The Corner

Cap-n-Trade Update: Part III

The other main point in my testimony was that China, India, and the other developing nations will not accept any limitations on their emissions. The other panelists went to great lengths to pretend that this doesn’t really matter, but at the same time they all argued that all nations must accept binding emissions targets. For instance, they argued that Copenhagen must not be seen as Kyoto II. But China, India, and the G77 have stated firmly and without any room for argument that the Kyoto framework must continue: Developed nations must cut emissions while developing nations can take other actions, not requiring cuts in emissions. This is a circle that cannot be squared.

Impressive charts were displayed showing that developing nations have voluntarily agreed to cuts from business as usual. This nice piece of sophistry should be viewed against the charts at the end of my testimony. Business as usual would see massive increases in emissions from developing nations. Cuts from BAU still allow developing nations to increase emissions substantially. But if you want to reach a 50% cut in emissions by 2050, which is what the U.N. scientists say is required to avoid “damaging climate change,” then developing world countries will have to undertake significant cuts from today’s level, never mind BAU, and indeed will have to cut per-capita emissions from today’s level as well. There is simply no way of doing this under current technology without perpetuating today’s poverty levels. The developing world knows this, which explains their stance. As Jairam Ramesh, India’s environment minister, said just last week: “India will never accept internationally legally binding emission reduction targets or commitments as part of any agreement or deal or outcome.”

There was a lot of love directed at China throughout the panel, including even unironic praises sung to five-year plans. Listening to the Democratic senators and the other panelists I was reminded of an incident when I was working at the British Department of Transport, in a division that was attempting to find ways of building new heavy-rail lines through and around London. Having returned from an EU conference, a very clever senior civil servant I worked for sighed (ironically this time), “If only we could just build things the way the French do. What a shame we actually worry about effects on the property rights of British citizens.”

Two particular things irritated me about the arguments of the other panelists on the way China is going. First, they argued that China was investing heavily in the renewables industry, which meant that we needed cap-and-trade. Err, no. China, you will note, has no cap-and-trade to promote its investment. If anything, they may be investing heavily in renewables in anticipation of us imposing cap-and-trade on our own industries, so they will retain a competitive advantage over us (especially if they can use coal-fired electricity to manufacture the parts more affordably than we can). Second, they argued that China’s coal generation industry is cleaning up its act faster than ours. This is hardly surprising, as regulations like New Source Review, beloved by environmentalists, mean that it is terribly difficult for our own coal generation industry to become more efficient! Moreover, upgrading old power plants really does represent low-hanging fruit. If only we were allowed to do that.

Finally, protectionism was rampant. Masquerading under the terms “border adjustment” and “targeting,” tariffs of the sort that will cause a trade war seemed to be the flavor of the day. Senators Cardin and Lautenberg both seemed to suggest that they could be embodied in any Copenhagen agreement although even my fellow panelists admitted that was unlikely.

So where does this leave us? As expected, the Kerry-Boxer Bill is becoming a monstrosity, adding in whatever political favors it thinks it needs to get it passed. The “moderate” environmental groups are happy to give these a pass, being fully aware that all they need in place is a structure. Once that is in place, they can tighten the ratchet to their heart’s content (see, for instance, this excellent article by Marlo Lewis on just one aspect of the bill). Meanwhile, they can stop new nuclear build, supposedly promoted by the bill, through other political measures. 

Any senator from an energy-producing or -intensive state who votes for this bill is deluded. Unfortunately, there seems to be a lot of delusion around at the moment. It will take mass popular action to persuade some of them otherwise. So get involved and send a letter to your senator today!