Candor about Kyoto

When the Bush Administration announced that it would not take steps to implement the Kyoto Protocol, environmentalists and many politicians, especially those in the European Union (EU), were apoplectic. Someone who is not a cynic might find that reaction surprising.

Where had these outraged critics been since 1997? In that year – before the Kyoto Protocol was adopted – the U.S. Senate voted 95-0 to oppose any treaty that exempted developing countries and would inflict economic harm on the United States.

When, in spite of the Senate’s action, the Clinton Administration proceeded to negotiate just such an agreement, it delayed submitting the Protocol to the Senate, indicating it would wait to seek ratification until there were, first, meaningful participation by developing countries and, second, new mechanisms to lower the cost to the United States. Since developing countries are exempt from the Protocol, and since the EU steadfastly rejects the unconstrained use of carbon sinks and trading favored by the Clinton Administration, the conditions necessary for submitting the Protocol to the Senate never existed.

So, what was new in President Bush’s announcement? Quite simply, candor. The President said what most people familiar with this issue already knew: Kyoto is flawed and will not work. Since the Protocol cannot be changed until it enters into force, there is no way to fix it to make it acceptable to the U.S. Senate. This reality cannot be a surprise to observers in the EU or the U.S.

State of the Science

The President’s decision was right on scientific grounds, on economic grounds and on principle.

Although some regularly assert that the science of climate is settled, it is anything but. The final draft of the IPCC’s Third Assessment (the scientific report, as opposed to the draft summary for policy makers) contains numerous cautions about climate change. The Report makes it clear that the scientific community is unable to rule out natural variability, and acknowledges that too little is known about clouds, water vapor, solar impacts, aerosols and carbon sinks to draw definitive conclusions about the magnitude of human influence on the climate system.

Two important facts about the science are known. First, if the prevailing theory is correct, the lower atmosphere should have warmed more than the surface. Yet we know from satellite and weather balloon measurements that it hasn’t. Second, the models that are the basis for apocalyptic predictions about future temperatures are unable to correctly “back-cast” temperatures. Instead, they overstate past temperatures by a factor of two.

When forecasts are corrected for this overstatement, the adjusted projections, out to 2100, fall within the range of natural variability. At the same time, many variables in these models reflect assumptions for which there are weak empirical foundations. Therefore, even the corrected output of the models should be viewed with caution in assessing public policy options.

A Regressive Tax

The economic consequences of the Kyoto Protocol also justify President Bush’s decision. The impact of actions to reduce carbon emissions to 1990 levels or lower has been extensively studied. The overwhelming majority of these independent analyses reach similar conclusions: Economic growth would be lower; the price of energy would be significantly higher. The estimated decrease in gross domestic product ranges between one and four percent, with two percent being a best estimate. In dollars, that is a loss of more than $150 billion annually – about the amount that the nation now spends on all environmental regulation.

Ultimately these costs are a tax and a regressive one at that. They would be reflected in fewer jobs and larger burdens on lower-income people. The California electricity-supply problem reaffirms the facts that economic growth requires increases in energy supplies and that there are no magic conservation measures to achieve one without the other. Increased energy efficiency, which we continue to achieve as a nation, is not the same as using less.

Finally, the President’s decision reflects sound policy. No country has made public a verifiable plan for meeting its Kyoto obligations. There is good reason: most cannot.

Although every European country says that it supports ratification of Kyoto, none have explained what ratification manes for their citizens and their economies. If they were so confident that these targets could be achieved at low cost with no serious economic consequences, they would be more forthcoming with their plans and analyses. Studies of the EU suggest that the UK and Germany may be able to meet their targets, but that is anything but certain. If they do, it will be for reasons that have nothing to do with the Kyoto Protocol or climate policy.

In the U.S., compliance with Kyoto would require reducing fossil fuel use by about 30 percent. That is roughly equivalent to taking all cars off the road, or shutting down all manufacturing. Clearly, this is impractical. It demonstrates that there is no readily available, economically viable technology to replace our capital stock as quickly as required by the Kyoto timetable.

Starting over

An agreement that few countries, if any, can achieve without economic harm clearly justifies rejection – and starting over. Some say that rather than kill Kyoto, it would be preferable to fix its flaws, which more people are willing to acknowledge than has previously been the case. But Article 26 of the Kyoto Protocol provides that the Protocol cannot be changed until it enters into force. Once it has entered into force, what incentive would countries who are exempt from its limits, or who might gain economically at our expense, have for changing it?

It is time to start over, rather than continuing to engage in fruitless discussion, fingerpointing and promoting an instrument that cannot achieve its purposes. The President’s decision provides a basis for that new beginning.

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