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

2. 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.

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. Who’s 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); “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?

8. ICCF Study

9. ICCF Study / 2

10. ICCF Study / 3 Targets: 2010: Kyoto Target 2020: 60% below 2000 levels by 2050 Electricity Natural Gas 2010202020102020 Italy13%14%44%54% UK35%34%46%57% Spain23%27%42%51% Germany31%32%30%39%

11. 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.

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) Btu per $ of Output 0 10000 20000 30000 40000 50000 60000 70000 80000 3.004.005.006.007.00 8.00 9.00 Russia China India Singapore USA S. Korea Spain Italy Belgium Germany Zimbabwe Economic Freedom Index Slovenia UK

15. Energy Intensity Reductions, EU vs USA (1997-2003) US EU-15 1997-20031991-2003 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 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…).

17. 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]

18. Carlo Stagnaro Istituto Bruno Leoni www.brunoleoni.it carlo.stagnaro@brunoleoni.it Thank you for your attention