Friday, June 08, 2007


The EU's carbon trading scheme has increased electricity bills, given a windfall to power companies and failed to cut greenhouse gases, it is claimed. An investigation by BBC Radio 4's File on 4 programme has found that after two and half years the scheme has yet to cut in carbon dioxide emissions. The consumer body Energywatch said customers are getting a raw deal.

But a government minister has promised that the scheme's next phase will be a big improvement. The EU's Emission Trading Scheme - a key part of the UK Government's drive to combat climate change - began in 2005 and created a trade in carbon allowances. It is essentially a permit to pollute. Power generators received their allowances free of charge but were allowed to reflect the value of those in increased prices to customers, as if the companies had actually had to buy the allowances. Energywatch believes this increased electricity bills by about 7% in 2005.

And according to one government estimate, that delivered windfall profits of up to 1.3bn pounds to the generators in that year - higher than environmental campaigners had claimed last year. However, so far the carbon scheme has brought no clear payback in terms of cutting emissions. Provisional government figures from the Department for Environment Food and Rural Affairs (DEFRA) suggest CO2 output in Britain actually went up, by 1.25% last year wiping out a slight drop of 0.01% in 2005. It is also reckoned that CO2 emissions across the EU also rose by between 1 and 1.5% over the last two years.

The chief executive of Energywatch, Allan Asher, said , "Consumers increasingly accept the need for reductions in carbon. "However they are paying the price and not seeing the benefits. The big generators are banking huge amounts of money and consumers aren't benefiting."

But the Minister for Climate Change, Ian Pearson, told File on 4 that the carbon trading scheme has been an administrative success yet concedes there have been problems in the first three year phase to the end of 2007. "If you are saying to me it hasn't achieved a massive amount so far when it comes to CO2 reductions, well I agree with you and I think Phase Two will be a big, big improvement...and a key instrument in helping us all to achieve our carbon reduction targets across Europe."


Paying for carbon

When it comes to "doing something" about global warming, two approaches are usually trotted out. One is trading permits to emit carbon dioxide (CO2) and other greenhouse gases. Yet it now appears that most existing carbon trading schemes are vastly inefficient, open to fraud, or both. Thus, it is worth looking at the other option, a tax on carbon emissions, to be levied on gasoline and most electricity use. A quick survey of the realities of carbon taxes reveals that the game might not be worth the candle.

Economists attempt to account for the "social cost" of carbon dioxide emissions -- that is, the economic value of the damages caused by global warming that many attribute to CO2. Many studies have shown wildly varying results due to the various uncertainties surrounding the topic, and also depending on whether each study takes mankind's innate ability to adapt and innovate into account.

A leading expert in the economics of climate change, Dr. Richard Tol, reviewed these studies and found that there were significant uncertainties. He concluded that it "is unlikely that the marginal damage costs of carbon dioxide emissions exceed $50/tC [dollars per ton of carbon] and are likely to be substantially smaller than that." One indicative smaller figure is $16/tC, which represents the mean estimate of all the studies at a discount rate of 3 percent, which is consistent with how governments value future costs and benefits. Because a ton of CO2 contains less than a third of a ton of carbon, these figures translate to a maximum of $14 and just under $5 respectively.

Another recent review, the "Stern Review," which was commissioned by the British government, estimated the marginal social cost per ton of CO2 emissions at $85. As Dr. Tol's research shows, this is actually an outlier in the literature and outside the mainstream of economic thought. Nevertheless, because the Stern Review has been so widely cited, it needs consideration here.

Many economists believe that to account for those costs, governments should levy a tax -- called a Pigou Tax after its inventor, a 19th century British economist, Arthur Pigou -- to deter or at least bring home to people the cost of their activity.

How big would a Pigou Tax have to be to account for the social cost of household electricity use? One megawatt hour (MWh) of coal-fired electricity use produces 0.95 metric tons of CO2, so the tax would need to be levied per kilowatt hour (KWh) of electricity used, depending on the social cost of carbon used. At Stern's figure of $85, the state should levy a tax of 8 cents per KWh. At $14, the tax would be a cent-and-a-half, and at $5, a half cent.

According to the 2001 census, the average American household uses 10,660 (KWh) of electricity per year. This means that at the social cost level of $85, the average household would see its electricity bills rise by $852 a year. At $5, the increase would be $53.

