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The Kyoto Commitments: Can Nations Meet Them
With the Help of Technology?
A monograph published March 2000 by the ACCF Center for Policy Research.
Introduction
Following its mandate to analyze the impact of environmental policies
on U.S. economic growth and environmental quality, the ACCF Center for
Policy Research has sponsored groundbreaking research on climate change
policy by top scholars and economic modelers for more than a decade. This
volume contains the proceedings of the Center's policy symposium, The
Kyoto Commitments: Can Nations Meet Them With the Help of Technology?,
held October 13, 1999, in Washington, D.C.
Building on its earlier research examining the economic impact of the
Kyoto Protocol which seeks to reduce U.S. greenhouse gas emissions to
7 percent below 1990 levels (the U.S. Department of Energy estimates that
U.S. emissions will be 40 percent above the baseline forecast by 2010),
the Center's 1999 forum analyzed two new issues: (1) whether developed
countries could possibly meet their emission limitation commitment under
the Protocol; and (2) whether new technologies will be available by 2008-2012
to make the emission reductions feasible.
Mary H. Novak, [available
for download, 212k PDF] senior vice president, Energy and Electric
Power Services, WEFA, Inc., reviewed recent assessments for carbon dioxide
emissions prepared by five government organizations-the International
Energy Agency, the European Commission, the U.S. Department of Energy's
Energy Information Administration, the Asia Pacific Energy Research Center,
and the Australian Bureau of Agricultural and Resource Economics-plus
an independent assessment prepared by WEFA's European energy analysts.
The unifying theme of the six reports is that the required reduction in
carbon emissions from the energy sector is very large, even though each
country is gaining in energy and carbon efficiency. In addition, the reports
stress that carbon dioxide emissions are related to all facets of energy
use in the economy, that energy is fundamental to improving economic performance,
and that energy and carbon efficiency is difficult to improve further
in the short to mid term due to the cost and longevity of energy-using
capital equipment. Further, the studies note that there is little time
available for innovation, demonstration, commercialization, and acceptance
over the short time available before the 2008-2012 assessment period.
And, importantly, they stress that the reduction in carbon emissions that
would be necessary to meet the Kyoto goals may require leapfrogging technologies
or technological invention, both of which are problematic and expensive.
Thomas G. Marx, [available
for download, 176k PDF] director, global climate issue, at the Public
Policy Center of General Motors Corporation, presented a study sponsored
by the Business Roundtable that analyzed the critical long-term role that
the development, commercialization, and global dissemination of new technologies
must play in responding to concerns about climate change. New technology
is essential because the costs of significantly abating emissions with
existing technology are economically and socially unacceptable. Technology
is also the only pathway that leads to both a safer global environment
and a more prosperous world economy. Yet the discord created by the debate
over the Kyoto Protocol prevents the nation from marshalling any semblance
of an effective technology policy for responding to climate change concerns.
While technology has a critical role to play in the long term, it cannot
make a significant contribution to meeting the targets of the Kyoto Protocol.
The Protocol provides neither the time nor the policy environment required
to develop and commercialize on a large scale and disseminate worldwide
the innovative energy-saving technologies needed to make such large reductions
in emissions without serious harm to the world's economies. Technological
contributions in the short term, while limited, can be accelerated by
encouraging voluntary actions, providing information clearinghouses, coordinating
government policies better to avoid conflicts and unintended consequences,
and eliminating regulatory barriers that stifle innovation.
Keynoting the Center's forum were Representatives John D. Dingell (D-MI)
and John E. Sununu (R-NH). Representative Dingell, [40k
PDF] the ranking Democratic member of the House Commerce Committee,
noted that the terms of the Kyoto Protocol for the United States are singularly
onerous because by 2010, U.S. carbon dioxide emissions will exceed the
Kyoto target by 40 percent relative to the baseline forecasts. Experience
tells us there are very few surefire ways to accomplish that goal. One
proven way to reduce greenhouse gas emissions is with "a very fine
and massive economic recession," Mr. Dingell said, since economic
contraction has always produced a significant reduction in energy consumption
and of course with it, carbon dioxide emissions-clearly an unacceptable
option.
Representative Dingell stressed further that the developing countries,
especially China and India, remain as intransigent as ever. The European
nations are busily trying to undermine the portions of the agreement dealing
with emissions trading and flexibility, the very concepts that Protocol
supporters invoke when they claim that the costs can be made bearable.
In the United States, the Kyoto agreement rests in a state of suspended
animation that Representative Dingell hopes will persist.
Representative Sununu [52K
PDF], a member of the House Appropriations and Budget Committees,
gave forum participants an assessment of the science, costs, and legislative
outlook for the Kyoto Protocol. He stressed that the scientific foundation
for the Protocol is weak and that current climate policy models need to
be improved. Citing the recent analysis by WEFA, Representative Sununu
also noted that the real costs of the Kyoto agreement to American consumers
and the effect of these costs on U.S. economic growth cannot be ignored.
Finally, he questioned the fundamental adequacy of the agreement. "What
sense does it make to have a binding treaty on the United States or Annex
B countries that isn't binding on China or Mexico or India or even some
of the Central European countries?" he asked. "That's not the
American way, it's not fair, and that argument alone I think struck a
chord strong enough for the Senate to vote against ratification without
some binding and fair equivalent mandates on developing nations."
The work of these noted climate policy scholars clearly shows that the
industrialized countries of North America, the Pacific region, and Western
Europe cannot meet their emissions targets without exorbitant carbon taxes,
and that in the long run technological progress will facilitate the achievement
of global carbon dioxide emission reductions but in the short run there
is no "quick technological fix." Given the need to maintain
strong U.S. economic growth to address such challenges as a growing population,
"saving" Social Security, the retirement of the baby boom generation,
and a persistent trade deficit, policymakers need to weigh carefully the
Kyoto Protocol's negative economic impacts and its failure to engage developing
nations in meaningful action. A more prudent and useful course of action
would be to remove the disincentives in the U.S. tax code for the installation
of new and efficient energy equipment and to spend more on research for
climate change models and new technology, in particular carbon sequestration.
The ACCF Center for Policy Research is grateful to our presenters and
respondents for their contributions that made this symposium and book
possible.
The Center will continue to focus its attention and resources on economic
growth through sound tax and environmental policies. We look forward to
sharing new information, analyses, and proposals with you, and welcome
your thoughts and inquiries about this and all other ACCF Center for Policy
Research programs.
Charls E. Walker
Chairman
Mark A. Bloomfield
President
Margo Thorning
Senior Vice President and Director of Research
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