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Global Warming and Carbon Global Warming and Carbon Constraints: Constraints: Conventional Wisdom Conventional Wisdom versus versus Reality Reality Myron Ebell Myron Ebell Director, Energy & Global Warming Policy Director, Energy & Global Warming Policy Competitive Enterprise Institute Competitive Enterprise Institute Washington, D. C. Washington, D. C. [email protected] [email protected] www.cei.org www.cei.org Oklahoma Independent Petroleum Association Oklahoma Independent Petroleum Association Las Colinas, Texas, 10 Las Colinas, Texas, 10 th th June 2007 June 2007

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Page 1: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Global Warming and Carbon Constraints:Global Warming and Carbon Constraints:Conventional Wisdom Conventional Wisdom versusversus Reality Reality

Myron EbellMyron EbellDirector, Energy & Global Warming PolicyDirector, Energy & Global Warming PolicyCompetitive Enterprise InstituteCompetitive Enterprise InstituteWashington, D. C.Washington, D. [email protected]@cei.org www.cei.orgwww.cei.org

Oklahoma Independent Petroleum AssociationOklahoma Independent Petroleum AssociationLas Colinas, Texas, 10Las Colinas, Texas, 10thth June 2007 June 2007

Page 2: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Where is CEI coming from?Where is CEI coming from?

• Non-profit, non-partisan public policy institute specializing Non-profit, non-partisan public policy institute specializing in regulatory issues from a free market perspective.in regulatory issues from a free market perspective.

• LibertyLiberty We support policies that fortify (or are at least We support policies that fortify (or are at least consistent with) political and economic liberties.consistent with) political and economic liberties.

• ScienceScience We believe that scientific objectivity must be We believe that scientific objectivity must be scrupulously respected, regardless of our political scrupulously respected, regardless of our political preferences. preferences.

• Life is a riskLife is a risk We reject the one-sided precautionary We reject the one-sided precautionary approach and think that the costs and benefits of proposed approach and think that the costs and benefits of proposed policies must be compared. policies must be compared.

Page 3: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

The conventional wisdomThe conventional wisdom

• Rapid warming (IPCC models)Rapid warming (IPCC models)

• Serious adverse impacts (Al Gore, James Hansen, Serious adverse impacts (Al Gore, James Hansen, etc.)etc.)

• Costs of warming high (Stern Review)Costs of warming high (Stern Review)

• Costs of mitigation comparatively low (Stern Costs of mitigation comparatively low (Stern Review)Review)

Page 4: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

The conventional wisdom The conventional wisdom continuedcontinued

• Momentum growing to do something (Public Momentum growing to do something (Public opinion polls, Democratic takeover of Congress, opinion polls, Democratic takeover of Congress, California, RGGI, Supreme Court decision, Major California, RGGI, Supreme Court decision, Major companies in USCAP support cap-n-trade)companies in USCAP support cap-n-trade)

• Doing something means mandatory limitsDoing something means mandatory limits• Carbon constraints inevitableCarbon constraints inevitable• We need to get started now, take a first step We need to get started now, take a first step • Regulatory certainty neededRegulatory certainty needed• Better to pass a bill we can live with this CongressBetter to pass a bill we can live with this Congress• Time to come to the table (or trough)Time to come to the table (or trough)

Page 5: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Maintaining the conventional Maintaining the conventional wisdom requires political wisdom requires political correctnesscorrectnessThe Associated PressThe Associated Press

3131stst May 2007 May 2007

““The head of NASA said he The head of NASA said he was not sure global was not sure global warming was a problem warming was a problem and added that it would be and added that it would be ‘arrogant’ to assume the ‘arrogant’ to assume the world’s climate should not world’s climate should not change in the future.”change in the future.”

