TCS Daily

Backdoor Kyoto

By James K. Glassman - June 27, 2002 12:00 AM

With little fanfare, a Senate committee is swiftly moving ahead on a bill that would bring back the treaty that won't die - the Kyoto Protocol on climate change, an agreement signed in 1997 by Vice President Al Gore that would require hugely expensive reductions in greenhouse gases, primarily carbon dioxide (CO2), the stuff we exhale, the stuff that makes plants grow.

Gore signed the treaty over the opposition of 95 senators, who warned unanimously five months earlier that they would not sign any agreement that excluded developing nations and that would cause "serious harm" to the economy. Kyoto did both.

Early last year, President Bush rejected Kyoto as "fatally flawed." Bush recognized that surface temperatures had increased by about one degree over the past century, but recent satellite data show no rise. The President wanted more research before committing the U.S. to extensive cuts in fossil-fuel use by vehicles and power plants. It remains unclear how much warming will occur in the future and how much human activity may be to blame.

Now, a Senate committee headed by Jim Jeffords of Vermont, who was among those who voted against Kyoto-like strictures in 1997, is close to passing a bill that can only be described as "Backdoor Kyoto."

When Jeffords left the Republican Party last year, he gave Democrats control of the Senate. Apparently as a reward, he received the chair of the Environment and Public Works Committee and quickly set out to implement his Backdoor Kyoto policy with a bill, S.556, initially co-sponsored by Sen. Joseph Lieberman, D-Conn., and 13 other senators, all from the Northeast and California.

The committee is expected to mark up the bill this week and to vote soon after. The tally will be close. Key votes will come from Democrats Max Baucus of Montana, Harry Reid of Nevada and Bob Graham of Florida and from Republican Arlen Specter of Pennsylvania.

At stake is nothing less than the health of the U.S. economy -- critical at a time of sluggish business, high unemployment and a terrorist threat that requires increased production and stability.

The bill, for the first time in environmental history, lumps CO2 together with three recognized pollutants - nitrogen oxide, sulfur dioxide and mercury. The legislation sets limits for all four, but a 228-page study by the Energy Information Administration brands CO2 reductions as especially difficult to achieve. Overall, the EIA predicts a loss of about one million jobs and a "reduction in gross domestic product ranging from 0.4 percent to 0.8 percent" when the limits are imposed. That's $40 billion to $80 billion per year at the current value of the dollar - or about $400 to $800 per American family.

The EIA says that "to meet the assumed CO2 limit, significant switching from coal to other fuels is expected." No doubt about it: The Jeffords bill will be devastating to states that mine and use coal to generate power. The United States has vast reserves - we are the Saudi Arabia of coal - and coal last year was responsible for 51 percent of all electrical power generation in this country, compared with 20 percent for nuclear and 17 percent for natural gas.

Coal generation has become much cleaner over the years, but, as the EIA points out, "low-cost technologies for capturing and sequestering CO2 are not expected to be widely available" for at least another 20 years. The only way to reduce carbon dioxide, then, is to cut back on coal, which emits about twice as much CO2 as natural gas. But Jeffords wants to limit natural-gas use as well, and the bill would require a mind-boggling shift to expensive "renewables," such as wind and solar power, which would have to increase their share of power-generation from 0.2 percent to 10 percent.

The simple result of the legislation will be sharply higher prices for all fuels. A study of the effect of the Jeffords bill by WEFA, a respected economic consulting firm, found that in Pennsylvania average costs to electricity users would rise 62 percent; in Florida, 54 percent. WEFA predicts that 77,300 jobs will be lost in Ohio, 76,000 in Florida and 14,600 in Pennsylvania. The poor would be hit hardest since utility bills are such a large share of their total income.

While Kyoto would have required the United States to cut CO2 emissions from all sources to 7 percent below 1990 levels between 2008 and 2012, the Jeffords bill focuses only on power plants. The reductions are not as large - to 1990 levels, not below them - but they have to be achieved by Jan. 1, 2008, under the newest version of the bill.

The EIA, official record-keeper in these matters, reports that power plants emitted 475 million metric tons of CO2 in 1990 and 556 million in 1999. Without the Jeffords restrictions, plants are estimated to emit about 675 tons by the start of 2008. In other words, the bill calls for cuts of nearly 30 percent from expected 2008 levels and more than one-sixth from current levels.

How would the cuts be achieved? The government would probably determine the amount of CO2 that each plant could emit, then auction off emission rights and allow the plants to trade them among themselves. This scheme is called "cap and trade," and its economic impacts, says a Congressional Budget Office report, "would be similar to those of a carbon tax: both would raise the cost of using carbon-based fuels, lead to higher energy prices, and impose costs on users and some suppliers of energy."

Another threat is that Backdoor Kyoto will lead to a frontdoor Kyoto, with costs of up to $4,540 per family of four, according to a study by the National Center for Policy Analysis, and not much in the way of global environmental benefits. After all, 85 percent of the rise in CO2 emissions over the next century will come from developing countries like China, India and Brazil, which are exempt from the treaty. In addition, even its backers admit that Kyoto will merely postpone temperature increases by six years over a century: instead of occurring in 2100, they will occur in 2106.

Since the 1960s, the United States has reduced sulfur dioxide in the air by 90 percent and nitrogen oxides by 50 percent. Making the air cleaner is a reasonable goal, one shared by the Bush administration and Congress. But carbon dioxide, which is not a pollutant, is another matter entirely. Reducing CO2 is hugely expensive and risky - especially right now.

A responsible approach for the Senate would be to focus on developing more certainty about the causes and cures of potential warming, not on forcing Americans to pay tens of billions of dollars and to lose hundreds of thousands of jobs on a strategy based on unsound science and Vermont-style environmental extremism.



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