Not Quite Kyoto | Green Energy News

February 10, 2002 – Vol.6 No.46

NOT QUITE KYOTO.

President Bush has finally come forth with his much anticipated U.S. alternative to the Kyoto Protocol. His plan would ask industry to voluntarily limit greenhouse gas emissions growth each year to one-third that of economic growth for the next ten years. That is, if the economy grew at 3 percent in a given year, greenhouse gas emissions would grow at 1 percent. With this proposal - and if industry did comply - greenhouse gases would continue to grow, but along a more shallow slope than the economy as charted on graph. The plan, and emissions growth, would be reviewed in 2012 and new efforts created to further reduce emissions if deemed necessary.

As a carrot to industry, as well as farmers and individuals, a wide range of tax breaks would be offered to encourage making the emissions reductions. Some of those tax breaks, such as the extension of the Production Tax Credit (PTC) for wind power, or tax credits for the purchase of hybrid electric vehicles have already been included in the President's budget request for fiscal year 2003.

(Similar tax breaks, as well as a possible increase in the Corporate Average Fuel Economy (CAFE) to 35 miles per gallon for cars and including light trucks and Sport Utility Vehicles, are now being debated in the U.S. Senate.)

The federal government would determine a methodology and targets for industry to follow. A program would also be created for companies to earn credits, that can be used in later years, for meeting or exceeding reduction goals .

Statements from the President in his sales pitch for his plan raise some pertinent questions.

--- The President claims that developing nations such as India and China already account for a majority of the world's greenhouse gas emissions yet wouldn't be forced to comply with Kyoto.

True, but India, for example, has close to one billion people, China more than 1.2 billion. The U.S. has fewer than 300 million. Wouldn't countries with large populations be expected to have higher emissions? The U.S. has the highest per capita greenhouse gas emissions.

Further, the U.S. economy, especially consumers, benefits greatly from low-cost, high-quality goods imported from developing nations, particularly China. Isn't the production of those goods, which we later purchase and enjoy, a cause, in part, of those emissions?

--- The President claims Kyoto would cost the U.S. economy $400 billion and 4.9 million jobs.

The President is not specific about which jobs would be lost, in which industry sectors and over what time period. (Presumably he means that jobs would be lost in the fossil fuel sector or by businesses that would be forced to lay off workers because of higher business costs associated with lowering emissions, such as having to purchase more expensive cleaner energy.)

Wouldn't those jobs be offset by new jobs and economic activity set off by Kyoto? (U.S. House Democratic Leader Richard Gephardt claims, for instance, that 1.4 million new jobs would be created by 2020 if the U.S. initiated a program to supply 20 percent of the nation's energy from renewables by that year.)

--- The President is offering tax breaks to encourage the purchase of lower emission technologies or power generation.

Will the tax breaks, such as those for renewable energy, be large enough to lure companies away from conventional energy? Will tax breaks be large enough to make renewables competitive with conventional energy? Will solar power become cost competitive with coal, for instance?

The best part about the President's plan? His agreement that global warming is a problem. That alone is a foundation for further discussion.