December 14, 2006
Climate-change activists and Democrats on Capitol Hill are gearing up to push the U.S. to limit so-called greenhouse gases. In their telling, America must save mankind from an eco-Apocalypse by adopting the arbitrary targets popular with Europe and other Kyoto Protocol signatories.
Well, let's look at results in the real world, as opposed to this Kyoto spin. Recent data show that placing artificial limits on emissions not only fails to make the world cleaner, it is also counterproductive, even on the environmentalists' own grounds. Contrary to caricature, the American approach offers more promise than the European one.
As the nearby chart shows, CO2 emissions growth in the U.S. far outpaced that of the 15 "old" members of the European Union from 1990-95 and especially from 1995-2000, when Mr. Climate Change himself, Al Gore, was the second-most powerful man in America. But, lo, the U.S. has outperformed the EU-15 since 2000, according to the latest U.N. data. America's rate of growth in CO2 emissions from 2000-04 was eight percentage points lower than from 1995-2000. By comparison, the EU-15 saw an increase of 2.3 points.
As far as individual EU states go, only two, Britain and Sweden, are on track to meet their Kyoto emissions commitments by 2010…
Europe's dismal record is explained by its approach to reducing emissions. The centerpiece of the Continent's plan is a carbon-trading scheme in which companies in CO2-heavy industries receive tradable permits for a certain amount of emissions. If they emit more CO2, they must buy credits from firms that are under quota. The idea is to force companies to emit less CO2 by making it prohibitively expensive to keep the status quo.
All this scheme has done so far is provide further proof that government cannot replicate the wisdom of markets. A red-faced European Commission recently admitted that it allowed more permits than there were emissions in 2005-07, keeping permit prices low and undermining the entire system. When Brussels tried to make amends by ordering several member states to cut carbon permits by 7% more than expected for 2008-2012, industry and national capitals squealed. The market hadn't priced in such a dramatic reduction. With carbon permits trading relatively cheaply, firms have been able to get by with minimal changes to the way they do business. That has minimized Kyoto's economic impact…
America may even have a few things to teach the Old World. The U.S. strategy has been to keep economic growth strong and provide incentives for private industry to develop cleaner technologies. For instance, the Bush Administration has granted $1 billion in tax credits for nine new coal-fired power plants that will double efficiency and reduce pollution compared with older generations. China is picking up on these tactics. This year it bought $58 million in machines from Caterpillar Inc. that trap methane in coal mines and use it to power electric generators.
If global-warming activists were as interested in lowering air temperatures as they are in expanding the role of the state, they'd understand that the key to reducing emissions lies in unleashing the private sector, not capping it. That's the real lesson from the policies -- and the results -- in Europe and the U.S.
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