Chemical & Engineering News
November 17, 1997
Copyright © 1997 by the American Chemical Society


Nations, business interests struggle over policies before Kyoto meeting

C&EN Washington

Nearly a decade ago, during the hot summer of 1988, global warming began to receive intense scientific and media attention. At that time, James E. Hansen, director of the National Aeronautics & Space Administration's Goddard Institute for Space Studies, testified before Congress that human-induced global warming was detectable in the climate record. Few other scientists were willing to make such a bold statement.

Now, although many uncertainties remain, the debate has shifted largely from scientific questions about whether the 0.3 to 0.6 °C global surface-air temperature increase seen since 1900 is partly due to human activities to questions about how disruptive future climate change will be to humans and natural ecosystems, and when to begin to take strong action to control greenhouse gases.

Two weeks from now, leaders of about 160 nations will begin meeting in Kyoto, Japan, to complete negotiations on a global climate treaty. One outcome of this treaty could be binding limits on emissions of greenhouse gases-mostly carbon dioxide-from industrialized countries. Although negotiators tried to work out their differences at a meeting in Bonn, Germany, late last month, proposals from various countries for reducing such emissions still differ sharply (C&EN, Nov. 10, page 14). Bitter arguments continue about whether countries will be able to implement any of the various proposals without devastating effects on their economies.

Throughout all of this, the state of climate science plays a pivotal role in the discussions. Policy shapers and scientists who advocate strong, near-term action usually claim that the science shows clearly that there is a serious risk of catastrophic climate changes during the next century if nations do not make a concerted effort to control emissions.

But there are also factions on the other side who argue that the data indicating global warming are unclear, that warming during the next century may very well be minimal, and therefore we should wait before taking possibly disastrous action. For example, Richard S. Lindzen, professor of meteorology at Massachusetts Institute of Technology, says the estimates of warming with a doubling of carbon dioxide concentration over the preindustrial level have declined and may decline further yet. Lindzen, a leading skeptic on global warming, points out that the signal of a human impact on climate "is still emerging from the noise of variability."

Apart from policy arguments, some very interesting science relating to climate change has been published recently. The debate over the effects of elevated carbon dioxide levels on tree growth and on the carbon content of soils continues. Evidence is accumulating that severe weather events around the world have become more frequent. Evidence that total worldwide precipitation has increased over the past century has been reported-an effect expected from global warming models. And in many places, more of the precipitation is coming in heavy downpours rather than in gentle rainfall. "There is a growing scientific consensus that climate is changing in ways that cannot be explained by natural causes," says John P. Holdren, professor in the department of earth and planetary sciences at Harvard University.

Image thumbnail Precipitation generally has increased...

A lot of the current discussion about the connection between climate disruption and global warming centers on the climate phenomenon called El Niño, the periodic marked warming of the central and eastern tropical Pacific Ocean off the coast of Peru that can spawn droughts and floods worldwide. El Niño occurs every two to seven years, and the current one may be the most intense of the century. Some scientists, such as Kevin E. Trenberth, head of the climate analysis section at the National Center for Atmospheric Research in Boulder, Colo., say El Niños are very likely to become more frequent and more intense as Earth grows warmer, but other scientists claim there is little evidence to support this.

A factor in the debate that has not been given much play in the press is that advances in green technologies-those that generate little or no emissions- have been made over the past few years and may make it more feasible and cheaper to maintain a growing worldwide energy supply while reducing emissions. Examples include fuel cells, wind energy, and photovoltaics, where costs have fallen to levels nearly competitive with some fossil fuel technologies.

Almost everyone involved in the climate debate agrees that very deep reductions in carbon dioxide emissions cannot be made economically without the use of green technologies. "A green energy revolution-a major move to renewable energy and energy efficiency measures- is the only long-term way to get the drastic emission reductions required for climate protection," says John C. Topping, president of the Climate Institute, a Washington, D.C.-based international nongovernmental organization focused largely on policy and scientific aspects of climate change.

Per capita C02 emissions vary widely

Per capita C02 emissions

a Measured as carbon.
Source: Oak Ridge National Laboratory

A major split on global warming policy and green energy is now developing among oil firms. British Petroleum, as a part of its decision to take precautionary action on climate change, is making major investments in photovoltaics, and Royal Dutch/Shell Group decided in October to make solar energy technology one of its five core businesses. But Exxon says fossil fuel combustion doesn't cause global warming and "there are no readily available alternatives to fossil fuels on the horizon."

