European Climate Policies

1

• European Climate Policies
• An Inconvenient Truth
• Amsterdam, August 25, 2006
• Carlo Stagnaro
• Director, Free Market Environmentalism
• Istituto Bruno Leoni
• www.brunoleoni.it
• Carlo.Stagnaro_at_brunoleoni.it

2
The Kyoto Protocol

• Aims at reducing developed countries greenhouse
  gas emissions by 5.2 below 1990 levels
• EUs collective target is 8 below the baseline
  year
• Europes emissions accounted for 19 of global
  emissions in 1990, 17 in 2003, 15 in 2010, 13
  in 2020, 12 in 2030.

3
Where Europe Stands
4
Comments

• European emissions have declined with respect to
  1990
• but not enough
• According to EEA projections, EU emissions will
  stabilize ? Kyoto targets will not be met
• The overall reduction will be by 1.6 vis-à-vis
  an 8 reduction commitment.

5
Additional Measures?

• Savings from additional measures being planned
  would result in emission reductions of 6.8 ,
  still not sufficient to meet the target. The use
  of Kyoto mechanisms by various Member States
  would reduce emissions by a further 2.5, leading
  to total reductions of 9.3 , sufficient to reach
  the EU-15 target. This would, however, rely on
  over-delivery by some Member States
• EEA, 29 November 2005

6
Whos Selling Emissions?
7
Flexible Mechanism

• The only way out is Clean Development Mechanism
• Buy quotas or fund low-emission projects in
  developing countries
• Hot air (Russia)
• Wealth transfer to countries that grow as much as
  10 (China, India)
• It is foreign aid by another name
• Does it meet real needs of LDCs?
• Less pollution or more energy?

8
ICCF Study
9
ICCF Study / 2
10
ICCF Study / 3
Electricity Electricity Natural Gas Natural Gas
2010 2020 2010 2020
Italy 13 14 44 54
UK 35 34 46 57
Spain 23 27 42 51
Germany 31 32 30 39
Targets 2010 Kyoto Target 2020 60 below 2000
levels by 2050
11
The Flaws Behind Kyoto

• Short term solution (vs long term problem)
• Regional agreement (vs global problem)
• Provides wrong incentives
• Undermines RD
• Disincentives future investments
• Economic slowdown result in political
  uncertainty
• Political uncertainty results in less economic
  growth
• Scientific uncertainty.

12
Scientific Uncertainty

• Wrong inference
• A correlation is not a cause

13
Benefits?

• Even if ratifying countries could meet Kyoto
  targets, global emissions would decrease by a
  mere 2-4, without even taking into account the
  growth of non-Kyoto countries emissions
• The impact on projected warming, if any, would be
  negligible.

14
Economic Freedom and Energy Intensity (2001)
80000
Russia
70000
60000

50000
China
40000
Zimbabwe
Btu per of Output
30000
India
S. Korea
Singapore
Slovenia
20000
Spain
Belgium
USA
10000
Italy
Germany
UK
0
Economic Freedom Index
15
Energy Intensity Reductions, EU vs USA(1997-2003)
Data EIA International Energy Annual 2003
16
Alternative Strategies(Gleneagles, Asia
Pacific Partnership)

• Avoid policies which do not meet cost-benefit
  tests
• Remove barriers to developing worlds access to
  more energy and cleaner technology by promoting
  economic freedom and market reforms
• Increase RD for new technologies to reduce
  energy intensity
• Expand bilateral cooperation with developing
  countries
• Promote a truly global solution such as the new
  Asia Pacific Partnership on Development with its
  focus on growth and technology transfer
• Adopt no regret strategies to address todays
  problems that might be made worse by global
  warming (malaria, hunger, lack of clean
  drinking water).

17
Cold Blood and Warm Temperaturesis better
than the opposite.

• Thousands of protesters took to the streets in
  cities worldwide Saturday December 3 to demand
  urgent action on global warming. Fox News, Dec
  5
• Ski industry optimistic for good season CNN, Dec
  5
• Temperatures hit record lows CNN, Dec 7
• Montreal - tens of thousands of people ignored
  frigid temperatures Saturday to lead a worldwide
  day of protest against global warming Canadian
  Press, quoted by The Telegraph, Dec 6

18
Thank you for your attention

• Carlo Stagnaro
• Istituto Bruno Leoni
• www.brunoleoni.it
• carlo.stagnaro_at_brunoleoni.it