New York TimesNew York Times

99thth June 2007 June 2007

Headline: “NASA Leader Headline: “NASA Leader Regrets Global Warming Regrets Global Warming Comments”Comments”

Page 6: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

RealityReality

• Modest warming (Historical data)Modest warming (Historical data)

• Mild impacts (IPCC)Mild impacts (IPCC)

• Costs of warming low (Stern Review read Costs of warming low (Stern Review read correctly)correctly)

• Costs of mitigation high (Stern Review ditto)Costs of mitigation high (Stern Review ditto)

Page 7: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Reality continuedReality continued

• Momentum changesMomentum changes• Carbon constraints are not inevitable—it is much Carbon constraints are not inevitable—it is much

easier to stop a bill than to pass oneeasier to stop a bill than to pass one• Mandatory carbon constraints are failing in EUMandatory carbon constraints are failing in EU• First step in wrong direction harms not helpsFirst step in wrong direction harms not helps• Any bill enacted this Congress will be used as a Any bill enacted this Congress will be used as a

stepping stone for a much worse bill next stepping stone for a much worse bill next CongressCongress

• Holdouts usually get the most in negotiationsHoldouts usually get the most in negotiations• Regulatory certainty is not of this worldRegulatory certainty is not of this world• Time to oppose cap-n-trade legislationTime to oppose cap-n-trade legislation

Page 8: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

First, a little climate science:First, a little climate science: Is the climate Is the climate changing?changing?

•Yes, the climate Yes, the climate is is alwaysalways changing.changing.

Page 9: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

For example, the last 400,000 years of Ice For example, the last 400,000 years of Ice Ages Ages and Inter-glacial periodsand Inter-glacial periods

Page 10: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Ice Age—approximately 15,000 years Ice Age—approximately 15,000 years agoagoSource: Source: NOAA NOAA OUR CHANGING CONTINENTOUR CHANGING CONTINENTByBy John S. Schlee John S. Schlee

OUR CHANGING CONTINENTBy John S. Schlee

Page 11: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Natural climate variation in Natural climate variation in historic time—2,000 BC to presenthistoric time—2,000 BC to present

Page 12: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute
Page 13: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Weather Satellite Temperature DataWeather Satellite Temperature Data 1979- 1979-20072007 (Source: John Christy, University of Alabama at (Source: John Christy, University of Alabama at Huntsville)Huntsville)

Page 14: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

But the Arctic is warming up,But the Arctic is warming up, right? right? (Source: Polyakov et (Source: Polyakov et

al., 2003)al., 2003)

Page 15: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

1870-2006 Mean Annual Temperature Time 1870-2006 Mean Annual Temperature Time SeriesSeriesStation: Weatherford, TexasStation: Weatherford, Texas(from the United States Historical Climatology Network (from the United States Historical Climatology Network dataset)dataset)

Page 16: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

1892-2006 Mean Annual Temperature Time 1892-2006 Mean Annual Temperature Time SeriesSeriesStation: Ada, OklahomaStation: Ada, Oklahoma(from the United States Historical Climatology Network (from the United States Historical Climatology Network dataset)dataset)

Page 17: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

The role of carbon dioxideThe role of carbon dioxide

• The radiative forcing (that is, warming) effect of The radiative forcing (that is, warming) effect of CO2 and other greenhouse gases is not linear.CO2 and other greenhouse gases is not linear.

• Each doubling of CO2 in the atmosphere results in Each doubling of CO2 in the atmosphere results in approximately the same increase in radiative approximately the same increase in radiative forcing (about 1.2 degrees C in the laboratory).forcing (about 1.2 degrees C in the laboratory).

• Thus an increase from 10 to 20 parts per million will Thus an increase from 10 to 20 parts per million will have the same warming effect as from 280 to 560 have the same warming effect as from 280 to 560 ppm.ppm.

• CO2 level in 1800 is estimated to have been 280 CO2 level in 1800 is estimated to have been 280 ppm. The current level is 390 ppm. ppm. The current level is 390 ppm.