On the other side, the Washington, D.C.-based Business Council for Sustainable Energy, which includes among its members Enron, the American Gas Association, United Technologies, and Honeywell, wants the U.S. to sign a binding treaty to cut greenhouse gas emissions.

Government proposals
So far, the governments of major industrialized nations have offered three proposals for the control of greenhouse gas emissions for the Kyoto summit. In March, the European Union proposed that the industrialized countries reduce emissions of greenhouse gases-carbon dioxide (80% of total), methane, and nitrous oxide-15% from their 1990 levels by 2010. However, as part of this scheme, EU greenhouse gas emissions would be averaged under a so-called bubble: Some EU countries, such as the U.K. and Germany, would be required to reduce emissions more than 15%, while other less industrially advanced EU nations would be allowed to increase emissions. For example, Portugal's emissions could rise 40% and Spain's 17%.

In early October, Japan proposed that industrialized countries cut greenhouse gas emissions 5% between 2008 and 2012 compared with 1990 levels. The Japanese proposal appears simple, but in fact it is based on complicated formulas. It calls for emission reductions to be adjusted according to the gross national product, per capita emissions, and population growth of individual countries. Under these criteria, many countries, including the U.S., would have to reduce emissions only about 3%. For Japan, the actual reduction would be 2.5%. A new mandate for limiting developing country emissions would be created in the future, but not in the current round of negotiations.

The U.S. proposal would delay emissions cuts the longest. It suggests that industrialized countries stabilize greenhouse gas emissions at 1990 levels within the period from 2008 to 2012. The U.S. definition of greenhouse gases includes carbon dioxide (80% of total), methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride. Since 1990, U.S. emissions have already risen 8% and their rate of growth is accelerating. So for the U.S., stabilization by 2012 would mean that emissions would have to be cut about 23% below what they would otherwise be. The U.S. proposal is the only one to recommend that developing countries agree to "meaningful participation" in the treaty process before binding limits are agreed to by the industrialized nations.

Australia and Canada have not yet advanced formal proposals. Australia, however, is generally opposed to binding uniform cuts in emissions from 1990 levels. In fact, it wants to be allowed some emissions growth. Prime Minister John Howard says if Australia stabilizes emissions at the 1990 level by 2010, that" would put at risk around $68 billion worth of investment in the energy and mining sectors over the next five years and tens of thousands of new jobs for Australians." Instead, Howard favors differentiated targets, arguing that all developed countries should incur similar per capita costs from the cuts. "Australia wants each country to negotiate its own target in light of its own national circumstances," he says.

Canada has indicated it will not promise big cuts in emissions at the summit in Kyoto. However, Prime Minister Jean Chrétien told Parliament in late October," we want our position to be better than the one by the Americans." Canadian emissions have already risen 9% over 1990 levels.

At the other end of the proposals to be made in Kyoto, the Alliance of Small Island States, a group of 36 island nations scattered around the globe, has been pushing for a 20% cut in emissions by 2005. Because some scientists predict a sea-level rise of 40 to 100 cm (16 to 39 inches) by 2100 if nothing is done to curb carbon dioxide emissions, many island states with low elevations are worried about their very existence. The Marshall Islands, for example, have an average elevation of 2 meters, so even the smallest rise in sea level is a threat to their survival.

Conflicts among nations
Not surprisingly, the differences among the climate-change proposals have led to some conflict among nations. For example, in testimony before the Senate Energy & Natural Resources Committee in October, the State Department's undersecretary for global affairs, Timothy E. Wirth, said the EU target of a 15% reduction below 1990 levels by 2010 is "unrealistic and unachievable."

Wirth also criticized the EU's bubble concept. He complained that a "significant portion of the total EU emissions reductions are anticipated to stem from the reunification of Germany [which has resulted in the closing of many inefficient factories] and the removal of coal subsidies in the U.K.," resulting in a switch to natural gas. "It is not clear that the benefit of such actions should eliminate the need for other countries within the EU to act," he said.

If emissions in some EU countries are allowed to grow, "what kind of example is the EU setting for the developing world?" Wirth asked.

