trigger innovation that will yield low or zero-emission technologies. And they may be correct in the long run. In the meantime, what is likely to happen? If the cost of emitting is high enough, energy-intensive industries will thrive in areas where the cost of emitting is low. Today, that includes countries such as China. And if it is already cost-effective to dismantle and relocate heavy industry plants before severe emissions constraints are in place, we might see more such instances of that when the costs go up. The net effect on emissions will be unchanged, their point of generation simply moving somewhere else.

This is why some proponents of mandated emissions reductions besides President Bush acknowledge the importance of getting China on board if the United States proceeds with emissions restrictions. But how likely is it that China will go along? Anything is possible. But after reading Kynge's deft and even-handed treatment of modern China, I am not optimistic that it is likely any time soon, for two reasons.

For starters, while there are many Chinese who are already rich or who are getting rich, the massive bulk of the Chinese population - more than the combined total of both Europe and the United States - is still enmeshed in extreme poverty. China's growth miracle, if it continues, will eventually pull these people out of poverty. But this will take a couple of generations, during which time their emissions will rise dramatically. China's short-run concern for its citizens' material well-being is likely to trump concerns about climate changes that could happen down the road.

Another reason is that China faces much more pressing ecological problems in the near term. Particulate air pollution is a large and persistent concern. And the nation's water problems are severe and growing. It will be costly to fix these problems. As China gets richer, it will begin to address them. But in prioritizing their environmental threats, these are likely to trump tackling climate change.

Would the United States and Europe be able to force China to lower its emissions? The only stick on offing is threat of a trade fight. Given growing protectionist sentiment in the United States, this prospect is not unimaginable. But given how costly trade restrictions can be in perpetuating human misery, this would be a large and nasty price to pay.

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WHY I DON'T BELIEVE GOD IS GREEN

The Church of England is once again fulfilling its historic role as an object of ridicule



Please stand now for the hymn: "Switch off, switch off for Jesus". You will not have heard the vicar say that in church this morning - but you soon might. Last week the Church of England published what has been described as a set of "green commandments" in a booklet entitled How Many Light Bulbs Does It Take To Change A Christian? The booklet (4.99 pounds at all good Christian bookshops) is part of the CofE's Shrinking The Footprint campaign.

That's right: the established Church is now fully signed up to the view that man-made CO2 emissions are destroying the planet and, therefore, humanity. Meanwhile David Miliband, the Environment Secretary, travelled to the Vatican last Thursday and called on Pope Benedict to use his "global reach and influence that individual governments do not have" to fight the good fight against global warming. The Pope responded that "we should all respect God's creation".

Official Christian doctrine, however, remains rooted in the idea that the Earth was created for Man's benefit. As God told Adam and Eve (Genesis 1:28): "Be fruitful and multiply and fill the Earth and subdue it; have dominion over the fish of the sea, over the birds of the air and over every living thing." This is as far removed as can be from what we might describe as the green gospel, which regards birth control as the greatest of all moral obligations and which abhors the idea that Man should be master of the planet, instead of nature itself.

In fact, the new green gospel is far closer in its appeal to the primitive cults that preceded the monotheistic faith of Jews, Christians and Muslims. It regards nature itself as a supreme deity whose wrath must be appeased. This, certainly, is the view of the Catholic Archbishop of Sydney, George Pell, who last year declared: "In the past, pagans sacrificed animals and even humans in vain attempts to placate capricious and cruel gods. Today, they demand a reduction in carbon dioxide emissions."

The Church of England would, I suspect, bitterly resent this accusation. In its booklet it is not calling for human sacrifices. Its suggestions are altogether more comfortable: we should use a toaster rather than a grill on our daily bread. We should holiday locally rather than abroad. We should use a car-sharing system for our trip to Sunday worship.

These might seem as clear as the Ten Commandments, but they are not. Suppose you can't find anyone to share your car on the way to church. Should you stay at home and save the environment instead of your soul? Is it actually morally better to holiday here and hand over your money to a comfortably-off Cornishman selling pub food at London prices, instead of taking your family on safari to Zimbabwe and putting some desperately needed hard currency into that wretched and suffering country?

Since the days of the missionaries, the Church of England has always had a deep concern for Africa, and rightly so. Indeed, Africa is at the heart of the whole issue of global warming. Despite what you might have read, global warming is, on balance, beneficial to the Northern Hemisphere. It will be a big boost for agricultural production as the corn belt moves northwards and old people will have less reason to fear the winters. (It's worth reminding ourselves that carbon dioxide is not itself a form of pollution. Or, if it is, then we are all polluting the Earth simply by breathing, which would be a fantastically bleak philosophy by which to live.)

If there is to be a victim of global warming, it is most likely to be Sub-Saharan Africa. Yet your decision - having read and digested How Many Light Bulbs Does It Take To Change A Christian? - not to travel there will not save a single African life. Even if you believe there is a direct link between CO2 emissions and global temperature, man-made emissions are a tiny part of the total, and carbon dioxide itself is only a small component within the full range of greenhouse gases.

