Chapter 8: Kyoto and Policy Alternatives (Skeptics Guide to Global Warming)

The table of contents for the rest of this paper, . 4A Layman's Guide to Anthropogenic Global Warming (AGW) is here Free pdf of this Climate Skepticism paper is here and print version is sold at cost here

Kyoto Treaty

In the mid-1990's, a number of western nations crafted a CO2-reduction
treated named Kyoto for the city in which the key conference was held.
The treaty called for signatory nations to roll back their CO2 emissions to
below 1990 levels by a target date of 2012.  Japan, Russia, and many
European nations signed the treaty; the United States did not.  In fact,
the pact was ratified by 141 nations, but only calls for CO2 limits in 35 of
these (so the other 106 were really going out on a limb signing it).
China, India, Brazil and most of the third world are exempt from its limits.

We will discuss the costs and benefits of CO2 reduction a bit later.
However, it is instructive to look at why Kyoto was crafted the way it was, and
why the United States refused to sign, even when Al Gore was vice-president.

The most obvious flaw is that the entire developing world, including China,
SE Asia, and India, are exempt. These countries account for 80% of the world's
population and the great majority of growth in CO2 emissions over the next few
decades, and they are not even included. If you doubt this at all, just look at
what the economic recovery in China over the past months has done to oil
prices. China's growth in
hydrocarbon consumption will skyrocket over the coming years
, and China is
predicted to have higher CO2 production than the United States by 2009.

The second major flaw with the treaty is that European nations cleverly
crafted the treaty so that the targets were relatively easy for them to make,
and very difficult for the United States to meet.  Rather than freezing
emissions at current levels at the time of the treaty, or limiting carbon
emission growth rates, the treaty called for emissions to be rolled back to
below 1990 levels. Why 1990? Well, a couple of important things have happened
since 1990, including:

a. European (and Japanese) economic growth has stagnated since 1990, while
the US economy has grown like crazy. By setting the target date back to 1990,
rather than just starting from day the treaty was signed, the treaty
effectively called for a roll-back of economic growth in the US that other
major world economies did not enjoy.

b. In 1990, Germany was reunified, and Germany inherited a whole country
full of polluting inefficient factories from the old Soviet days. Most of the
dirty and inefficient Soviet-era factories have been closed since 1990, giving
Germany an instant one-time leg up in meeting the treaty targets, but only if
the date was set back to 1990, rather than starting at the time of treaty
signing.

c. Since 1990, the British have had a similar effect from the closing of a
number of old dirty Midlands coal mines and switching fuels from very dirty
coal burned inefficiently to more modern gas and oil furnaces and nuclear
power.

d. Since 1990, the Russians have an even greater such effect, given low
economic growth and the closure of thousands of atrociously inefficient
communist-era industries.

It is flabbergasting that US representatives could allow the US to get so
thoroughly out-manuevered in these negotiations. Does anyone in the US really
want to roll back the economic gains of the nineties, while giving the rest of
the world a free pass? Anyway, as a result of these flaws, and again having
little to do with the global warming argument itself, the Senate
voted 95-0 in 1997 not to sign or ratify the treaty unless these flaws (which
still exist in the treaty) were fixed
.  Then-Vice-President Al Gore
agreed that the treaty should not be signed without modifications, which were
never made and which Europeans were never going to make.

By the way, enough time has elapsed that we have data on the
progress of various countries in meeting these targets.  And if you leave
out various accounting games with offsets of dubious value, most all the
European nations, despite all the advantages described above, are still missing
their targets.  The political will simply does not exist to hamstring
their economies to the extent necessary to roll back CO2 growth.  Actual
growth rates for CO2 emissions have been (source UN):

 

 

 

 

 

 

 

 

 

 

 

 

United States

Europea Union

1990-1995

6.4%

-2.2%

1996-2000

10.1%

2.2%

2001-2004

2.1%

4.5%

You can see that the Europeans positioned themselves well in
the 1990's to make their targets.  Realize that as the treaty was negotiated,
they already had a good idea of these numbers for 1990-1995 and even a few
years beyond.  They knew that by selecting a 1990 baseline, they were
already on target to meet the goals and the US would be far behind.
Again, realize that the 1990-2000 EU performance on CO2 production had nothing
to do with post-Kyoto regulatory responses and everything to do with the
economic fundamentals we outlined above that would have existed with or without
the treaty.

Since 2000, however, it has been a different story.
European emissions have increased as their economies have recovered, at the
same time the US experienced a post-9/11 slowdown.

By the way, the US is generally the great Satan in AGW
circles because its per capita CO2 production is the highest in the
world.  But this is in part because our economic output per capita is
close to the highest in the world.  The US is about in
the middle of the pack in efficiency
, though behind many European countries
which have much higher fuel taxes and heavier nuclear investments.

As an interesting side note, the US per capita CO2
emissions, as show below, have actually been flat to down since the early
1970's.  To the extent that Europe is doing better at CO2 reduction than
the US, it may actually be more of an artifact of their declining populations
vs. America's continued growth.

