Wednesday, 3 March 2004

The Debate Is Warming Up

A couple of weeks ago a smallish volume came out: “Man-Made Global Warming: Unraveling a Dogma,” co-authored by Simon Rozendaal, Dick Thoenes and me. It was dedicated to debunking the man-made global warming scare. What was the reaction so far in our home country, the Netherlands — a country which is proud to belong to the vanguard of nations in the fight against global warming?

To be honest, we had expected ignorance, indifference and rejection. But the response was just the opposite. Various newspapers and journals showed a surprising interest in our message. And we were delighted to note that even a couple of columnists and science journalists took our side, which — with only rare exceptions — was unprecedented in our country. Of course, we also received a splash of critical reactions from supporters of the Kyoto Protocol designed to limit greenhouse gas emissions, fiercely rejecting our points of view. But our book was intended to trigger a serious debate, because it was our feeling that the global warming discussion had been dominated by scare-mongering, green faith and political correctness, while ignoring the uncertainties which are so characteristic of the current state of climate science; uncertainties which are even glaringly visible in the “Summary for Policymakers” by the Intergovernmental Panel on Climate Change (IPCC). We felt that the topic had never been subject to a down-to-earth, business-like and even-handed discussion. So the overwhelming response, both positive and negative, made us very happy.

A prominent participant in the debate was the Dutch Assistant Secretary, Pieter van Geel, who is responsible for environment, including climate issues. He stressed the importance of IPCC reports as the foundation for his policy and he chided us for our use of climate sceptical literature as well as for exaggerating the cost and belittling the benefits of Kyoto. More generally he condemned what he sees as the “confusion” we are creating on global warming. He often calls us “dissidents.” This notion will undoubtedly ring a familiar bell with the students of the practices of the erstwhile Soviet Union of how to cope with pluralism.

It is true that climate sceptics do not exclusively refer to peer-reviewed sources, but occasionally to non-peer-reviewed ones as well. And it is also true that they are critical of the IPCC, not so much about the basic work, the overviews of current literature, but about the biases which tend to accumulate in successive stages of the IPCC process: from the overviews, via the technical summaries by the working groups, to the ultimate “Summary for Policymakers.”

The preparation of the “Summary” is not a purely scientific but partly also a political exercise, given the fact that many countries are represented not by independently-acting scientists but by civil servants. In subsequent stages, those which concern preparation of policy measures and their submission to parliaments, these biases are even reinforced, while the uncertainties and caveats, which still abound in the previous stages of the IPPC’s scientific process, are lost by the wayside. But to be fair, even in the IPCC’s “Summary for Policymakers” there are uncertainties galore. In its 17 pages of text, the word “uncertainty” or an equivalent occurs no less than forty times. This is probably unprecedented for such a short policy document. The most striking illustration of this uncertainty is IPCC’s acknowledgment that it knows little or nothing about nine out of the twelve mechanisms which are determinant for global warming (page 8).

This implies that the models are far from perfect. Moreover, the IPCC uses many models, each of which produces different outcomes. That is exemplary for the uncertainty which still prevails in the field of climate science. It requires a giant leap of faith to jump from this wholesale admission of uncertainty to the conclusion that one should adopt Kyoto as a means to stop man-made global warming. It is inappropriate to qualify those who are not prepared to do so as wetblankets or quibblers.

What about the cost/benefit relationship of Kyoto? The Dutch adherents of Kyoto claim that these are in the order of an annual 0.1 % of GDP. Strange! As has been observed before, they also claim that the IPCC reports are the foundation for climate policy. But these reports present far higher figures. In the technical summary of the Working Group II Report (page 55) we find a range of (model) outcomes averaging from 0.2 to 2% of GDP (Gross Domestic Product) in 2010 without CO2 emissions trading and from 0.1 to 1.1% of GDP in 2010 with emissions trading. In the literature we also find higher estimates: of around 4% of GDP in 2010 for the US alone.

But will the trading come off the ground? We don’t believe so, because the technical and political difficulties will prove to be insurmountable, as we have explained in detail in our book. That leaves us with the higher range. And as the Canadian economist Ross McKittrick once noted: “The overall net loss of compliance with Kyoto is comparable to adding a new recession on top of the slowdown we are already experiencing.”

The supporters of Kyoto also suggest that all kinds of catastrophes could be prevented by reduction of greenhouse gasses, such as massive extinction of species and rising sea levels. But whatever may happen by whatever cause, man-made or natural, Kyoto will be ineffective to counter these putative threats. European governments have been conspicuously silent about the benefits of Kyoto in terms of net cooling. Yet, the relevant figure has been circulating for years in IPCC circles. It is 0.02 (two hundredth) degree Celsius in 2050, an amount too small to measure with standard thermometers. Even if the lower cost figures would be right, it is still a waste of money for an undetectable result.