Besides which, the plane will take off without you. Yes, you can argue that if hundreds of thousands take the same decision, those flights might be cancelled - but is boosting the British tourism industry at the expense of those in less wealthy countries actually a virtuous act, however well-meaning the intentions?

Recently, Tesco announced that as part of its plan to be a responsible corporate citizen and save the planet, it had dramatically cut the amount of fresh produce it would fly in from Africa, and buy more locally. Do you think the Africans were grateful? What guidance might we expect on this from the Church of England?

Perhaps we should consult the Bishop of London, the Rt Rev Richard Chartres, who chairs the bishops' panel on the environment. Last July, Dr Chartres declared that flying was 'a symptom of sin'. That made the headlines. Unfortunately for this most pompous of prelates, what also made the headlines a few months earlier was that he had deserted his flock in Holy Week so that he and his wife could enjoy a free ocean-liner cruise for which other holidaymakers would have paid about 7,000 pounds. (To be fair to the Bishop, he was giving them the benefits of his views, as "a guest lecturer", on the rise and fall of Egypt, Rome and Carthage.)

Even though Dr Chartres had left his parishioners during the most important week in the Christian calendar, at least, say his defenders, he wasn't using a plane to get away. I suggest they consult green campaign group Climate Care, which points out that "a cruise liner such as Queen Mary 2 emits 0.43kg of CO2 per passenger mile, compared with 0.257kg for a long-haul flight (even allowing for the further damage of emissions being produced in the upper atmosphere). It is far greener to fly than cruise."

So the Bishop looks like either a hypocrite or a fool - or quite possibly both. This is not an argument against the Church of England using its authority to protect the environment. I can't help feeling, however, that it is behaving a little bit like the Conservative Party - after all, it used to be described as "the Conservative Party at prayer". Just as the Tories have jumped on the issue of global warming as a means to impress younger voters, so the Church of England is in danger of becoming an ideological fashion victim - and thus end up looking ridiculous.

Above all, I worry that it is encouraging people into forms of ritual - using the toaster instead of the grill, switching off the light in the porch - which may do no good to anyone, but which allow the performer to imagine that by acting in this way he or she has become a better person. This, after all, was exactly the objection that Jesus had to the Pharisees.

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AS EUROPEAN CLIMATE POLICIES CRUMBLE, THE U.S. APPROACH IS FINDING VINDICATION

European company Arcelor Mittal, the world's largest steelmaker, is a model of environmental care. Since 1990, the manufacturing juggernaut has reduced its carbon dioxide emissions 20 percent, exceeding European targets by two and half times. Nevertheless, company leaders warn that restrictive government caps on greenhouse gases may soon force the closure of two large factories in France. The resulting dip in production from such a move would press Arcelor Mittal to import steel from far less efficient factories in the Third World, where CO2 emissions restrictions are not enforced. Hardly an isolated incident, businesses throughout Europe are laying off employees, outsourcing production, and reining in innovation as a luxury no longer affordable.

Michel Wurth, president of Arcelor Mittal France, calls the situation "absolutely ridiculous." But European Union officials managed to avoid broadcasting such difficulties at a White House summit meeting April 30. Instead, German Chancellor and EU President Angela Merkel and European Commission President Jose Manuel Barroso were eager to highlight common ground with U.S. climate-change policy. They lauded President George W. Bush for taking the issue seriously-high praise for a man committed environmentalists are supposed to hate.

That conciliatory tone reflects a growing realization that Bush's refusal to adopt emissions restrictions is not the vice once imagined. In past years, EU officials chastised Bush for his stubborn rejection of the Kyoto Protocol, a pact adopted by 169 nations to impose mandatory reductions of CO2 emissions. This year, Merkel and Barroso made no mention of the 10-year-old treaty, a stark reversal that underscores a momentous shift in the debate: As Kyoto sputters, stalls, and ultimately fails, the Bush approach proves increasingly credible.

Substantial disagreements remain over how best to move forward in tackling greenhouse gas emissions, which many scientists believe are to blame for the planet's recent warming trend. But many policy experts now recognize that the Bush administration's strategy to develop new carbon-cutting technologies presents the only real-world approach to reducing emissions. Absent such technologies, hard caps like Kyoto amount to nothing more than empty green stamps for naive or disingenuous politicians.

Kyoto-supporting nations are learning that lesson the hard way. The Kyoto accord has wrought substantial economic harm for little environmental gain. Its targets have proved unfeasible, its costs debilitating. Merkel has witnessed the fiasco firsthand in Germany, where initial Kyoto cheerleading has morphed into nationwide grumbling. The country now stands to pay up to $5 billion in fines when it fails to meet emissions goals by next year. Meanwhile, industry leaders are hemorrhaging funds for a cause that holds little to no chance of success. Those companies threaten to retract investments in new energy sources.