Finally, if you get really tired of the US-bashing, you can
take some comfort that though the US is the #1 per capita producer of CO2, of
which we are uncertain is even harmful, we have done a fabulous job reducing
many other pollutants we are much more certain are harmful.  For example,
the US has much lower SO2
production
than most European nations and the
water quality is better
.  One could argue that the US has spent its
abatement dollars on things that really matter.

Cost of the
Solutions vs. the Benefits:  Why Warmer but Richer may be Better than
Colder and Poorer

If you get beyond the hard core of near religious believers in the massive
warming scenarios, the average global warming supporter would answer this paper
by saying: "Yes there is a lot of uncertainty, but though the doomsday
warming scenarios via runaway positive feedback in the climate can't be proven,
they are so bad that we need to cut back on CO2 production just to be on the
safe side."

This would be a perfectly reasonable approach if cutting back on CO2
production was nearly cost-free.  But it is not.  The burning of
hydrocarbons that create CO2 is an entrenched part of our lives and our
economies. Forty years ago we might have had an easier time of it, as we were
on a path to dramatically cut back on CO2 production via what is still the only
viable technology to massively replace fossil fuel consumption -- nuclear
power.  Ironically, it was environmentalists that shut down this effort,
and power industries around the world replaced capacity that would have gone
nuclear mostly with coal, the worst fossil fuel in terms of CO2 production (per
BTU of power, Nuclear and hydrogen produce no CO2, natural gas produces some,
gasoline produces more, and coal produces the most).

Just halting CO2 production at current levels (not even rolling it back)
would knock several points off of world economic growth.  Every point of
economic growth you knock off guarantees you that you will get more poverty,
more disease, more early death.  If you could, politically, even make such
a freeze stick, you would lock China and India, nearly 2 billion people, into
continued poverty just when they were about to escape it.  You would in
the process make the world less secure, because growing wealth is always the
best way to maintain peace.  Right now, China can become wealthier from
peaceful internal growth than it can from trying to loot its neighbors.
But in a zero sum world created by a CO2 freeze, countries like China would
have much more incentive to create trouble outside its borders.  This
tradeoff is often referred to as a cooler but poorer world vs. a richer but
warmer world.  Its not at all clear which is better.
 

What impact, warming?

We've already discussed just how much the popular media has overblown the
effect of warming.  Sea levels may rise, but only by 15 inches in one
hundred years, and even that based on arguably over-inflated IPCC models.
There is no evidence that weather patterns will be more severe, or that
diseases will spread, or that species will be threatened by warming.  And,
since most of the warming has been and will be concentrated in winter and
nights, we will see rising temperatures more in a narrowing of temperature
variability rather than a drastic increase in summer high temperatures.
Growing seasons, in turn, will be longer and deaths from cold, which tend to
outnumber heat-related deaths, will decline. 

What impact, Intervention?

While the Kyoto treaty was a massively-flawed document, with current
technologies a Kyoto type cap and trade approach is about the only way we have
available to slow or halt CO2 emissions.  And, unlike the impact of
warming on the world, the impact of such a intervention is very well understood
by the world's economists and seldom in fact disputed by global warming
advocates.  Capping world CO2 production would by definition cap world
economic growth at the rate of energy efficiency growth, a number at least two
points below projected real economic growth.  In addition, investment
would shift from microprocessors and consumer products and new drug research
and even other types of pollution control to energy. The effects of two points
or more lower economic growth over 50-100 years can be devastating:

  • Remember the power of compounded growth rates we discussed earlier.  A world real economic growth rate of 4% yields income fifty times higher in a hundred years.  A world real economic growth rate two points lower yields income only 7 times higher in 100 years.  So a two point reduction in growth rates reduces incomes in 100 years by a factor of seven!  This is enormous.  It means, literally, that on average everyone in a cooler world would make 1/7 what they would make in a warmer world.
  • Currently, there are perhaps a billion people, mostly in Asia, poised to exit millennia of subsistence poverty and reach the middle class.  Global warming intervention will likely consign these folks to continued poverty.  Does anyone remember that old ethics problem, the one about having a button that every time you pushed it, you got a thousand dollars but someone in China died.  Global warming intervention strikes me as a similar issue - intellectuals in the west
         feel better about man being in harmony with the Earth but a billion Asians get locked into poverty.
  • Lower world economic growth will in turn considerably
    shorten the lives of billions of the world's poor
  • A poorer
    world is more vulnerable to natural disasters
    .  While AGW
    advocates worry (needlessly) about hurricanes and tornados in a warmer
    world, what we can be certain of is that these storms will be more devastating and kill more people in a poorer world than a richer one.
  • The unprecedented progress the world is experiencing in
    slowing birth rates, due entirely to rising wealth, will likely be
    reversed.  A cooler world will not only be poorer, but likely more populous as well.  It will also be a hungrier world, particularly if
    a cooler world does indeed result in lower food production than a warmer
    world
  • A transformation to a prosperous middle class in Asia will
    make the world a much safer and more stable place, particularly vs. a cooler world with a billion Asian poor people who know that their march to progress was halted by western meddling.
  • A cooler world would ironically likely be an
    environmentally messier world.  While anti-growth folks blame all
    environmental messes on progress, the fact is that environmental impact is
         a sort of inverted parabola when plotted against growth.  Early
    industrial growth tends to pollute things up, but further growth and
    wealth provides the resources and technology to clean things up.  The
         US was a cleaner place in 1970 than in 1900, and a cleaner place today
    than in 1970.  Stopping or drastically slowing worldwide growth would
    lock much of the developing world, countries like Brazil and China and
    Indonesia, into the top end of the parabola.  Is Brazil, for example, more likely to burn up its rain forest if it is poor or rich?

