Licence for gas emission ( American North-East are developing back door Kyoto)

In this final instalment of a three-part series on climate change, CHARLES J. HANLEY writes that companies are trading ‘hot air’ to buy time on the climate.

BUYERS, sellers, brokers and lawyers, even “specialists in carbon asset creation management”, convened last week on the banks of the Rhine to launch a new business for a worried world.

CarbonExpo, in the cavernous congress halls of Cologne, Germany, is a three-day trade fair for those who would deal in carbon dioxide – buying and selling permits to discharge the waste gas chiefly blamed for global warming.

This carbon trading is a Europe-wide effort to use supply-and-demand to control emissions and protect the climate, in the spirit of the Kyoto Protocol. But the supply far outstrips demand, Europeans are finding. The climate of this marketplace itself is decidedly cloudy. Advance prices have plunged by half.

More than six years after governments negotiated the historic climate accord in Kyoto, Japan, the world is taking only halting steps – not always forward, never in unison – to follow through.

A worker shovelling coal into a machine at a coal mill in Shanghai. China loom larger year by year as a big coal burner. In fact, the Kyoto treaty itself is not yet in force since it has not been ratified, as required, by industrial countries emitting a total of 55% of “greenhouse gases” such as carbon dioxide that trap heat in the atmosphere that Earth otherwise would give off.

Russia’s expected accession later this year would clear the 55% hurdle. But even a functioning Kyoto agreement would have little impact: its limited reductions would barely slow the greenhouse buildup, and the biggest emitter, the United States, would remain outside the treaty.

Scientists, meanwhile, grow increasingly concerned. “If carbon dioxide had a colour, if people saw the sky getting darker, they would have no problem recognising what’s going on,” saysclimatologist David Pierce of San Diego’s Scripps Institution of Oceanography.

What’s going on is that the world’s daily output of man-made carbon dioxide, from burning coal, oil and other fossil fuels, is 11% greater today than a decade ago. Under Kyoto, industrial nations were actually supposed to be cutting back greenhouse gas discharges, to 8% below 1990 levels by the year 2012.

The planet, meanwhile, is warming. Global temperatures rose almost 0.5°C from 1981 to 1998, NASA scientists report. If greenhouse emissions are not cut back soon, temperatures could rise many degrees more, expanding oceans, causing drought, intensifying storms and altering climate in other predictable and unpredictable ways, say scientists of the United Nations-organised Intergovernmental Panel on Climate Change.

As the mercury rose in recent years, so did US political opposition to reducing power plant and car exhaust emissions, imposing energy taxes or taking other steps to try to stabilise the atmosphere. Higher energy and other costs would seriously damage the economy, it was said.

Economic analyses to comply with Kyoto ranged widely, from a projected annual cost of US$112 (RM425) to US$2,700 (RM10,260) per American family, coupled with heavy job losses. Environmentalists say dire projections didn’t factor in the costs – to coastal states, agriculture and other sectors – of doing nothing, or the job growth in new energy industries.

Economists say any ultimate plan must include “cap-and-trade” – schemes whereby emissions caps are imposed, and companies that emit less gas than allowed can sell unused allotments to others who overshoot the target. The profit motive is expected to drive efforts and technology to rein in emissions.

Europe’s “cap-and-trade” is by far the biggest and most ambitious. “We want to demonstrate that this works, using market-based tools,” says European Union’s environment commissioner Margot Wallstrom.

The EU’s 25 nations, whose leaders claim a “special responsibility” to lead on climate with Washington on the sidelines, ratified the Kyoto Protocol in 2002 and put its provisions into European law.

Now, whether the treaty takes effect elsewhere or not, Europe must reduce greenhouse emissions overall to 8% below 1990 levels by 2012, via formulas distributing the burden to individual countries. It has made progress, but slowly. Emissions are 2% less than in 1990, thanks largely to big reductions in Germany and Britain.

