What's the future of the Kyoto Protocol without the United States taking part? Are there still doubts about the threat of global warming? And what are the chances of the Senate taking legislative action on climate change? Annie Petsonk, international counsel for Environmental Defense, and Myron Ebell, director of global warming issues for the Competitive Enterprise Institute, discuss where the climate change issue is headed, in Washington and internationally.
Brian Stempeck: Hello and welcome to OnPoint. I'm Brian Stempeck. Joining us today is Annie Petsonk, international counsel for Environmental Defense, and Myron Ebell, director of the Global Warming Programs at the Competitive Enterprise Institute. Thank you both for joining us today. Annie, let's start with you. You just got back from some meetings last week in Bonn, Germany, and it was basically a follow-up to some of the COP-10 meetings about the Kyoto Protocol. Tell us a little bit about what these meetings were about and then kind of what happened there.
Annie Petsonk: The meetings were meetings of the more than 160 countries that have joined the international framework under the Kyoto Protocol for reducing greenhouse gas emissions, that's the emissions that are contributing to climate change, global warming. The countries there got together to kick start the emissions trading market that the Kyoto Protocol has put into place. The European Union launched their trading market across the whole E.U. region in January of this year. So there was a lot of talk about carbon prices and projects for reducing emissions and emissions trading. Also the countries are beginning to chart the future direction of the international trading regime. It lasts through 2012. A lot of people want to extend it beyond 2012 because they know that global warming is a problem there we're going to have to deal with for a long time and that emissions trading is the most cost effective way. The way that brings the most energy and ingenuity and imagination to solving the problem.
Brian Stempeck: Now I know the delegates from the United States have said, at least publicly in the past few meetings, the COP-10 meetings down in Argentina for example, that they don't want to start looking at 2012 and onwards yet. They want to see what happens with Kyoto Protocol first and they have their own kind of plan of greenhouse gas intensity and technology investments in the United States. Did you see kind of any change in the U.S. perspective and what the U.S. delegates were saying in Germany last week?
Annie Petsonk: No.
Brian Stempeck: Nothing at all?
Annie Petsonk: No.
Brian Stempeck: What was the reaction of other countries then? How do other delegates perceive what the United States is doing?
Annie Petsonk: One of the most interesting things, it seems to me, is that the Kyoto Protocol, whose mandatory emissions caps apply in about 37 countries, is now beginning to attract new participants. Developing countries came to the meeting in Bonn saying, "Gee, we're interested in this carbon market," and several stood up and said, "We'd like to accountable for our emissions too."
Brian Stempeck: What countries said that?
Annie Petsonk: For example, Papua New Guinea, which is the home of the world's third largest rain forest, they're having a tremendous problem. People are going in and chopping down the forest and emissions from the destruction of the world's rain forests are as large as the emissions that the entire United States, its 20 to 25 percent of the global emissions. So Papua New Guinea called for a coalition for the rain forest nations to be able to join the carbon trading market so that people could have incentives to protect the forests, instead of having to chop them down and make money. When Papa New Guinea said that and other countries began to respond favorably to that, it sort of puts a question for countries that are now looking at United States. What will happen? Will the United States continue to stay out of this market and what questions will that raise for U.S. companies that can't move very cost effective greenhouse gas emission reductions from our country to overseas markets?
Brian Stempeck: Myron, how do you see the future of the Kyoto Protocol? People are already talking about 2012. I know you've criticized in the past saying a lot of these countries aren't already meeting the targets they've already set for themselves.
Myron Ebell: Well, I thought since it was negotiated in 1997 that Kyoto's dead in the United States. I don't think there was the chance, regardless of who was president, that it would be ratified by the United States Senate. I think it's now dead. It's rapidly becoming apparent to most of the major countries that it really is a dead end.
Brian Stempeck: Who are some of the countries right now, I know a lot of them aren't on target to meet the emissions that they need to achieve under Kyoto Protocol. Who are some of those countries and what happens to them if they don't meet the reductions they said they're going to do?
