Kerry and Lieberman Unveil Their Climate Bill: Such a Deal!
I see that my colleague Sallie James has already blogged on the inherent protectionism in the Senate’s long-awaited cap-and-tax bill. A summary was leaked last night by The Hill.
Well, we now have the real “discussion draft” of “The American Power Act” [APA], sponsored by John Kerry (D-NH) and Joe Lieberman (I-CT). Lindsay Graham (R-SC) used to be on the earlier drafts, but excused himself to have a temper tantrum.
So, while Sallie talked about the trade aspects of the bill, I’d like to blather about the mechanics, costs, and climate effects. If you don’t want to read the excruciating details, stop here and note that it mandates the impossible, will not produce any meaningful reduction of planetary warming, and it will subsidize just about every form of power that is too inefficient to compete today.
Copenhagen: Let the Games Begin!
25,000 bureaucrats, factota, hangers on, and representatives of various environmental organizations have just converged on Copenhagen for the UN’s latest “Conference of the Parties (COP) to its infamous 1992 climate treaty. Expect a lot of heat, not much light, and a punt right into our next election.
President Obama says that the US will agree to a “politically binding” reduction of our emissions of carbon dioxide to a mere 17% of 2005 levels by 2050. This will allow the average American the carbon dioxide emission of the average citizen in 1867. Obama’s pronouncement has stepped all over the toes of the US Senate, which really doesn’t want to vote on similar legislation this election year. Jim Webb, a democrat heretofore very loyal to the President recently wrote Obama a very tersely worded note reminding him that the power to commit the nation to such a regulation lies with the Senate, not with the Commander-in-Chief.
The UN’s own climate models show that even if every nation that has obligations under the failed Kyoto Protocol (which is supposed to be replaced by the Copenhagen Protocol) did what Obama wants, that only 7% of prospective warming would be prevented by 2100. The world’s largest emitter—China—was exempt then, and won’t agree to these reductions now.
Instead they will agree to reduce “carbon intensity”—the amount of carbon dioxide emitted per unit GDP—by 20% per decade. This is nothing but business as usual for a developing or robust economy. In fact, when President George W. Bush said that was our global warming policy, he was roundly booed. The Chinese announcement—already telegraphed, is being greeted with unmitigated praise by the same environmentalists who beat on Bush for the exact same policy. India has just announced that there is no way that they will agree to any emission reductions unless we pay them lotsa money. Obama thinks that’s a good idea, too. Polling data, anyone?
Since there’s no way that India and China will agree to large reductions, the real result of Copenhagen is that the climate can will be kicked down the road to the next COP, which begins on November 8, 2010, right down the road in Mexico City. That’s six days after our Congressional election, guaranteeing that cap-and-tax will be on the voters’ minds when they close the curtain on the current Congress.
Are Industrialized Countries Responsible for Reducing the Well Being of Developing Countries?
A basic contention of developing countries (DCs) and various UN bureaucracies and multilateral groups during the course of International negotiations on climate change is that industrialized countries (ICs) have a historical responsibility for global warming. This contention underlies much of the justification for insisting not only that industrialized countries reduce their greenhouse gas emissions even as developing countries are given a bye on emission reductions, but that they also subsidize clean energy development and adaptation in developing countries. [It is also part of the rationale that industrialized countries should pay reparations for presumed damages from climate change.]
Based on the above contention, the Kyoto Protocol imposes no direct costs on developing countries and holds out the prospect of large amounts of transfer payments from industrialized to developing countries via the Clean Development Mechanism or an Adaptation Fund. Not surprisingly, virtually every developing country has ratified the Protocol and is adamant that these features be retained in any son-of-Kyoto.
For their part, UN and other multilateral agencies favor this approach because lacking any taxing authority or other ready mechanism for raising revenues, they see revenues in helping manage, facilitate or distribute the enormous amounts of money that, in theory, should be available from ICs to fund mitigation and adaptation in the DCs.
Continue reading here.
A Harsh Climate for Trade
Although it has very much taken a back-seat to health care, and a press report [$] today say it could be bumped down yet another notch on the administration’s hierarchy of goals, climate change is shaping up to be a major battle if the others don’t prove to be prohibitively exhausting. So today I am weighing in on the debate by releasing my new paper on the dangers of using trade measures as a tool of climate policy.
The Democrats were keen to pass a climate change bill in advance of the December meeting in Copenhagen designed to agree on a successor regime to the Kyoto protocol, which expires in 2012. However, opposition from a number of quarters and the fear of health-care-town-halls-mark-II has cooled their heels. Senate leaders have pushed back the deadline for passing bills out of committees a number of times.
The reason why climate change legislation has become so controversial is that businesses and consumers are, quite understandably, fearful about any policies that threaten to increase their costs. I’ll leave it to others to blog about the effect of emissions-reductions policies on jobs and profits, but even the fear of losses has led to calls for special deals for “vulnerable industries”, in the form of free emission permits and/or protection from imports that are sourced from countries that purportedly take insufficient steps to limit emissions.
H.R. 2454, the so called Waxman-Markey bill passed by the House in June, contains both free permits and provisions for carbon tariffs. I’ve blogged before about the efforts of trade-skeptic senators to introduce the same kinds of protections in the senate bill. To that end, Sen. Sherrod Brown (D, OH) is reportedly meeting with Sen. Barbara Boxer, Chairwoman of the Senate Environment and Public Works Committee next week about trade protections for manufacturing industries. As my paper makes clear, I think these efforts are misguidedly ineffective at best, and harmful at worst.
I’m looking forward to discussing these issues in more detail tomorrow at a Hill briefing in Washington DC. Registration for the event was closed very early because of overwhelming demand, but you can watch the event when the video becomes available on the Cato website.
The President’s New Cars
I had an op-ed yesterday in USA Today about President Obama’s proposed new fuel-economy standards. Don’t like ‘em. Unfortunately, an editing snafu over at the newspaper inadvertently left out the fact that there are four models at present that meet the proposed new standard — the 2010 Honda Insight (41 mpg) and the 2010 Ford Fusion Hybrid (39 mpg) were left off the list.
Space prohibited me from making an additional point. Even if there is no rebound effect, my colleague Pat Michaels finds that global temperatures will only be reduced by 0.005 degrees Celsius by 2050 and 0.0078 degrees Celsius by 2100 once you plug those emissions reductions into the computer models used by the IPCC. Of course, proponents contend that U.S. action on fuel efficiency will lead to like action abroad. Well, good luck with that. But even if all of the signatories to the Kyoto Protocol adopted Obama’s proposed fuel-economy standards, global temperatures would be reduced by only 0.038 degrees Celsius by 2050 and 0.071 degrees Celsius by 2100. If you tried to monetarize those benefits, you would be hard pressed to come up with an defensible number of consequence.
So what should be done instead? Nothing. At the risk of sounding politically irrelevant, there is no good case for the government to reduce U.S. gasoline consumption via fuel economy standards or fuel taxes; an argument I made at length in a study I co-authored almost two years ago with my colleague Peter Van Doren.
[Cross-posted at The Corner]
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