To kick off trading, national governments are allocating carbon dioxide quotas to some 12,000 plants across the continent – from power plants and oil refineries to paper and cement factories. Those permits and the ability to trade them, as of January, are what drew company reps and technology salesmen, legal experts and would-be dealers to Cologne for CarbonExpo.

As national allocation plans were announced, however, the “hot air” market lost some of its bounce.

Germany’s pacesetting plan, in particular, deflated expectations: in its first round, Berlin shaved just 2 million tons off current annual output of 505 million tons of carbon dioxide gas. Following the German lead, other EU governments also drafted lax emissions plans.

With hundreds of millions of tons of quotas issued, but relatively little need for anyone to buy them, speculative prices on the carbon market slid by nearly half, from about US$16 (RM61) per ton of CO2 in January.

The EU’s Wallstrom noted that with the economic downturn in Europe and the difficult political situation there, extremely ambitious plans were not expected. As for carbon trading’s future, she says “we have to move one step at a time” and some encouraging steps are being taken in the United States.

Ten states in the American North-East are developing their own regional “cap-and-trade” plan for power plants and carbon dioxide, to be unveiled in April next year. Some see it as a potential “backdoor Kyoto,” a seed for US national action – even for carbon trading between Europe and American states – in defiance of the Bush administration. In Washington, there is a proposal to cap greenhouse emissions at 2000 levels by 2010, and create an emissions trading system.

The Kyoto formulas would have required the United States – home to 5% of the world’s population but one-quarter of its carbon dioxide emissions – to reduce greenhouse emissions to 7% below 1990 levels by 2012. President Bush rejected the climate accord as based on “incomplete” science and as a threat to the US economy. His administration instead called for voluntary emissions reductions by industry, and continued government-funded research into climate and clean-energy and other technologies.

Bush also complained that Kyoto’s controls didn’t apply to China and some other fast-growing economies, poor nations that didn’t create the “greenhouse” problem and were deemed unready to bear the immediate burden of fixing it.

China looms larger year by year as a big coal burner. Some suggest it be held to improved energy-efficiency standards, if not outright emissions caps. To help wean the Chinese off coal, some suggest the West give their nuclear-power industry more advanced technology.

Some scientists and engineers said so much time has been lost that only carbon “sequestration” – technology to capture and store emissions – can save the climate. One calculated, however, that a Lake Michigan in liquid carbon dioxide would have to be hoarded away in the next 100 years.

If nothing else, concerned citizens should act individually, says former US climate negotiator Eileen Claussen. “The choices you make are very important – the car you buy, the transport you use, the washing machine you buy.”

The talk and stalemate go on, with a bit of carbon trading in Europe. Penehuro Lefale, meanwhile, is opting for action, as he watches seas rise with the temperatures in the Pacific. A science adviser at the 1997 Kyoto negotiations, the Samoan climatologist has given up on talk. “The process wasn’t going anywhere. I felt the best way to contribute was on the adaptation side.”

He now works with Pacific island governments to prepare for climate change, on early-warning systems for more numerous, more powerful tropical cyclones. Too much time has passed for a CarbonExpo or other steps to do much good, he said. Instead, it’s time to get ready, “to save lives.” – AP

Global Warmers Adopt New Tactic

Friday, June 04, 2004
By Steven Milloy
The global warming treaty known as the Kyoto protocol is politically dead in the U.S. But the treaty's left-leaning environmental extremist supporters haven't given up their fantasy of creating a socialist global economy through controls on energy use.

Rather, they've merely switched tactics to achieve that dubious aim -- and I'm not referring to making dopey movies like "The Day After Tomorrow" (search). The new tactic is to pressure publicly owned corporations into taking steps to reduce carbon dioxide emissions (search) -- essentially committing to private Kyoto protocols (search ) on a corporation-by-corporation basis.