Myron Ebell: Well, according to the European Commission, 13 of the 15 countries that have targets in the European Union, will miss those targets. Now some of them are by a huge margin. Under the E.U. bubble, the European Union has an 8 percent below 1990 emission level target, but they divvied it up amongst themselves. So that for example, Spain gets an 8 percent increase rather than an 8 percent decrease over 1990. Spain is on target to be between 40 and 50 percent above 1990, Portugal even worse, Italy almost as bad. So these countries are not going to meet their targets. Canada is not going to meet its targets and Japan really has no chance at all. So what you're looking at is a bunch of countries that in 2012 are going to have to say, "Well we tried, but we couldn't even meet the first round of targets." If the United States had ratified of course, we would have met the targets because under the constitution treaties have the force of law and they could be enforced by private individuals and the environmental groups by going into federal court. So these countries are going to try, but I think what they're finding out is that there's no future in an energy rationing system.
Brian Stempeck: Annie, how you react to that? I mean a lot of these countries are not on target to meet the emission reductions we're talking about, even with some of the emissions trading that's going into effect. Why bother continuing with Kyoto Protocol if it's not really working?
Annie Petsonk: I'd say it's a little bit too soon to say whether the Kyoto Protocol is working or not. The targets actually don't even come into effect until 2008, three years from now and they last from 2008 to 2012. The fact that these are multiyear emissions targets or budgets is very important in looking at the climate change issue. In any particular year if a country, let's say, has a lot of hydroelectric power and there's a drought in that country, it might have to import electricity from a country that burns more coal. You know, in a wetter year, the country that generates the hydropower can export electricity to the coal burning country. This is a multiyear problem and it needs a multiyear management approach. So before the opening bell of the actual Kyoto Protocol targets I say it little bit premature to kind of dismiss the whole effort. Even the Financial Times, I happen to bring with me yesterday's Financial Times, which is a leading economic newspaper and it discusses the E.U. carbon trading market and says that that market is now beginning to create real incentives for emitters all over Europe to look for better, cheaper, faster ways to reduce pollution. What that's also doing in Europe is it's beginning to stimulate a market in technologies, clean energy technologies. I don't know if you've tried to buy a wind turbine in the United States lately, but it's hard to find them because we're not producing enough to meet demand. In Europe they're ahead of the game. They're producing them and there's a chance that the Europeans are going to get the jump on this clean energy technology market, if America doesn't move forward.
Brian Stempeck: Myron, that's an argument that environment groups raise a lot, is that, and another issue to kind of goes along with this is that U.S. multinationals who have operations in Europe and have operations in the United States might be able to make cheap reductions in the U.S., which would help them with Kyoto Protocol and they could be missing out on that. Do you think American companies are losing out by the U.S. government not being involved in any of these emissions trading plans?
Myron Ebell: No, because emissions trading sounds good, but it raises your costs. It raises the costs of doing business. Of course each company that does business in any country that's under Kyoto is going to have to figure out how to best get along, how to try to meet the targets and hope that they go away soon. The fact that there is not, the Kyoto is not legally binding, that is it does not have an enforcement mechanism, I think, should give every company great pause before they spend a lot of money on very expensive attempts to use less energy. What's happening in Europe is that several leading companies have announced that they're moving new production and their facilities overseas. Including, I believe, Lafarge, the French cement and construction company, which is chaired by the chairman of the World Business Council on Sustainable Development. They've looked at the economic realities and said, "Our new business will be in Africa and Turkey and places like that."
Brian Stempeck: Now the job-loss issue is a pretty important one. It kind of goes along with the climate debate we're having in the United States right now. The energy bill is going to be going to the floor soon. We have indications from a number of senators that they're going to offer amendments to that dealing with climate, Senator Bingaman talking about one kind of cap-and-trade type plan and MacLean and Lieberman doing their own climate plan and the movement against both of these amendments is kind of ramping up in the last few days. People saying that these are going to cost thousands of jobs, it's going to hurt the economy. How do you react to that? People saying, and there's a report put out this morning where some advocacy groups were basically saying, "McCain Lieberman would cost the U.S. 600,000 jobs." What's the defense to that kind of argument?