The Commons Blog
links to this
study
by Indur Goklany on just this topic:

If global warming is real and its effects will one
day be as devastating as some believe is likely, then greater economic growth
would, by increasing greenhouse gas (GHG) emissions, sooner or later lead to
greater damages from climate change. On the other hand, by increasing wealth,
technological development and human capital, economic growth would broadly
increase human well-being, and society's capacity to reduce climate change
damages via adaptation or mitigation. Hence, the conundrum: at what point in
the future would the benefits of a richer and more technologically advanced
world be canceled out by the costs of a warmer world?

Indur Goklany attempted to shed light on this
conundrum in a recent paper presented at the 25th Annual North American
Conference of the US Association for Energy Economics, in Denver (Sept. 21,
2005). His paper "” "Is a
richer-but-warmer world better than poorer-but-cooler worlds?"
"” which can
be found here,
draws upon the results of a series of UK Government-sponsored studies which
employed the IPCC's emissions scenarios to project future climate change
between 1990 and 2100 and its global impacts on various climate-sensitive
determinants of human and environmental well-being (such as malaria, hunger,
water shortage, coastal flooding, and habitat loss). The results indicate that
notwithstanding climate change, through much of this century, human well-being
is likely to be highest in the richest-but-warmest world and lower in
poorer-but-cooler worlds. With respect to environmental well-being, matters may
be best under the former world for some critical environmental indicators through
2085-2100, but not necessarily for others.

This conclusion casts doubt on a key premise
implicit in all calls to take actions now that would go beyond "no-regret"
policies in order to reduce GHG emissions in the near term, namely, a
richer-but-warmer world will, before too long, necessarily be worse for the
globe than a poorer-but-cooler world. But the above analysis suggests this is
unlikely to happen, at least until after the 2085-2100 period.

Policy Alternatives

Above, we looked at the effect of a cap and trade scheme, which would have
about the same effect as some type of carbon tax.  This is the best
possible approach, if an interventionist approach is taken.  Any other is
worse.

The primary other alternative bandied about by scientists is some type of
alternative energy Manhattan project.  This can only be a disaster.
Many scientists are technocratic
fascists at heart
, and are convinced that if only they could run the
economy or some part of it, instead of relying on this messy bottom-up
spontaneous order we call the marketplace, things, well, would be better.
The problem is that scientists, no
matter how smart they are, miss with their bets
because the economy, and
thus the lowest cost approach to less CO2 production, is too complicated for
anyone to understand or manage.  And even if the scientists stumbled on
the right approaches, the political process would just screw the solution
up.  Probably the number one alternative energy program in the US is
ethanol subsidies, which are scientifically insane since ethanol
actually increases rather than reduces fossil fuel consumption
.
Political subsidies almost always lead to investments tailored just to capture
the subsidy, that do little to solve the underlying problem.  In Arizona,
we have thousands of cars with subsidized conversions to engines that burn
multiple fuels but never burn anything but gasoline.  In California, there
are hundreds of massive windmills that never turn, having already served their
purpose to capture a subsidy.  In California, the state bent over
backwards to encourage electric cars, but in fact a different technology, the
hybrid, has taken off.

Besides, when has this government led technology revolution approach ever
worked?  I would say twice - once for the Atomic bomb and the second time
to get to the moon.  And what did either get us?  The first got us
something I am not sure we even should want, with very little carryover into
the civilian world.  The second got us a big scientific dead end, and
probably set back our space efforts by getting us to the moon 30 years or so
before we were really ready to do something about it or follow up the efforts.

If we must intervene to limit CO2, we should jack up the price of fossil
fuels with taxes, or institute a cap and trade scheme which will result in
about the same price increase, and the market through millions of individual
efforts will find the lowest cost net way to reach whatever energy consumption
level you want with the least possible cost.  (The only real current
alternative that is rapidly deploy-able to reduce CO2 emissions anyway is nuclear
power
, which could be a solution but was killed by...the very people now
wailing about global warming.)

The table of contents for the rest of this paper, . 4A Layman's Guide to Anthropogenic Global Warming (AGW) is here Free pdf of this Climate Skepticism paper is here and print version is sold at cost here

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