The sort of pressure employed by the global warming activists is not the usual one of forcing corporate managements to cave-in under the threat of bad publicity. Instead, the activists are becoming shareholders of publicly owned companies, attempting to steer corporate policy under the guise of being owners of the corporations. During 2003, these activist-shareholders filed resolutions with more than 25 companies urging the companies to take action to reduce greenhouse gas emissions (search).

None of the resolutions came close to passing, but in some cases they did achieve significant shareholder support, such as: 32 percent at ChevronTexaco (search); 27 percent at American Electric Power (search), the largest U.S. generator of coal-fired electric power; 23 percent at General Electric (search); 21 percent at ExxonMobil (search).

In response to this pressure, American Electric Power announced in February 2004 that it would assess and report to shareholders on the risks of its greenhouse emissions and impacts of efforts to reduce those discharges. Another major coal-burning utility, Cinergy Corp. (search), also agreed to demands from state and church pension funds that it report on greenhouse emissions and other environmental matters. And let's not forget the 40 or so large corporations -- including Dupont, IBM and Boeing -- who have already caved into the activists by joining the Pew Center on Global Climate Change (search). BP has even taken to labeling its primary product, oil, a "necessary evil" in television commercials.

Pressure on corporations to take action on global warming is also coming from something called the Carbon Disclosure Project (search) -- 87 institutional investors managing $9 trillion in assets. The Project has asked 500 large companies to disclose their carbon risk and plans for mitigating the problem. Global warming activists have also marshaled pension funds with about $800 billion under management to lobby the U.S. Securities and Exchange Commission to force publicly owned companies to disclose financial risks related to global warming on their balance sheets.

Even more frightening is the activists' move toward the ultimate corporate takeover. Surfing the wave of bad publicity related to corporations like Enron (search) and WorldCom (search), the activists are lobbying the SEC to propose a rule that would allow minority shareholders to nominate directors to corporate boards.

Although corporate shareholders have the right to vote for directors on corporate boards, the process of nominating those directors has traditionally been an internal corporate process not involving the shareholders. The activists hope that if they can get their candidates nominated, they hope to get them elected through a shareholder voting method called "cumulative voting," (search) a process designed to assure that minority shareholders can elect their candidates.

The activists don't plan to stop there. Ultimately, they would like to see that controlling majorities of the directors on the boards of a publicly owned corporations are "independent" -- that is, have no ties to corporate management. Ties to activists, of course, would be allowed. And perhaps the most frightening aspect of all is the lack of awareness about what the activists are up to. Of the 690 public comments received by the SEC regarding the proposal to allow minority shareholders to nominate directors, only 10 were from corporations and corporate executives. The vast majority was from activists and their supporters in favor of the proposal.

United for Jobs (search), a project of the National Black Chamber of Commerce (search), Small Business Survival Committee (search) and the United Seniors Association (search), lampooned the released of "The Day After Tomorrow" with a mock movie poster titled The Day After Kyoto featuring Depression-era unemployment lines. Fearing the disastrous ramifications of a global warming treaty, President Bush withdrew the U.S. from the Kyoto protocol in 2001. No global warming legislation has ever been seriously considered by Congress. The proposal of Sens. John McCain and Joe Lieberman to cap U.S. greenhouse emissions at 2000 levels by 2010, and create an emissions trading system is not likely to go anywhere either.

Even politicians -- on a bipartisan basis -- know that the junk science-fueled Kyoto protocol would be an economic suicide capsule. Though Greens have failed to advance their agenda through scientific and political debate in the public policy arena, they haven't quit. They've just changed pressure points.

Steven Milloy is the publisher of JunkScience.com, an adjunct scholar at the Cato Institute and the author of Junk Science Judo: Self-Defense Against Health Scares and Scams (Cato Institute, 2001).

USA > Domestic Politics
from the June 14, 2004 edition

TRAFFIC: California cars would emit less greenhouse gas under a first-of-a-kind plan to be unveiled Monday.
GENE BLEVINS/LOS ANGELES DAILY NEWS/AP

New war on emissions

A state plan to be unveiled Monday would be the first to curb greenhouse-gas emissions in cars.