Page 18: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

There is no obvious correlation There is no obvious correlation between temperature and CO2 levels between temperature and CO2 levels over geologic time periods over geologic time periods

Page 19: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

But don’t the computer models predict But don’t the computer models predict more warming?more warming?

• The IPCC runs various scenarios through a The IPCC runs various scenarios through a number of general circulation models. The number of general circulation models. The results of these storylines are often loosely results of these storylines are often loosely described in the media as predictions or described in the media as predictions or projections.projections.

• The IPCC does not refer to them as predictions or The IPCC does not refer to them as predictions or projections. That is because general circulation projections. That is because general circulation models do not have predictive capability.models do not have predictive capability.

• To get scary numbers, the IPCC uses highly To get scary numbers, the IPCC uses highly unrealistic assumptions.unrealistic assumptions.

Page 20: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Some potential impacts of global Some potential impacts of global warmingwarming

The one certain effect of The one certain effect of increasing atmospheric increasing atmospheric CO2 levels:CO2 levels:

• Increased plant growth Increased plant growth and hardiness— and hardiness— confirmed in hundreds of confirmed in hundreds of USDA-funded studiesUSDA-funded studies

Possible effects of global Possible effects of global warming:warming:

1.1. Rising sea levelsRising sea levels

2.2. Greenland and Antarctica Greenland and Antarctica meltingmelting

3.3. More intense and frequent More intense and frequent severe weather eventssevere weather events

4.4. Spread of “tropical” Spread of “tropical” diseasesdiseases

5.5. Gulf Stream shutdownGulf Stream shutdown

Page 21: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Example of Impacts: Sea Level Example of Impacts: Sea Level RiseRise

• Al Gore: Al Gore: 20 feet of sea level 20 feet of sea level riserise

• Dr. James Hansen: Dr. James Hansen: 80 feet! 80 feet!

• IPCC’s Third IPCC’s Third Assessment Report: Assessment Report: 4-35 inches, with a 4-35 inches, with a mean of 20 inchesmean of 20 inches

• IPCC’s Fourth IPCC’s Fourth Assessment Report: Assessment Report: 7-23 inches, with a 7-23 inches, with a mean of 14 inches mean of 14 inches in this centuryin this century

Page 22: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Examples of Impacts: Examples of Impacts: Malaria in the United Malaria in the United StatesStates

18821882 19321932

19121912 1934-51934-5

Page 23: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Examples of Impacts: Examples of Impacts: US Hurricane Strikes US Hurricane Strikes (Decades, 2001-05 through Rita)(Decades, 2001-05 through Rita)

0

5

10

15

20

25

1851 1861 1871 1881 1891 1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001

Cat 1-5

Cat 3-5

• Decade AverageDecade Average• Cat 1-5 Cat 1-5 12.212.2• Cat 3-5 Cat 3-5 6.06.0

Page 24: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Costs of Global Warming: Stern Costs of Global Warming: Stern ReviewReview

• 5-20% of global 5-20% of global economic output economic output “now and forever”“now and forever”

• Uses extreme scenariosUses extreme scenarios

• Uses extreme cost Uses extreme cost estimatesestimates

• Assumes little or no Assumes little or no adaptationadaptation

• Costs primarily occur in Costs primarily occur in 2222ndnd century when world century when world economic output is many economic output is many times that of todaytimes that of today

Page 25: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Costs of Mitigation: Stern ReviewCosts of Mitigation: Stern Review

• No more than 1% No more than 1% of total world of total world economic output in economic output in next two centuriesnext two centuries

• Total costs of mitigation Total costs of mitigation over two centuries must be over two centuries must be paid by 2050paid by 2050

• According to Sir Partha According to Sir Partha Dasgupta, Frank Ramsey Dasgupta, Frank Ramsey Professor of Economics, Professor of Economics, Cambridge University, this Cambridge University, this will require a 97.5% will require a 97.5% savings rate nowsavings rate now

Page 26: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

The conventional wisdom:The conventional wisdom: Carbon constraints are Carbon constraints are inevitableinevitable

Thu Oct 5, 2006 9:01 PM ETThu Oct 5, 2006 9:01 PM ETBy Scott MaloneBy Scott Malone

IRVING, Texas (Reuters) - The head of a large IRVING, Texas (Reuters) - The head of a large California natural gas and electric utility on California natural gas and electric utility on Thursday called for national legislation to cap Thursday called for national legislation to cap greenhouse gap emissions.greenhouse gap emissions.

