TCS Daily

Europe Cools Off

By Carlo Stagnaro - December 7, 2004 12:00 AM

Whatever you think about President Bush, you have to admit that, at least, he's not going to cheat the voters on environmental issues. Since his first election in 2001, he has been very clear about what the US is doing with regard to climate change. He is pursuing the goal of reducing the American economy's greenhouse gas intensity by 18% by 2012 -- especially through voluntary actions by industries, as opposed to imposing emissions caps.

The science is uncertain on global warming, economics is not: we do know that the Kyoto Protocol, as well as other possible "climate control" actions, would have an actual, high cost now vis-a-vis a negligible benefit, if any, decades from now.

The question, now, is: What will the European Union do? Whatever its reasons, the EU is playing the role of the environmentally-concerned country. If it really wants to comply with the Kyoto target, i.e. an 8% cut of greenhouse gases emissions by 2008-2012, the EU should take Kyoto more seriously. True, next January the European Emission Trading Scheme will start. Yet, so far there's been no evidence of a real will to cut emissions -- luckily for Europeans. The reason is plain and clear: who is the political leader who would go in front of the voters saying, "Hey guys, I'm saving the climate, I'm making your electricity bill more expensive, and, look, you've got to say thanks to me as the price of gas rises steadily"?

According to the European Environment Agency, the EU emissions are today 2.9% below the baseline year, 1990. Only four countries, according to the EEA, are on track to comply with the Kyoto targets (France, Germany, Sweden and the UK). The other 11 pre-2004 member states are well far from their goals.

EEA also pointed out that between 2001 and 2002 emissions dropped by 0.5%, reversing the previous, upwards trend (+0.2% in 2000 and +1.3% in 2001). Is this a success of European climate policies? No way. It is a result of... global warming (yes, really!). Look: "The reasons for the decrease", writes the EEA, "include warmer weather in most EU countries which reduced the use of carbon dioxide-producing fossil fuels to heat homes and offices. Slower economic growth in manufacturing industries, which also lowered fossil fuel use, a continuing shift from coal to gas and specific measures to reduce greenhouse gas emissions were the other main reasons".

Both of the leading components of the reduction are subtly ironical. First, global warming seems to have a built-in insurance against "too much" consumption of fossil fuels, whatever "too much" means: making the climate warmer, people consume less energy for heating. Secondly, the mean economic performance of the EU pushed Europeans to save energy. Europeans didn't do that, as environmentalists would say or hope, for the sake of saving energy per se. They rather did it to save money. It is questionable that we should encourage poverty as an anti-global warming measure, yet it seemingly works.

The funny thing is that next year's data could well show another reverse in the trend, towards more energy consumption. Summer 2003 was much warmer than usual, so Europeans spent lot of money in air conditioning (leading to the failure of the Italian electricity system, for instance, which is still too much state-driven to work as it should). Also, the economic growth was again very slow in 2003. This might have contributed to partially counterbalance the effects of the hot Summer.

Perhaps this is the only chance for Europe to meet the Kyoto targets. The Commission led by Romano Prodi was very successful in developing anti-growth European regulations. Such a strategy, however well intentioned, is perhaps the end-point of European hubris: we can't be better than Americans in economic performance, so we run the other way around. "Impossible" means nothing to European politicians, especially as far as the economy and the welfare are to be destroyed.


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