By Mark Sappenfield | Staff writer of The Christian Science Monitor

OAKLAND, CALIF. – Once again, California is trying to change the world. This time its target is the ever-present automobile, and Monday state officials will announce emissions regulations of unprecedented scope and significance.
Never before has a country - let alone a state - required that car manufacturers reduce the amount of greenhouse gases emitted from tailpipes in an effort to combat global warming. Within the next decade, however, California will demand that new cars sold in the state cut those pollutants by 30 percent.

Related stories:

04/22/04

Smog regulations just got tougher

04/22/04

Earth Day's biggest challenge yet

E-mail newsletters

Get all of today's headlines, or alerts on specific topics.
Subscribe for free.

E-mail this story

Write a letter to the Editor

Printer-friendly version

Permission to reprint/republish

On one hand, it is a measure of California's clout: 12 percent of all cars sold in the United States roll off lots here. Yet it also marks a reprise of California's role as Washington West - the primary counterweight to the policies of the Bush administration. As a result, the decision could stir states dissatisfied with Washington's leadership, despite the fact that the program could eventually add $1,000 to new car prices.

"In a number of states, a lot of misgivings have been expressed about the failure of the federal government to do anything about greenhouse gases," says Therese Langer of the American Council for an Energy Efficient Economy in Washington. "That will make this very appealing."

In recent years, seven Northeastern states - including New York, New Jersey, and Massachusetts - have adopted California's auto-emission regulations, which are tougher than the federal standard. California's new plans, however, represent something unique. It has never before regulated gases such as carbon dioxide, which many scientists believe contribute to global warming.

While some European countries have voluntary guidelines for reducing tailpipe greenhouse-gas emissions, California would be the first in the world to create a mandatory standard, introducing it in 2009 and gradually strengthening it until 2015. Since California is home to some of the most car-clogged cities in the US, the change would have an obvious environmental effect.

Yet even environmentalists say the greater significance is political. As it has done many times before, California has crafted a new policy for other states and countries to follow. In 1960, for example, California established the world's first agency to control air pollution; several years later it became the first state to regulate pollutants such as carbon monoxide.

Already, New York has said it would follow California's new greenhouse-gas regulations, and Canada has made similar intimations. The California Air Resources Board is expected to lay out the details of the plan Monday. Two years ago, the legislature passed a bill - signed by former Gov. Gray Davis - that gave the agency the authority to regulate greenhouse gases. Gov. Arnold Schwarzenegger says he will support the decision.

"If it weren't for California, the environment would be much worse in this country," says Roland Hwang of the Natural Resources Defense Council. "It puts pressure on the auto industry and Washington to come up with a solution."

For its part, the auto industry wants nothing to do with the new California policy, and it has said it might sue. At issue is California's authority. The federal Clean Air Act clearly gives California the right to set its own emissions policy in order to curb pollution. Many times in the past, California has used this authority to pass stricter regulations than those that existed in other states.

But critics of the new plan suggest that one of California's fundamental goals is to improve fuel-efficiency, and Washington still retains total authority over national fuel-efficiency standards. Experts suggest that there are other ways to lower greenhouse-gas pollutants besides improving fuel efficiency, such as cutting the carbon content of gasoline. Yet improved fuel economy is "the great untapped resource," says Ms. Langer.

A study by her organization found that fuel economy could be doubled using existing technology - such as lighter materials and more sophisticated transmissions - with no change in a car's appearance and no loss of performance. The cost: between $1,000 and $1,500 per car - roughly in line with California's estimates. Moreover, if California's plan can survive, the state hopes its mandate will spur further innovation. It has happened before: In the 1970s, California pioneered the use of the catalytic converter, which is now standard equipment on all automobiles.

"[Auto manufacturers] don't want to make two different cars," says Mr. Hwang. But if California's new regulations spread as previous ones have, he says, "the California car may become the de facto national car."

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.