Such difficulties threaten Germany's sizable automotive industry, which employs about 15 percent of the country's manufacturing workforce. New regulations from the European Commission require carmakers to re-engineer their high-end models for much lower emission levels by 2012. That burden will likely drive up sticker prices, reduce sales, and provoke layoffs.

Similar problems have sprung up throughout Europe. Beyond Arcelor Mittal, other companies, such as Spanish steelmaker Acernex and Dutch silicon carbide manufacturer Kollo Holding, are choking on the continent's skyrocketing cost of electricity. Acernex has transported production overseas and closed several factories. Kollo Holding must shut down its plant for hours each day and has lost customers to competitors in China.

Despite such economic costs, EU emissions levels continue to rise, illustrating Kyoto's failure on both economic and environmental fronts. In the United Kingdom last year, CO2 emissions from power plants, automobiles, and homes increased 6.4 million tons above 2005 levels-pushing total UK emissions to their highest point since Britain ratified Kyoto a decade ago. The embarrassed government, which has already abandoned its aim of a 20 percent reduction by 2010, now must reconsider whether its proposed 30 percent drop by 2020 is realistic.

Many British environmentalists blame politicians for the failures, but recent polling throughout the EU suggests public opinion has turned against overly optimistic Kyoto-like requirements. Benny Peiser, a researcher at Liverpool John Moores University in the UK, expects that greater economic costs will further unravel the continent's once strong green consensus. He suggests that Europe's stubborn unwillingness to admit failure may be the only force preventing an all-out abandonment of Kyoto: "A political failure of the Kyoto process would, without a shadow of doubt, cause incalculable trauma to European pride and standing."

In desperation to meet their targets, European nations adopted a system of carbon-trading two years ago, whereby emissions credits are bought and sold in an international market. The system intends to generate economic incentives for companies to reduce their carbon footprints. But, so far, the artificial market has set the price so low for credits that large-scale emitters can purchase as many as they need without significant financial burden. The result: Kyoto's goal of reducing the combined emissions of EU nations by 8 percent from 1990 levels by 2012 is highly improbable. In fact, the numbers are likely to continue creeping upward.

Outside Europe, a growing chorus of Kyoto dissent is joining the once isolated Bush administration. Canadian environment minister John Baird announced new emissions targets last month that effectively toss Kyoto to the policy scrap heap. The new standards call for reductions per unit of production, a measuring system that may actually allow emissions to rise amid a growing economy. Canadian Green Party leader Elizabeth May was furious, describing such backing down from Kyoto as "worse than Neville Chamberlain's appeasement of the Nazis." But the plan won't appease economic pain, costing Canada an estimated $7 billion annually. Such high costs have prompted nations such as China, India, Australia, and Turkey to join the United States in avoiding Kyoto's top-down carbon-cutting method.

To the surprise of many Europeans, the U.S. approach of technology investment and voluntary emissions reductions has proved more effective than Kyoto. Figures from the International Energy Agency (IEA) show that U.S. CO2 emissions from fuel combustion grew 1.7 percent from 2000 to 2004 while European Union emissions of the same kind increased 5 percent. Furthermore, the U.S. approach presents the only realistic possibility for including the developing economies of China and India in global efforts to reduce emissions.

China recently reiterated its opposition to any international pact that would stifle its use of cheap energy to grow its economy. Chinese officials argue that G8 nations got rich by ignoring environmental concerns and that China is due that same opportunity. If new technologies emerge to reduce emissions without substantially increasing energy costs, China, India, and other developing nations would be able to participate. Such inclusion is critical to global emissions strategies given new estimates from the IEA that China will pass the United States as the world's top emitter of greenhouse gases before the end of the year.

In a meeting last month with Japanese Prime Minister Shinzo Abe, President Bush expressed his desire that Japan contribute its technological capabilities and expertise to the hunt for new carbon-cutting technologies. The leaders discussed the further development and construction of nuclear power plants, an existing technology that could drastically reduce CO2 emissions. If Bush has his way, such technology-centered discussions will dominate the global dialogue post-Kyoto, elbowing out talk of top-down emissions caps or carbon-trading schemes.

The Bush administration wants nations to operate independently in the drive to cut emissions, an affront to the UN's globalist approach. New strategies will be fodder for the G8 summit next month in Germany, an opportunity for the fallout from Kyoto to take center stage-and for the proven detrimental treaty to rest in peace.

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Many people would like to be kind to others so Leftists exploit that with their nonsense about equality. Most people want a clean, green environment so Greenies exploit that by inventing all sorts of far-fetched threats to the environment. But for both, the real motive is generally to promote themselves as wiser and better than everyone else, truth regardless.

Global warming has taken the place of Communism as an absurdity that "liberals" will defend to the death regardless of the evidence showing its folly. Evidence never has mattered to real Leftists

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