EU officials defend their proposal and criticize the U.S. initiative for being far too limited. "I am disappointed with the very weak level of ambition of the U.S.," says Ritt Bjerregaard, European commissioner for the environment. "This is not an adequate response to the global problems of climate change." She dismisses allegations that the EU position is "unfair," "overambitious," or "not realistic."

Bjerregaard cites an EU policy paper," Communication on Climate Change," to demonstrate that the EU position "is technically feasible and economically manageable. It is very important to make it clear that a 15% reduction is not something just picked out of the air. It is something we can achieve," she adds. "This goes for the EU. Don't tell me other industrialized countries cannot do the same."

The EU's policy paper lays out plans for achieving the 15% reduction in Europe and is the most comprehensive plan made public. Without additional control measures, emissions in the EU are expected to increase 8% over 1990 levels by 2010. Emissions in the transport sector are projected to grow the most-39% between 1990 and 2010. To slow this growth, the EU plans to increase the average fuel economy of new cars 30% over today's figure by 2005 and to revitalize the railways.

The EU also intends to lower emissions in most industrial sectors. It will do this partly by negotiating agreements with each industrial sector, a plan similar to that used by the Netherlands to effect 2% annual increases in energy efficiency in that country. In addition, the EU says it will increase the energy efficiency of products such as refrigerators and washing machines and accelerate the closing of old low-efficiency fossil fuel power plants. As a further measure, it expects to increase the share of renewables in its energy supply mix from a current 6% to 12% by 2010, mostly with expanded use of wind and biomass to generate electricity. It expects to accomplish all of these goals at a relatively manageable cost- 0.2 to 0.4% of total gross domestic product (GDP)-if other industrialized countries take on comparable commitments.

However, even these reductions are not enough for some nations. Danish Minister of the Environment & of Energy Svend Auken says considering the threat of climate change, the EU's proposed 15% cut is not sufficient. Denmark plans to reduce emissions 20% by 2005, and 50% by 2030 compared with 1990 levels, he says. As part of this effort, Denmark will install offshore wind turbines to supply 20% of its energy by 2005. Wind turbines already generate 10% of Denmark's power.

TO SIDEBAR: Decision-making process may have precluded...

Developing country participation
One of the most contentious issues facing nations is whether developing countries should make CO2 reduction commitments in the Kyoto treaty. All negotiators agree that developing countries will eventually have to participate in efforts to control emissions if atmospheric levels of CO2 are eventually to be brought under control. The debate is over whether developing countries should be required to participate now or in a later round of negotiations.

It is the scientific consensus that developing countries currently produce about 25% of the world's greenhouse gases. But their emissions are growing rapidly and are expected to exceed those from industrialized countries by 2030, and to dwarf them by the end of the coming century. The United Nations Intergovernmental Panel on Climate Change (IPCC), the UN scientific body set up in 1988 by the UN World Meteorological Organization and the UN Environment Program, recently released a technical report, "Implications of Proposed CO2 Emission Limitations," which shows that participation of the developing world will be required for meaningful reductions in atmospheric levels of CO2 and for the eventual emissions cut of 50 to 60% that is estimated to be required to stabilize concentrations in the atmosphere.

China's plans for power plant construction vividly illustrate how quickly developing country emissions are likely to grow. China aims to build an average of one 1,000-MW power plant every month for the next four years, Wirth says. Under current policies, most of these would be fueled with coal, which produces twice as much carbon dioxide per unit of energy as natural gas. India, which is even less developed than China, has similar plans.

In the U.S., the Senate this summer unanimously passed the Byrd resolution (S. Res. 98), named after its sponsor Sen. Robert C. Byrd (D-W.Va.). It shows how worried some members of Congress are about this issue. The resolution says the U.S. must not agree to binding cuts in its emissions unless developing countries make reduction commitments within the same compliance period.

However, this resolution directly conflicts with a UN agreement called the Berlin mandate. In 1995, the industrialized countries, including the U.S., promised that, in the interest of fairness, they would be the first to "set quantified limitation and reduction objectives" for greenhouse gas emissions. The mandate also stated no new commitments should be introduced for developing countries in this first round of negotiations.