In an interview on the sidelines of a Business In an interview on the sidelines of a Business Council meeting in this Dallas suburb, Peter Council meeting in this Dallas suburb, Peter Darbee, chairman, president, and CEO of PG&E, Darbee, chairman, president, and CEO of PG&E, said "The probability of legislation at the national said "The probability of legislation at the national level approaches 100 percent within the next five level approaches 100 percent within the next five years."years."

Page 27: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Carbon constraints: Carbon constraints: How are they working in the How are they working in the EU?EU?

Emissions Growth Since Kyoto

0

2

4

6

8

10

1997-2004 2000-2004

Perc

ent I

ncre

ase

CO

2

EU Emissions U.S. Emissions

Page 28: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Greenhouse Gas emissions since Greenhouse Gas emissions since 19901990

Economic collapse is the surest Economic collapse is the surest way to reduce emissions.way to reduce emissions.

• Poland Poland -30% -30%• Russia Russia -24% -24%• Germany -17%Germany -17%• United Kingdom -14%United Kingdom -14%• Sweden -4%Sweden -4%• Japan +14%Japan +14%

The U. S. is about in the The U. S. is about in the middle, even though our middle, even though our economic and population economic and population growth have been among the growth have been among the highest .highest .

• United StatesUnited States +17% +17%• Ireland +23%Ireland +23%• Canada +27% Canada +27% • Australia +33%Australia +33%• Portugal +40%Portugal +40%• Spain +48%Spain +48%

Page 29: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

The fact is…The fact is…

• That greenhouse gas emissions have gone up in That greenhouse gas emissions have gone up in every nation that ratified the Kyoto Protocol and every nation that ratified the Kyoto Protocol and undertook to reduce greenhouse gas emissions undertook to reduce greenhouse gas emissions since 1997, the year Kyoto was negotiated.since 1997, the year Kyoto was negotiated.

• That emissions have been rising much faster in That emissions have been rising much faster in the major rapidly developing nations, such as the major rapidly developing nations, such as China (+190% economic growth since 1990) and China (+190% economic growth since 1990) and India (+120% economic growth since 1990). India (+120% economic growth since 1990). That’s why China is building one new coal-fired That’s why China is building one new coal-fired power plant a month.power plant a month.

Page 30: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

It isn’t easy or cheap to cut It isn’t easy or cheap to cut emissionsemissions

• Major European countries have raised gasoline Major European countries have raised gasoline taxes dramatically since 1997 to try to reduce taxes dramatically since 1997 to try to reduce emissions.emissions.

• As a result, gasoline prices average $6-7 dollars a As a result, gasoline prices average $6-7 dollars a gallon in major European countries.gallon in major European countries.

• Yet, according to the European Environment Yet, according to the European Environment Agency, greenhouse gas emissions from Agency, greenhouse gas emissions from transportation since 1990 have gone up 26%. transportation since 1990 have gone up 26%.

Page 31: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

EU Emissions Trading System: EU Emissions Trading System: regulatory regulatory certainty?certainty?

