European Climate Policies An Inconvenient Truth Amsterdam, August 25, 2006 Carlo Stagnaro Director, Free Market Environmentalism Istituto Bruno Leoni

The Kyoto Protocol  Aims at reducing developed countries’ greenhouse gas emissions by 5.2% below 1990 levels;  EU’s collective target is 8% below the baseline year;  Europe’s emissions accounted for 19% of global emissions in 1990, 17% in 2003, 15% in 2010, 13% in 2020, 12% in 2030.

Where Europe Stands

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.

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

Who’s Selling Emissions?

Flexible Mechanism  The only way out is Clean Development Mechanism;  Buy quotas or fund low-emission projects in developing countries; “Hot air” (Russia); “Hot air” (Russia); Wealth transfer to countries that grow as much as 10% (China, India); 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? Less pollution or more energy?

ICCF Study

ICCF Study / 2

ICCF Study / 3 Targets: 2010: Kyoto Target 2020: 60% below 2000 levels by 2050 Electricity Natural Gas Italy13%14%44%54% UK35%34%46%57% Spain23%27%42%51% Germany31%32%30%39%

The Flaws Behind Kyoto  Short term solution (vs long term problem);  Regional agreement (vs global problem);  Provides wrong incentives: Undermines R&D; Undermines R&D; Disincentives future investments; Disincentives future investments; Economic slowdown result in political uncertainty; Economic slowdown result in political uncertainty; Political uncertainty results in less economic growth; Political uncertainty results in less economic growth;  Scientific uncertainty.

Scientific Uncertainty  Wrong inference…  A correlation is not a cause…

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.

Economic Freedom and Energy Intensity (2001) Btu per $ of Output Russia China India Singapore USA S. Korea Spain Italy Belgium Germany Zimbabwe Economic Freedom Index Slovenia UK

Energy Intensity Reductions, EU vs USA ( ) US EU Data: EIA International Energy Annual 2003

Alternative Strategies (Gleneagles, Asia & Pacific Partnership)   Avoid policies which do not meet cost-benefit tests;   Remove barriers to developing world’s access to more energy and cleaner technology by promoting economic freedom and market reforms;   Increase R&D 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 today’s problems that might be made worse by global warming (malaria, hunger, lack of clean & drinking water…).

Cold Blood and Warm Temperatures… …is 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]

Carlo Stagnaro Istituto Bruno Leoni Thank you for your attention