Yes but, so the adherents of Kyoto say, Kyoto is only the first step which has to be followed by subsequent steps. However, in the light of the present deadlock over Kyoto it is highly unlikely that the Treaty will ever be ratified on a global level. In the current situation the support of Russia is crucial for exceeding 55% of global emissions, which is the critical threshold for the Treaty entering into force. But Russia refuses to ratify Kyoto. That implies that the first step will never be taken.

Yes but, so the supporters of Kyoto say, Europe will eventually be able to persuade Russia to join. In return Europe will be prepared to buy Russian emission rights which Russia does not need right away. Moreover, Europe might promise Russia to be forthcoming as regards Russian membership of the WTO. However, it is highly unlikely that Russia will want to play this game. In a power point presentation at the National Press Club in Washington, on January 30th, Andrei Illarionov, economic adviser to President Putin, has once again explained Russia’s objections to Kyoto. In doing so, he did not only highlight the economic damage which Kyoto might inflict on Russia, but he also stressed the fatal flaws in the underlying science.

If it would prove to be impossible to conclude a Kyoto Treaty on a global scale — that is to say, with a sufficient number of rich countries which together exceed 55% of total global greenhouse gas emissions — then Europe might fall back on a European mini-Kyoto. But this would only be an act of political symbolism, because the impact of such a mini-Kyoto would be even less than that of its aborted predecessor. But it will of course have a profound impact on the European economy. And it is likely that once the emission ceilings will start to hurt and massive disinvestments and redundancies are imminent, countries will de facto step out of a European mini-Kyoto. Gunboat diplomacy to enforce compliance has gone out of fashion. The experience with France and Germany exceeding the 3% GDP deficit ceiling, which has been enshrined in the Stability Pact, offers an illustrative case in point.

Will Europe nevertheless proceed with its disastrous policy? If one asks Eurocommissioner Margot Wallström, who is responsible for environment, the answer is clearly yes. But the first shots across the bow have already been fired. Apparently the damaging consequences of the whole project are beginning to dawn upon European policymakers and businessmen and are concentrating the minds. Mrs. Wallström’s Spanish colleague, Loyala de Palacio, who is responsible for energy, told national energy ministers meeting in Brussels in December that it would be “suicide” for the 15-nation bloc to follow the Kyoto treaty if Russia, whose support is crucial to the treaty, does not come on board. “The time has come for us to face to reality,” de Palacio said. “We can’t go on pretending that everything is fine when it’s not.”

Following the remarks of de Palacio, EU ministers expressed concerns that Europe could be harmed if it pushes ahead without major trading partners. “We could hurt our competitiveness” if only European companies are subject to Kyoto’s constraints, said Antonio Marzano, Italy’s industry minister. Subsequently, concern has been expressed by Spain. In an article, “Asfixiados por Kioto” (“Asphyxiated by Kyoto”), published on 8 February 2004, the Spanish Paper El Pais (Negocios) presented a gloomy picture of the implications of the introduction of an emission trading system for Spanish industry. The Spanish minister for energy, José Folgado, warned that “nobody can force Spain to implement the Kyoto Protocol in a graveyard of enterprises.” And on 15 February the Finnish minister for trade and industry, joined this chorus by declaring that the costs were too high for his country. He wanted renegotiation in order to bring about a more balanced burden sharing. Those are all signs that European industry is gradually shaking off its lethargy inflicted upon them by the Kyoto hype.

Of course, there are businesses which favour emission trading, for example, enterprises which are confident that they have sufficient leeway for additional emission reduction of greenhouse gasses and, in doing so, might sell their surpluses of emission rights on the market. Moreover, there are the brokers who expect a lucrative market in trading emission rights. But somebody has to foot the bill, for instance, the newcomers for whom the threshold to enter a particular sector will be higher than before, as well as the consumers who have to pay higher prices for their goods and services. All in all these activities fall within the category of rent-seeking. They may be profitable for some, but they do not create any additional wealth for society as a whole.

A European mini-Kyoto, including a system of intra-European emission trading, constitutes a major threat to our free enterprise system, maybe even the most serious threat since communism. Whether this may be true or not, one thing is certain: a European mini-Kyoto adds a new dimension to the already existing “Eurosclerosis.” It will introduce a new layer of regulation with the concomitant bureaucracy. Fuelled by increasingly ambitious environmental objectives it will undoubtedly give rise to ever-tightening control of government over private enterprise, thus fundamentally changing the relationship between the two, clearing the way for economic centralism and dirigisme. All this means that one could better forget about the ambitious goals which have been formulated at the Lisbon summit of March 2000 to make Europe the most dynamic and competitive knowledge economy in ten years time.

How does the precautionary principle – “better safe than sorry” — fit into this picture? Well … safety is in the eye of the beholder. One should better not tinker with the economy. Otherwise, one risks to bring about a repetition of the Great Depression of the thirties.

Hans Labohm

This article first appeared on Tech Central Station.