Annie Petsonk: Well it's interesting when you look behind who does those studies. A number of the people who are involved in the anti-McCain-Lieberman campaign are the same people who, 10 or 20 years ago, brought us the campaign about "smoking is good for you." What's interesting is, in both cases, the advocates try to first confuse the public about the science, saying smoking is good for you, just the same way the advocates of organizations like Mr. Ebell's have said, "Oh, global warming science is very uncertain," and then say, "Any steps to address the problem would be too costly." Just the way the smoker rights crusade said, "Oh, if you get rid of cigarettes you're going to lose a lot of jobs." Very similar way that the current studies that are put out give these catastrophic numbers about job loss.
Brian Stempeck: Right. Myron how do you react to that?
Myron Ebell: Well I think that when people start making the tobacco analogy it shows that they're pretty desperate. I mean this is silly. In 1997, when Kyoto was negotiated, some econometric modeling firms costed out how much complying with Kyoto might cost and I remember that environmental groups made fun of these estimates. One of them was that gasoline would have to be 75 cents a gallon higher to reduce consumption enough to meet the Kyoto target. We now have gasoline that's more than 75 cents a gallon higher than it was in 1997 and consumption has not gone down. So those estimates in 1997, which I believe were using the same kinds of models that the U.S. government uses at the Department of Energy, those models have under costed by a wide margin what it would cost to comply with Kyoto. We'll need much more than a 75-cents-per-gallon increase in gas if we're going to reduce gasoline consumption.
Brian Stempeck: I think Annie does have a point that the groups like CEI have, for the past few years, been attacking a lot of the climate science. Is that debate starting to end? I mean you have a lot of companies like GE, major American companies, coming out of saying, "All right, it's time to do something on greenhouse gases, to reduce them," and you have a lot of these amendments, which could theoretically, pass the Senate this year. Is the climate science debate over?
Myron Ebell: No, but I do think that there's a large consensus, which is represented say by the third assessment report of the IPCC, which if you don't read the summary for policymakers, which is an alarmist document, it's 27 pages, but if you read the Working Group I report, which is nearly a thousand pages, you will see that there is a consensus and it an anti-alarmist one. Where you get alarmism is largely from computer modeling which is based on implausible and, in some cases, impossible in both economic and scientific assumptions. So if you believe models rather than climate history I suppose you could make a case for alarmism, but if you look at the rate of warming that we're now experiencing, which is very modest, the impacts which are mixed, but again, fairly modest, you will see that this whole issue has been blown up into a kind of the scary monster for, I believe, to serve a political agenda.
Brian Stempeck: But at the same time, you do have a number of utilities all addressing this issue, major corporations, it's getting through Congress. There's no doubt that this is really rising in significance. Annie, what do you see as kind of the next step in the Senate? Do either of the approaches from Senator Bingaman or from Senator McCain, do we have the votes yet to kind of push something like that through?
Annie Petsonk: I think our country is coming to a political tipping point on this issue. I think that the American public is beginning to understand that it's not just global warming, it's American warming. We all have a responsibility to step up the plate to begin to cut greenhouse gas emissions and to do so in a way that creates jobs. The farmers that I talk to they're interested in finding out how they can begin to grow the fields of the future right there on the farm, so that under a cap-and-trade program, like the McCain-Lieberman bill, they can actually earn money from growing new energy crops on their land. That helps America's energy independence. It also helps our national security. So that's the kind of response and I think Americans, at the level of heads of companies like GE and at the level of individual farmers, are starting to see.
Brian Stempeck: But if you are just looking at a vote count, in terms of, last time around in 2003, McCain-Lieberman got 43 votes. They lost some support in the last series of elections and so they're probably looking at less support than they had before, maybe about 40 votes. How can you possibly get up to the 60 votes you need to add that to the energy bill? I mean isn't that unrealistic?