The rationale for the Berlin mandate is that industrialized countries are responsible for most of the extra carbon dioxide now in the atmosphere and that per capita emissions are still far higher in industrialized countries than in developing nations. For example, China's per capita emissions are one-tenth those in the U.S. and India's are about one-eighteenth. Under a mandate to cut greenhouse gases, it was argued that developing countries with very low emissions would find it nearly impossible to industrialize unless all their new power came from renewable or nuclear sources, or some kind of joint implementation scheme was set up under which industrialized nations could achieve emission reduction credits for energy-efficient projects in developing nations.

Consequently, most countries advocate only voluntary measures for developing nations in this round of negotiations. "For the time being," Japanese Prime Minister Ryutaro Hashimoto says, "Japan is arguing that the developing countries, especially medium-income countries, such as China and India, should voluntarily participate in taking measures to reduce their carbon dioxide and other emissions."

Some government officials worldwide are deeply offended by the notion of asking developing countries to take on binding commitments at the Kyoto summit. Says Carlos Pimenta, a member of the European Parliament from Portugal: "For a country that uses as much energy per capita as the U.S. does, has such a huge potential for energy efficiency savings, and is enjoying a healthy growing economy, it is morally reprehensible to be asking developing countries to make cuts in Kyoto."

Despite this attitude, many energy-intensive companies in the U.S. fear severe economic consequences if they are forced to comply with steep emissions controls while competing companies in other nations are not. To highlight their concerns, a $13 million U.S. advertising campaign paid for by the Global Climate Coalition, an industrial consortium opposing mandatory emissions reductions, and other groups is urging developing country participation in the Kyoto treaty.

Two other contentious issues that will be on the table in Kyoto are joint implementation with credit and international emissions trading. When a company pays for the transfer of emission-reducing technologies to a foreign nation, usually a developing country, and takes credit for the emission reductions achieved, this is called joint implementation. The U.S. advocates the use of joint implementation as a way of achieving global emissions reductions at lower cost than they can be obtained in the U.S. But some developing nations say industrialized countries should accomplish reductions on their own territory and should not be allowed to take credit for reductions achieved elsewhere. Other developing nations welcome joint implementation as a way to convince industry to help them industrialize.

European nations are leery of international emissions trading. Because the baseline for trading would be 1990, Russia and other countries of the former Soviet Union could sell emission reduction credits for factories that shut down after 1990. Companies based in other nations could purchase credits for emissions cuts from a factory that was going to shut down anyway, says Daniel F. Becker, director of the global warming and energy program at the Sierra Club. In this case, a transfer of money would take place, but emissions wouldn't actually be reduced, he claims.

These were among the issues debated when climate treaty negotiators met in Bonn for two weeks in late October. There, they tried to work out differences over emission reduction targets and developing country participation but failed to reach consensus. Peter Jorgensen, a spokesman for the European Commission, the executive body of the EU, says the gap between the EU's proposals and those positions of the U.S. and Japan was too big to close at the Bonn meeting.

"The Clinton Administration's announcement of the U.S. negotiating position very likely did not move the parties closer together," says Gail McDonald, president of the Global Climate Coalition. "If anything, it appeared, unfortunately, to harden the determination of the developing countries to avoid any commitments in the treaty."

To try to close the gap between the U.S. and EU positions, Wirth, Bjerregaard, and the environment ministers from the U.K., Luxembourg, and the Netherlands met Nov. 4 and will have several more meetings, including one in Tokyo, before the Kyoto summit. No firm agreements have yet been reached, but "no one who attended the meeting would say the U.S. and the EU are at an impasse," says Michael Meacher, the U.K. environment minister.

Michael Marvin, executive director of the Business Council for Sustainable Energy, says the differences between the U.S. and EU look greater on paper than they are in reality. "The intense bilateral discussions going on right now will probably close many of the gaps before the Kyoto summit," he predicts.

Scientific basis for action
Although governments may differ in their approaches to emission reductions, they are almost unanimous in their conviction that potential climate change from greenhouse gases is a serious problem that must be dealt with. There are perhaps three major reasons for this. One is the conclusion in the 1995 UN IPCC report that there is already a discernible human influence on climate. Another is the statement in this report and earlier ones that if the atmospheric level of carbon dioxide grows high enough, the climate consequences are likely to cause a significant disruption of human well-being. "Few scientists think going beyond a doubling of preindustrial CO2 will be anything but dangerous," Harvard's Holdren says.