ECX CFI Futures Contracts: Price and Volume

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

6-Feb-06

27-Feb-06

20-Mar-0

6

10-Apr-06

3-May-0

6

24-May-0

6

15-Jun-06

6-Jul-0

7

27-Jul-0

6

17-Aug-06

7-Sep-06

28-Sep-06

19-Oct-

06

9-Nov-06

30-Nov-06

21-Dec-06

15-Jan-07

5-Feb-07

26-Feb-07

VO

LU

ME

(to

nn

es C

O2)

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Pri

ce p

er t

on

ne

(EU

R)

Total VolumeDec07 SettDec08 Sett

Page 32: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Effects of price uncertainty in the EU Effects of price uncertainty in the EU ETSETS

• No scholarly studies yet, but anecdotal evidence No scholarly studies yet, but anecdotal evidence suggests that European industry is moving to the suggests that European industry is moving to the new EU members in Eastern Europe.new EU members in Eastern Europe.

• No scholarly studies yet, but anecdotal evidence No scholarly studies yet, but anecdotal evidence suggests that capital investment in the energy suggests that capital investment in the energy sector has plummeted.sector has plummeted.

Page 33: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

So if cap-n-trade doesn’t work, So if cap-n-trade doesn’t work, why do so many companies want why do so many companies want it?it?

•The Enron exampleThe Enron example

•Goldman SachsGoldman Sachs

•U. S. Climate Action PartnershipU. S. Climate Action Partnership

•BP, Shell, ChevronBP, Shell, Chevron

•And now even Exxon MobilAnd now even Exxon Mobil

Page 34: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

So if cap-n-trade doesn’t work, So if cap-n-trade doesn’t work, why do so many companies want why do so many companies want it?it?

Page 35: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

What about California, RGGI, and other What about California, RGGI, and other state efforts? Isn’t there strong public state efforts? Isn’t there strong public support?support?

• California and other States that have enacted or California and other States that have enacted or are near enacting mandatory limits on are near enacting mandatory limits on greenhouse gas emissions already have much greenhouse gas emissions already have much higher than average electricity prices.higher than average electricity prices.

• Strong support for these programs is Strong support for these programs is concentrated in the bi-coastal elite. concentrated in the bi-coastal elite.

Page 36: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Costs of energy-rationing policies Costs of energy-rationing policies will not be evenly distributedwill not be evenly distributed

• States that already have high electricity costs will States that already have high electricity costs will not be hit as hard as States that are more not be hit as hard as States that are more dependent on cheaper coal-fired power plants.dependent on cheaper coal-fired power plants.

• American industry has been concentrating in the American industry has been concentrating in the heartland States where electricity costs are lower.heartland States where electricity costs are lower.

• As the price of electricity rises in low-cost States As the price of electricity rises in low-cost States to the level of the high-cost States, American to the level of the high-cost States, American industry will move to foreign countries that have industry will move to foreign countries that have not undertaken mandatory emissions reductions.not undertaken mandatory emissions reductions.

Page 37: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

The reality is...The reality is... Global energy demand 2003-2030, Global energy demand 2003-2030,

+71%+71%

(from EIA’s 2006 International Energy (from EIA’s 2006 International Energy Outlook)Outlook)

Page 38: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

The reality is…The reality is… emissions will rise emissions will rise substantiallysubstantially

Page 39: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

The train wreckThe train wreck

• The Kyoto Protocol is just the first step in putting The Kyoto Protocol is just the first step in putting humanity on an ever tighter hydrocarbon energy humanity on an ever tighter hydrocarbon energy rationing diet. Leading alarmists are now in rationing diet. Leading alarmists are now in general agreement that global greenhouse gas general agreement that global greenhouse gas emissions must be reduced by at least 60% emissions must be reduced by at least 60% by 2050.by 2050. Full compliance with the Kyoto Protocol Full compliance with the Kyoto Protocol would only reduce emissions by 5%.would only reduce emissions by 5%.

