TCS Daily

Dirty Little Secret

By Carlo Stagnaro - March 15, 2005 12:00 AM

Why are we going through the Kyoto process?

The question may seem trivial, but it isn't. The European Union and other developed countries are implementing policies that will have a significant impact on their economies. Of course the common answer to the question is: anthropogenic emissions are warming the planet to unprecedented temperatures, so we must do something to counter such a potentially harmful trend.

Now, assuming that man-made emissions are the real cause of climate change and as a consequence climate will change for the worse (two assumptions that may be questionable), another question arises. Does Kyoto work? Indeed, if a kind of "cap & trade" strategy could lead to less emissions, thus less warming, the EU may be on the right track. A third question, one that will not taken into account, is whether Kyoto is the most efficient, or the least costly, method of curbing global warming; and, if not, which strategy should be followed?

Now, according to the alarmists, global emissions should be cut by 60-80 percent to mitigate global warming, i.e. slowing climate change and keeping average temperatures to "normal" values - whatever that may mean. (Temperatures have been fluctuating since the world was created - there is no such thing as a normal average temperature.)

However, Kyoto aims to reduce emissions levels in a select number of developed countries by 8 percent below 1990 levels. Assuming that all of the signatories implement the protocol, the effect on global emissions would be negligible. According to 2001 data, industrialized countries account for less than 50 percent of global emissions. Were they all to cut by 8 percent their own emissions, the overall reduction would be less than 4 percent -- far less than the supposedly needed 60-80 percent. Moreover, as time passes developing countries' emissions will grow both in their absolute value, and relative to the developed economies. For instance, according to EIA projections industrialized countries will account for 45 percent of global CO2 emissions in 2015, and will further decline to 42 percent in 2025 - despite an increase in the absolute value of emissions.

The Kyoto believers know very well all of this. They are aware that actions taken to limit emissions make no difference in global trends, unless all of the big emitters are involved. For strategic reasons they tend not to mention this part of the process, because they regard Kyoto as a first step towards stricter controls.

Yet not all are hiding their true feelings. David King, the chief scientific advisor to the British government and a notorious alarmist, suggested that China and India should no longer be exempt from emissions reduction targets. "In the next phase, we need to discuss with China, discuss with India how to [make them] come aboard the process.... It would be fair to say the Chinese government is very much aware of this problem and the Indian government is keen to listen to what we have to say." China and India representatives were strongly opposed to joining such climate policies. In fact during the COP10, the climate conference held in Buenos Aires in December 2004, they made it clear that they have no intention to implement CO2 emission cuts, because it would prevent or slow their economic growth.

The Kyoto supporters will not give up. They will likely look for some kind of trade-off, as they did with Russia. President Vladimir Putin had set a target of doubling GDP by 2010, a goal incompatible with cutting emissions. But the EU forced the Kremlin to change its mind, promising it would make no objection to Moscow joining the WTO if it chose to ratify Kyoto. Putin had to accept. The process led Andrej Illarionov, then chief economic advisor to the Russian president, to liken Kyoto to the "gosplan" and Soviet central planning. He accused the EU of imposing "Kyotism" on Russia and said that "During the 20th century, Russia seriously suffered from another ideology that came from Europe," referring to communism.

In fact, there is an inherent imperialist temptation in the climate treaty. Paul Driessen's book Eco-Imperialism largely deals with the implications of Kyoto. He shows that, if you put aside the questionable theories underlying the climate treaty, the single most important cause of pollution is poverty. Thus, if you sincerely aim to reducing the former, you have to defeat the latter - and only free market institutions provide an efficient way to do that. However, most international organizations, including the EU and the UN, stick with Kyoto. So do some corporations.

Why? On the one hand, climate policies are redistributionist policies, so the recipients of redistributed money (for example, the renewables industry) have an incentive to support them. Other industries are lobbying their governments to be protected from foreign competition - and environmental regulations work as non-monetary trade barriers, since they result in the exclusion of some potential competitors (that are not able to meet the requested standards) and cause higher costs - thus less competitiveness - for others. Finally, as Driessen puts it, "The EU's self-interest is highly visible in its insistence that Ireland, the United States, Eastern Europe and other nations adopt a system of 'global tax equity' or 'tax harmonization.' This is bureaucratic code for a compelling the United States to raise its taxes to EU levels, to prevent 'disruption' and eliminate 'unfair and harmful tax competition'." In other words, most EU governments are willing to make economic life more difficult in order to maximize their power over society.

If this is true, one has to admit there is nothing noble in promoting climate policies. Nor could their outcome be desirable. Inefficient industries and politicians in power would be winners, but everyone else loses.



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