Annie Petsonk: I think it's a little too soon to tell. I noticed that one of Myron's colleagues, Bill O'Keefe from over at the Marshall Institute, was quoted in the press last week at saying, "Well, of course, even if McCain Lieberman passes the Senate, it doesn't mean anything." So obviously he's doing some vote counting and he's looking at that it might just pass the Senate.
Brian Stempeck: Myron, what's your reaction to that? Do you think Congress is going to push through something on climate change or, like Mr. O'Keefe has speculated, is it dead in the house?
Myron Ebell: I think, I've learned one thing about dealing with Congress, it's very hard to pass any kind of legislation and it's probably easier to pass bad legislation, like McCain-Lieberman, than it is to pass good legislation. But again, I think it has very low prospects in the Senate. When it gets to the House it's absolutely dead. So for this Congress I think it's going nowhere and I think the other similar measures are going nowhere. The fact is that of course the American people are speaking on global warming, every since it shows that the Midwest loses population relative to places like Arizona, Florida, California and Nevada and that's because people prefer warmer climates and consumers prefer lower prices. I think, you know we can talk about special interest benefiting from higher energy prices and energy rationing, but in fact, the American consumer is the one that would have to pay the bills. And since we're all consumers, we're not all part of that special interest that can benefit from energy rationing I think that this kind of legislation has a very bleak prospect as far as I can see.
Brian Stempeck: Clearly you guys have different opinions about where McCain-Lieberman and the Bingaman amendment are going, but in terms of the international outlook, President Bush will be meeting with the G8 Summit with Tony Blair, I believe, this summer. Mr. Blair has said this is going to be a top priority for him. Just a last question for each of you, where do you see the U.S. going in terms of international commitments to climate change? Any change from the status quo?
Annie Petsonk: I think that one of the things that Tony Blair understands is that we're actually in a relatively narrow time window as a world to begin to deal with this problem because if we don't deal with it our children and our grandchildren are going to be stuck with it. That's why Mr. Blair is taking this extraordinary step of making climate change the major issue, not just for the G8 presidency, where he's going to be face-to-face with Mr. Bush, but for the balance of the year where Mr. Blair has the presidency of the European, U.K. has the presidency of the European Union. So he's making a durable commitment to this over the next year, reaching out to America, reaching out, this is one of America's major friends and allies, reaching out to see if we can bring this country along and bring it into the world market where people are working together to find better, cheaper, faster ways of dealing with this environmental problem.
Brian Stempeck: Myron, your thoughts on where the U.S. is going with the international commitments?
Myron Ebell: Well, I agree with what Annie said about Tony Blair. He has really gone out on a limb on global warming along with several other senior leaders in Europe. I don't think they're going to get anywhere with President Bush. I think Harlan Watson, the State Department's climate negotiator, said that a couple of weeks ago, that the president's position is clear and it makes a lot more sense than the Kyoto Protocol. The fact is that you have a bunch of leaders in Europe who have invested a lot in Kyoto. They are, most of them, nearing the end of their careers and what's going to happen, I believe, is that when the European Union misses its targets in 2012 it will be impossible to agree on a second round of lower targets, which would be even more expensive than the first round of course, because each cut will be more expensive. The Australian Environment Minister Ian Campbell recently took a tour to talk to people in Brussels, London, Washington and in Asia about what will happen in a second round and he said, "It's clear nobody wants a second round of targets and timetables." If Kyoto has a future it isn't that kind of system.
Brian Stempeck: All right. Tough road ahead for the Kyoto Protocol it sounds like. We're out of time. We're going to have to stop there. I'd like thank both of our guests today, that was Annie Petsonk, international counsel for Environmental Defense, and Myron Ebell, director of Global Warming Programs for the Competitive Enterprise Institute. I'm Brian Stempeck. This is OnPoint. Thanks for watching.
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