Page 40: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

KYOTO PROTOCOL WOULD AVERT ONLY KYOTO PROTOCOL WOULD AVERT ONLY 0.06 C OF GLOBAL WARMING BY 20500.06 C OF GLOBAL WARMING BY 2050

KYOTO PROTOCOL WOULD AVERT ONLY KYOTO PROTOCOL WOULD AVERT ONLY 0.06 C OF GLOBAL WARMING BY 20500.06 C OF GLOBAL WARMING BY 2050

-0.2

0.2

0.6

1.0

1.4

2000 2010 2020 2030 2040 2050

Year

Tem

per

atu

re C

han

ge

(C)

-0.2

0.2

0.6

1.0

1.4

2000 2010 2020 2030 2040 2050

Year

Tem

per

atu

re C

han

ge

(C)

Without Kyoto

With Kyoto

Page 41: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

The train wreck when reality meets The train wreck when reality meets fantasy:fantasy:Global Energy Needs Global Energy Needs versusversus Global Warming Global Warming GoalsGoals

Energy Needs v. Global Warming Goals

0

10

20

30

40

50

60

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

CO

2 E

mis

sio

ns

(bil

lio

ns

of

met

ric

ton

s

EIA CO2 Projection Minus 60% Goal

Minus 60% Goal after 2030

Page 42: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

How to achieve the perfect How to achieve the perfect climate?climate?

Gore v. GoreGore v. GoreIn In “An Inconvenient Truth”,“An Inconvenient Truth”,

Al Gore suggests that Al Gore suggests that stopping stopping

global warming will be easy.global warming will be easy.

People should: People should:

• buy compact fluorescent buy compact fluorescent light bulbs, light bulbs,

• buy hybrid autos, andbuy hybrid autos, and

• try to telecommute from try to telecommute from home.home.

In his 21In his 21stst March testimony, March testimony,

Al Gore supported:Al Gore supported:

• Carbon taxes,Carbon taxes,

• Cap-and-trade,Cap-and-trade,

• An immediate freeze on U. An immediate freeze on U. S. emissions, andS. emissions, and

• An immediate ban on new An immediate ban on new coal-fired power plants.coal-fired power plants.

Page 43: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Important studies reveal that costs of Important studies reveal that costs of mitigation outweigh costs of global mitigation outweigh costs of global warmingwarming

• Bjorn Lomborg’s Copenhagen ConsensusBjorn Lomborg’s Copenhagen Consensus

• Richard Tol’s analysis of the costs of global Richard Tol’s analysis of the costs of global warmingwarming

• Indur Goklany’s studies comparing the costs of Indur Goklany’s studies comparing the costs of mitigation versus directly addressing mitigation versus directly addressing environmental problemsenvironmental problems

• Ross McKitrick’s study on cap-and-tradeRoss McKitrick’s study on cap-and-trade

• Moreover, opportunity costs matterMoreover, opportunity costs matter

Page 44: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Choosing between costs and Choosing between costs and targetstargets

• In creating a program to reduce emissions, a In creating a program to reduce emissions, a choice must be made between setting an choice must be made between setting an emissions target or setting a cost of emissions.emissions target or setting a cost of emissions.

• If an emissions target is set, there is no way to If an emissions target is set, there is no way to know what the costs may be.know what the costs may be.

• If an emissions cost is set, there is no way to If an emissions cost is set, there is no way to know what reductions may result.know what reductions may result.

• Putting a limit on costs, such as the Bingaman Putting a limit on costs, such as the Bingaman safety valve, would result in negligible emissions safety valve, would result in negligible emissions reductions.reductions.

Page 45: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Vulnerability to climate changeVulnerability to climate change

• Modern industrial societies are not very Modern industrial societies are not very vulnerable to changing weather or bad weather.vulnerable to changing weather or bad weather.

• Modern agriculture and silviculture are more Modern agriculture and silviculture are more vulnerable, but are highly adaptable.vulnerable, but are highly adaptable.

• Subsistence societies are very vulnerable to Subsistence societies are very vulnerable to changing weather and bad weather because they changing weather and bad weather because they lack modern technology and energy.lack modern technology and energy.

Page 46: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

The American people prefer warmer The American people prefer warmer climatesclimates

• Since air conditioning became practical and Since air conditioning became practical and affordable, Americans have been moving south.affordable, Americans have been moving south.

