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December 13, 2004

Editorial: Kyoto's 'Capitalists'

The Wall Street Journal reports, "The Kyoto [Protocol] idea is 10 years old now, and no better for its age. The U.S. wisely chose to forgo the pact, as the long- term costs add up to hundreds of billions a year across the world economy, not to mention untold lost economic opportunities. The energy industry has heretofore backed this U.S. decision, noting that even Kyoto's defenders have admitted the pact wouldn't slow climate change."

"Yet suddenly business pooh-bahs are claiming they've seen the eco-light. Cinergy, the big Ohio utility, issued a report this month fretting that human activity is 'likely contributing' to global warming and endorsing a national CO2 program. The nation's largest utility, AEP, says what's needed to address this 'serious challenge' is a 'committed policy response'...These executives are thinking green all right—as in greenbacks."

The real story behind their conversion is that the industry has figured out that a U.S.-based climate program holds profit opportunities, while any costs can be foisted on the backs of others -- consumers, taxpayers or competitors. This new cynical approach to regulation is worrying, if for no other reason than that the quickest way to bad policy is a co-opted business community."

In Market Exchange Rates or Purchasing Power Parity: Does the Choice Make a Difference to the Climate Debate? Alan S. Manne and Richard G. Richels refute claims of an upward bias in greenhouse gas projections due to exchange rates. Their analysis focuses on the difference between the use of market exchange rates rather than purchasing power parity for projecting the extent of the global warming effect. The authors find that although critics of the Intergovernmental Panel on Climate Change's Special Report on Emission Scenarios claim that that the use of market exchange rates has led to a significant upward bias in projections of greenhouse gas emissions, the upward bias is minor at most.

Also of interest from the Joint Center:

Climate Change: An Agenda for Global Collective Action Joseph E. Aldy, Peter R. Orszag and Joseph E. Stiglitz

U.S. Rejection of the Kyoto Protocol: The Impact on Compliance Costs and CO2 Emissions Alan S. Manne and Richard G. Richels

For more publications on climate change, click here.

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