Kyoto Destroying European Economy

Here is some incidental music to keep you entertained while you read the following:

The Kyoto Protocols are playing havoc with the European economy.

Carbon trading is the EU's principal strategy for meeting its Kyoto target of reducing CO2 emissions by 8% by 2012. The scheme was launched two years ago in the hope that it would achieve what more than 10 years of political commandeering had failed: significant reductions in CO2 emissions. Instead, year after year, most EU countries continue to increase their greenhouse-gas emissions. Rather than proving its effectiveness, the trading system has pushed electricity prices even higher while energy-intensive companies are forced to close down, cut jobs, or pass on the costs to consumers.

As the reality of economic pain is felt all over Europe, deep cracks in its green foundations are beginning to become apparent. Gunter Verheugen, the EU's industry commissioner, has warned that by "going it alone" Europe is burdening its industries and consumers with soaring costs that are undermining Europe's international competitiveness. Instead of improving environmental conditions, Europe's policy threatens to redirect energy-intensive production to parts of the world that reject mandatory carbon cuts.

Verheugen's warning reaffirms what U.S. administrations have been saying for many years. It is aimed at the rapidly evolving challenges posed by Asian competitors such as China and India that are set to overtake Europe's sluggish economy within the next couple of decades. Indeed, Europe's imprudent unilateralism is not only constraining its trade and industry; worse still, it has led to a significant slowdown in European R&D budgets, a sliding trend that is hampering the development of low-carbon technologies.

Jeeze the Americans were right? What a calamity.
As far as the imminent future is concerned, one thing is patently clear: After years of inflated promises that the Kyoto process would not upset their economy, European governments are beginning to realize that the era of cost-free climate hype is coming to an end. In its place, concern is growing that key industries and entire countries will pay a devastating price for Europe's reckless Kyoto craze.

The stakes are particularly high for Germany. Despite its customary role as environmental cheerleader, it has been hit hardest. Brussels bureaucrats have slashed more than 30 million tonnes from its annual carbon permit. It faces up to ?3.5-billion in fines if it cannot bring down emissions by 2008.

Germany is extremely vulnerable to imposed energy caps. It is strongly opposed to plans for replacing its coal-fired power plants with gas-fired facilities, as such a move would only increase its already precarious dependency on Russian gas imports. Furthermore, successive governments have agreed to shut down all nuclear power plants, which account for a third of Germany's electricity generation. The Greens' anti-nuclear achievement has thus turned ideological triumph into an energy nightmare.

To make matters worse, Germany's industry bosses have warned that they will not proceed with billions in intended energy investments should the government lose the bitter dispute with the European Commission over slashed emission credits. The EU has made clear that it will not yield to German demands, as this would destabilize its fragile trading scheme. However, should German companies be forced to buy carbon credits at higher prices, it will simply remove funds and economic incentives that the government had hoped would be invested in alternative technologies.

As the price for electricity, goods and services continue to rise and Asian competitors catch up with Europe's lethargic economy, the public is beginning to question Brussel's unilateral climate policy. According to a recent EU poll, more than 60% of Europeans are unwilling to sacrifice their standard of living in the name of green causes. As long as advocates of Kyoto got away with claims that their policies would not inflict any significant costs, many people were tempted to believe in improbable promises. Now that the true cost of Kyoto is starting to hurt European pockets, the erstwhile green consensus is unravelling.

What do you know? Evidently the Americans were too stupid to fall for this trick. I blame Bush. Or Congress. Or both.

Cross Posted at The Astute Bloggers

posted by Simon on 05.13.07 at 11:31 PM










Comments

There's no question that reducing carbon emissions costs money; what surprises me is that this article says nothing about how much money it is costing. It makes vague, hand-waving claims but never backs them up with any hard data. This is an op-ed piece that's all op and no fact.

Sadly, we don't have any really good data on either costs or benefits of carbon reduction strategies. The costs are much easier to quantify; I have seen a variety of estimates, but I can't recall where I saw them. Putting aside the wild-eyed stuff such as this article, the figures I have seen seem to fall in the range of a few hundred billion dollars in toto for the USA to comply with Kyoto.

The benefits are even harder to figure, largely because of uncertainties as to the magnitudes of the effects and the value of any particular reduction. The best effort in this regard was done by the British banker who produced the white paper last summer estimating total costs of global warming in the tens of trillions of dollars, as I recall. However, this is the total cost, not the value of global warming effects obviated by carbon reductions today.

It appears that humanity is not yet politically astute enough to solve this classic 'tragedy of the commons' problem. As a consequence, we will likely suffer the worst-case scenarios outlined in the various studies, and simply have to accept the economic catastrophe that these will bring. If you have children, well, that's just too bad for them -- they'll be living a life far harsher than the one you live.

Froblyx   ·  May 14, 2007 10:47 AM

Uh?

I think 3.5 bn in fines is a number.

However, I'm glad the Euros are doing the experiment. If we just sit back and watch for a few years we will find out what the real number is.

So far capitalism (lower costs mean higher profits) has been doing a good job of limiting the rise of CO2 output from the USA. The rate of rise for America is lower than the rate of rise for Europe.

Keeping government out of it has done a better job for the USA than government intervention has done for Europe.

BTW China now exceeds the USA in CO2 output for an economy 1/6th the size of the USA economy.

If something is to be done I think this might be a long term answer:

Easy Low Cost No Radiation Fusion

We should get cracking.

M. Simon   ·  May 14, 2007 1:54 PM

The tragedy of the commons is solved by private ownership. People take better care of their own stuff.

Of course we are politically astute enough to solve the problem. Except that the American socialists (the left) resist doing what needs to be done.

You aren't a lefty are you Frob? That would make you part of the problem. It would ruin my faith in your expert analysis.

M. Simon   ·  May 14, 2007 2:00 PM

Frob says:

If you have children, well, that's just too bad for them -- they'll be living a life far harsher than the one you live.

Yep. I have children.

They are pretty smart. I think that they can outrun an ocean that is rising about a hundredth of a foot every year.

China is building electical power plants at a furious pace. Unless we can figure out how to do something about that we have big problems ahead (if global warming is not a myth - for the sake of argument).

We either get a crash program re: fusion going or a lot of fission plants.

M. Simon   ·  May 14, 2007 2:46 PM

I've brought the Kyoto-induced ailings of the EU to the attention of the local papers here in Malaysia... Like the US, it's not too late for us. Hopefully, rethoric and computer games (I mean, climate prediction models) won't drag our politicians into Euro-appeasement anytime soon.

http://scottthong.wordpress.com/2007/05/22/the-star-opinions-kyoto-will-creep-up-on-us/

Scott   ·  May 21, 2007 10:41 PM

'Tis my honour to comment on your site, from which I learn many useful knowledges. Btw, you're the first blogger I've met who puts up intelligent, well-crafted posts at the kind of rate I do!

Scott   ·  May 22, 2007 8:10 PM

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