• Every Census since 1960 confirms that more Every Census since 1960 confirms that more people prefer to live in warmer climates as long people prefer to live in warmer climates as long as they have air conditioning.as they have air conditioning.

• Air conditioning uses a lot of energy.Air conditioning uses a lot of energy.

Page 47: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

However, Americans support However, Americans support action action on global warmingon global warming

• Recent polls show that most Americans rate Recent polls show that most Americans rate global warming as a serious problem: 52% very global warming as a serious problem: 52% very serious, 37% major but not high priority (NYT/CBS serious, 37% major but not high priority (NYT/CBS poll, April 20-24, 2007).poll, April 20-24, 2007).

• But only 15% rate it as the top environmental But only 15% rate it as the top environmental problem (NYT/CBS).problem (NYT/CBS).

• And recent polls also show that most Americans And recent polls also show that most Americans support federal government action to address support federal government action to address global warming.global warming.

Page 48: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

But open debate changes mindsBut open debate changes minds

• Intelligence Squared debate, 14Intelligence Squared debate, 14thth March 2007, March 2007, held in the upper East Side of Manhattanheld in the upper East Side of Manhattan

• Motion: This house believes that global warming Motion: This house believes that global warming is not a crisis.is not a crisis.

• Before debate: 30% agreed, 57% disagreedBefore debate: 30% agreed, 57% disagreed

• After debate: 46% agreed, 42% disagreed!After debate: 46% agreed, 42% disagreed!

Page 49: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

But the public is less enthusiastic But the public is less enthusiastic about energy price increases.about energy price increases.

• 58% oppose higher taxes on gasoline (NYT/CBS 58% oppose higher taxes on gasoline (NYT/CBS poll, April 20-24, 2007).poll, April 20-24, 2007).

• 76% oppose $2 a gallon tax on gasoline 76% oppose $2 a gallon tax on gasoline (NYT/CBS).(NYT/CBS).

• 70% oppose $1 a gallon tax on gasoline 70% oppose $1 a gallon tax on gasoline (NYT/CBS).(NYT/CBS).

• People do support government mandates on big People do support government mandates on big business as long as the costs are not passed business as long as the costs are not passed along to consumers.along to consumers.

Page 50: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

So what is Washington doing So what is Washington doing about it?about it?

President Bush: President Bush: • 34 billion gallons of ethanol and miracle fuels by 34 billion gallons of ethanol and miracle fuels by

20172017

Reid-Bingaman anti-energy bill, S. 1419:Reid-Bingaman anti-energy bill, S. 1419:• 36 billion gallons by 2025—15 billion ethanol, 21 36 billion gallons by 2025—15 billion ethanol, 21

billion miracle fuelsbillion miracle fuels Plus:Plus:• 4% per year higher CAFÉ standards, anti-price 4% per year higher CAFÉ standards, anti-price

gouging on gasoline prices, higher efficiency gouging on gasoline prices, higher efficiency standards, and 15% renewables for electric utilities standards, and 15% renewables for electric utilities

Page 51: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

And cap-and-trade on top of all And cap-and-trade on top of all thatthat

S. 280, Lieberman-McCain (and Clinton and Obama)S. 280, Lieberman-McCain (and Clinton and Obama)H.R. 620, OlverH.R. 620, Olver

S. 309, Sanders-BoxerS. 309, Sanders-Boxer

S. 485, KerryS. 485, KerryH. R. 1590, WaxmanH. R. 1590, Waxman

Bingaman draft—based on so-called National Bingaman draft—based on so-called National Commission on Energy Policy report—cap with a Commission on Energy Policy report—cap with a safety valvesafety valve

Page 52: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Wisdom from Al GoreWisdom from Al Gore

“ “And that is what is at stake. Our ability to live on And that is what is at stake. Our ability to live on planet Earth—to have a future as a civilization.planet Earth—to have a future as a civilization.

“ “I believe this is a moral issue.”I believe this is a moral issue.”