Turning to gasoline, a social cost of $85 per ton of CO2 implies a gas tax of 74 cents per gallon, a cost of $14 implies a tax of 12 cents and $5 a tax of 4 cents. The average household uses 1,143 gallons of gas a year, which means that at the Stern Review level, the household's annual fuel expenses would increase by $845. At the social cost levels of $14 and $5, the bills would increase by $140 and $45.

For the average family on median income ($44,334), the extra burden of energy taxation at the level implied by the Stern Review would represent a loss of about 4 percent of total household income -- an unconscionable rise in taxation that would need to be offset with taxation reductions elsewhere. Taxation hikes at the more realistic estimates of social cost, however, are unlikely to affect consumer behavior. At the lowest, but still respectable, estimate of social cost, bills would increase by a mere $98 a year, a sum likely to be absorbed. The same is likely true of the $300 increase implied by a social cost of $14.

The effectiveness of a Pigou tax in reducing carbon emissions is questionable. A tax high enough to force reductions in energy use would greatly burden the poor and obstruct economic growth, while a lower tax is unlikely to lead to emissions reductions at all.

Attempting to moderate behavior through carbon pricing will either fail or impose significant social costs of its own. If we need to do something about global warming, it is to move on from talking about forcibly reducing emissions and working instead to see how we can reduce any possible impacts on the world. A rich and resilient world will be better than one made poorer through overpriced carbon constraints


What If?

Post lifted from Belmont Club. See the original for links

The world famous physicist Freeman Dyson discusses Global Warming with a twist, at Classical Values.

He starts out in the first video (on the left) talking about vegetation. He says you can't do good science without good data. He notes that the data on vegetation is sparse (as in almost totally non-existant). The money went into computer models instead of data gathering. It figures. Computers are sexy. Electronic wind vanes and anemometers are not. He also notes that the carbon in vegetation dwarfs the carbon in the atmosphere.

In the second video he says the real problem is not CO2 induced global warming, but CO2 induced stratosphere cooling which may lead to bigger ozone holes.

He ends with the fact that the lowest cost way to control CO2 in the atmosphere is not by controlling energy production and use, but by planting or cutting down plants. He suggests more irrigation. For that we are going to need cheap fresh water.

The problem for political environmentalism is that Dyson takes a broad view of the issue when a narrow, dogmatic view is necessary to advance the current policy agenda. Starting from the premises the discussion rapidly escapes the confines of the standard Global Warming narrative. That is to say it escapes from its political prison. That raises an interesting question about the prescriptive policy changes being promoted. Are they actually based on the correct model? And if they are predicated on the wrong model would they have the same effect as swallowing the wrong medicine would have for a patient? If environmentalism were about science first and politics afterward the question would be easy to answer. Alas, today we live in a world of post-normal science.

The weather is a complex and nonlinear system, and the solutions advanced to solve "Global Warming" don't seem to take that fully into account. We will inevitably learn more about the environment as time goes on, and some of the facts will probably be at variance with the Global Warming narrative. Ideally we should adjust but I'm afraid that politics will create policy rigidities which will stifle movement when a rapid decision cycle is necessary when attempting to deal with any complex system.


European leaders have expressed dismay over U.S. President George W. Bush's June 1 call for the creation of a long-term dialogue among the 15 largest greenhouse gas-emitting countries. The plan, they say, is another stall tactic designed to allow the Bush administration to appear as though it is trying to work with the international community on climate issues, when in reality it is not. Such action, they say, would take time and attention away from the difficult work being done on the issue via the Kyoto Protocol process.

In reality, however, the Bush plan signals the end of Kyoto -- and the beginning of a new international consensus that relieves Kyoto's pressures on governments. The United States, China, India, Canada and Australia produce more than half of the world's greenhouse gas emissions -- and those emissions are growing.

To be effective, then, any climate regime that endeavors to make real cuts in emissions must include these countries. By bringing the Pacific Rim countries into alignment on the issue, Bush has brought the United States far more power over global greenhouse gas emissions policy than Europe ever has had. With this, Bush takes from Europe its one global foreign policy success story....

Though from a U.S. perspective Kyoto was flawed in many ways, it was this lack of restrictions on developing countries that rendered ratification a nonstarter in the United States. Despite the tone of the current political conversation in the United States, in a 1997 vote both Republicans and Democrats unanimously vowed to reject any climate treaty that did not include commitments from developing countries. Sens. John Kerry, Paul Wellstone, Barbara Boxer and many of the climate issue's current champions were among those who essentially declared Kyoto dead on arrival. Within four months of taking office, Bush did the same, saying the United States would take no part in talks regarding a treaty it had no interest in joining.