——An Inconvenient TruthAn Inconvenient Truth (2006, page (2006, page 298)298)

Page 53: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Al Gore is right—it is a moral Al Gore is right—it is a moral issue.issue.• The global warming debate is really about whether The global warming debate is really about whether

we are going to have a world of energy starvation or we are going to have a world of energy starvation or abundance.abundance. In a world where nearly two billion people In a world where nearly two billion people lack access to electricity, the world is not energy rich—it is lack access to electricity, the world is not energy rich—it is energy poor. By producing affordable energy, the benefits energy poor. By producing affordable energy, the benefits to humanity are immense and are immensely greater than to humanity are immense and are immensely greater than all the negative environmental externalities combined, all the negative environmental externalities combined, including greenhouse gas emissions. including greenhouse gas emissions.

• To oppose taxes or cap-and-trade schemes on greenhouse To oppose taxes or cap-and-trade schemes on greenhouse gas emissions is not merely a matter of self-interest. gas emissions is not merely a matter of self-interest. Whether we create a future of energy poverty or Whether we create a future of energy poverty or plenty is of the greatest importance to humanity.plenty is of the greatest importance to humanity.

Page 54: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

It’s also a big vs. limited It’s also a big vs. limited government issue government issue

• The environmental movement has framed the The environmental movement has framed the debate so that only mandatory actions count as debate so that only mandatory actions count as doing something about global warming.doing something about global warming.

• The result, even if not the intention, would be a The result, even if not the intention, would be a massive expansion of government control over massive expansion of government control over people’s daily lives and lifestyle choices.people’s daily lives and lifestyle choices.

Page 55: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

ConclusionConclusion

Although global warming has been described as Although global warming has been described as the greatest threat facing mankind, the policies the greatest threat facing mankind, the policies designed to address global warming actually pose designed to address global warming actually pose a greater threat. The Kyoto Protocol and similar a greater threat. The Kyoto Protocol and similar domestic schemes to ration carbon-based energy domestic schemes to ration carbon-based energy use would do little to slow carbon dioxide use would do little to slow carbon dioxide emissions, but would have enormous costs. These emissions, but would have enormous costs. These costs would eventually fall most heavily on the costs would eventually fall most heavily on the poorest people in the poorest nations in the poorest people in the poorest nations in the world. world.

Page 56: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

Conclusion concludedConclusion concluded

Luckily, predictions of the extent of future Luckily, predictions of the extent of future warming are based on implausible scientific and warming are based on implausible scientific and economic assumptions, and the negative impacts economic assumptions, and the negative impacts of predicted warming have been vastly of predicted warming have been vastly exaggerated. In the unlikely event that global exaggerated. In the unlikely event that global warming turns out to be a problem, the correct warming turns out to be a problem, the correct approach is not energy rationing, but rather long-approach is not energy rationing, but rather long-term technological transformation and building term technological transformation and building resiliency in societies by increasing wealth. resiliency in societies by increasing wealth.

Page 57: Global Warming and Carbon Constraints: Conventional Wisdom versus Reality Myron Ebell Director, Energy & Global Warming Policy Competitive Enterprise Institute

What should you do?What should you do?

• Forget about trying to accommodate your industry Forget about trying to accommodate your industry to cap-and-trade. You can’t do it. to cap-and-trade. You can’t do it.

• Instead, oppose attempts to limit hydrocarbon Instead, oppose attempts to limit hydrocarbon energy use. These are real but temporary energy use. These are real but temporary obstacles.obstacles.

• Put your efforts into creating energy abundance Put your efforts into creating energy abundance and relieving energy poverty.and relieving energy poverty.

• Make the positive case for energy. To quote Make the positive case for energy. To quote Professor John R. Christy: “Energy means life. Professor John R. Christy: “Energy means life. Access to affordable energy enhances the quality Access to affordable energy enhances the quality and extends the duration of human life.” and extends the duration of human life.”