Amazingly, the global reaction to Bush's announcement was shock. Bush became an environmental pariah at home and around the world, with Greenpeace dubbing him the "Toxic Texan" and European leaders pleading for the United States to reconsider.

From the European standpoint, simply bringing the United States into the climate change conversation is far more important than forcing it to cut its emissions by 2012. Given that the United States is the world's single-largest source of carbon emissions, any deal that does not have explicit American buy-in simply cannot achieve the ultimate end goal: reducing global emissions to the point of heading off the worst-case scenario of global warming.

To get the United States into the talks, then, G-8 leaders agreed in 2005 in Gleneagles, Scotland, to stop pressing for U.S. adherence to Kyoto if Washington agreed to take part in international discussions on the issue. European leaders hoped this would bring the United States into the fold for the more important negotiations on a broad and binding treaty that would address what happens after Kyoto expires in 2012.

U.S. activists fit their tactics into this broad European strategy. Kyoto proponents in the United States considered it a foregone conclusion that, under Bush, the United States would not pass a greenhouse gas-emissions-reducing policy on environmental grounds. The trick, then, was to get Bush to budge for other reasons. Environmental groups thought that if industry were faced with a maze of climate-related regulations at the state and local levels, then business -- normally hostile to greenhouse gas-related policies -- would appeal to the administration for harmonization. This, the environmentalists believed, would sneak in a U.S. greenhouse gas policy via the back door.

The environmentalists' key insights were simple: One of the few things businesses dislike more than patchwork regulation is uncertainty -- and having dozens of constantly changing competing regimes is about as uncertain as one can get. Therefore, the environmentalists believed industry would be more successful than they had been in lobbying the administration for a unified national policy on greenhouse gases. The strategy was a sound one, and local/state directives have proliferated, with laws in 15 states now forcing some climate change-related action or accounting on industry -- laws the Supreme Court already has ruled constitutional.

In the end, however, both U.S. environmental groups and European governments miscalculated. The former mistakenly assumed industry's desire for a single standard would lead industry to Kyoto; it only led industry to Washington. The latter assumed that dropping discussion of Kyoto I would lead Washington to participate in Kyoto II; instead, it led Washington to the Pacific.

History will remember 2007 as the year the United States lost its infamous position as the world's leading emitter of greenhouse gases to China, an event that has been inevitable for years. From the U.S. point of view, therefore, any successful greenhouse gas-limiting agreement is not dependent upon Washington's participation, but on Beijing's. As such, Bush has engaged China, India, Australia, Canada and even a discontented Japan -- birthplace of the Kyoto Protocol -- in separate negotiations outside the Kyoto system. Called the Asia-Pacific Partnership on Clean Development and Climate, this strategy eschews firm caps on emissions -- which the Americans, Chinese and Indians oppose and which have thus far proved impossible to align with Australian and Canadian resource policy.

It instead focuses on sharing technology that would reduce greenhouse gas emissions, particularly in developing countries; it also offers companies that are developing efficiency-related technologies an expanded market for their products. Key among such technologies are clean coal, nuclear, carbon capture/sequestration and fuel cells. The Europeans at first saw this "Pacific direction" as a stall tactic, but deemed it acceptable as long as the goal remained intact -- that the United States would eventually join Kyoto. That too was a miscalculation. Ultimately, U.S. industry and the Bush administration believe joining an international regime only brings more uncertainty, as both the ideological and practical design of such regulations not only originates in but also is designed explicitly for Europe....

With Australia and Canada unwilling to divorce their climate plans from that of the United States, the likely membership in any Kyoto II would be limited to Europe alone. (Europe is the only significant signatory that actually has put the current Kyoto Protocol into practice.) But this time there will be a clear alternative, which will constantly raise the question: Why doesn't Europe get with the program?

More here


Former German Chancellor [Prime Minister] Helmut Schmidt called for an end to the "hysteria" over global warming in the lead-up to the summit. The topic is "hysterical, overheated, and that is especially because of the media," Schmidt told Germany's Bild daily. There has always been climate change on earth, Schmidt said. "We've had warm- and ice-ages for hundreds of thousands of years," he said, and added that the reasons behind the multiple climate changes have been "inadequately researched for the time being." To assume that global climate change can be altered by any plans made at the Heiligendamm summit is "idiotic," he said.



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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