Without strong control efforts, and with moderate economic growth globally, some climate models predict carbon dioxide levels will reach 700 ppm by 2100- two-and-a-half times the preindustrial level of 280 ppm. And atmospheric levels wouldn't stabilize at that point. Eventually, Holdren says, they would quadruple the preindustrial level, a concentration predicted to cause an average global temperature increase of 15 °F (8 °C).

The third reason why many governments believe greenhouse gas emissions are a serious problem is the evidence that the climate is already showing signs of disruption. Average global temperatures continue to set records. The 10 warmest years on record have occurred since 1980. This year looks like it will be the second hottest on record, NASA's Hansen says.

Global mean temperature has risen fairly steadily since 1880

Global mean temperature

a Difference in global surface-air temperature from the 1951-80 average. Source: National Aeronautics & Space Administration's Goddard Institute for Space Studies

Extreme weather events, such as floods, droughts, and windstorms, seem to be more frequent in many places. In the past decade, there were 10 times as many catastrophic floods worldwide as there were in the previous decade, says Thomas R. Karl, senior scientist at the National Climatic Data Center of the National Oceanic & Atmospheric Administration (NOAA). Europe alone experienced five catastrophic floods in the past five years. Worldwide, the direct economic losses from natural disasters, including weather-related events, has escalated dramatically, rising from a $5 billion annual average in the 1965-69 period to a $213 billion annual average in the 1990-94 period, he says. Some of this increase is caused by urbanization, he says, but some may be the result of an increase in weather-related disasters.

Karl analyzed two worldwide data sets and found that over the past century, rainfall has increased markedly in temperate regions and decreased in the tropics and subtropics. In some places, precipitation has increased 50% since 1900. In the U.S., he says, rainfall has increased an average of 5 to 10% since 1900. In addition, the intensity of rainfall has changed in many parts of the world, Karl says. "Most of the extra precipitation is coming in very heavy events," with no change in more moderate events, he says.

These are the kinds of changes that would be expected with global warming, Karl explains. When extra heat is trapped at Earth's surface by elevated levels of greenhouse gases, 20% of that heat goes into raising the air temperature, and 80% of it causes increased evaporation, he says. And the altered distribution of rainfall with more in temperate regions and less in the tropics and subtropics is predicted by the general circulation climate models used to determine the effects of elevated levels of greenhouse gases.

The U.S. Global Change Research Program, a federal interagency research program, is now putting more effort into studying the potential regional effects of climate change. It also has been holding a series of workshops around the U.S. to inform businesses, local governments, environmental groups, and citizens about the kinds of climate changes they can expect with global warming.

Question of El Niño
Some people believe that global warming has contributed to the intense and more frequent-than-usual El Niño weather patterns that have occurred since the mid-1970s. But scientific opinion is divided on this subject. According to Ants Leetmaa, director of the Climate Prediction Center at the National Weather Service, El Niños were more frequent in the early part of the climate record-at the turn of the century-" then they tended to die away, then they came back again in the 1970s." So it's hard to say if global warming has had an effect on El Niños. On top of this, current general circulation models do not show that elevated levels of carbon dioxide would change El Niños, he says.

TO SIDEBAR: Climate observation networks face deterioration

The National Center for Atmospheric Research's Trenberth concedes that the possible connection between El Niños and global warming is still a research question. "But," he says, "El Niños are a way of getting heat out of the tropics. So it is reasonable to expect them to be affected by global warming. Some models do show they would increase with global warming."

To predict how fast global temperatures are likely to rise, it is necessary to know how fast carbon dioxide will build up in the atmosphere. This depends partly on how trees and soils respond to elevated levels of carbon dioxide. So an active area of research is determining how much more quickly trees are likely to grow in an enriched CO2 atmosphere and whether soils will lose or gain carbon.

For a number of years, scientists said global warming would stimulate plant growth in northern latitudes, says William H. Schlesinger, professor of botany and geology at Duke University. They argued that the growing season would be longer, so trees and plants would grow faster and the ecosystem would be a net sink for carbon even if soils were losing it.

But, Schlesinger says, a number of papers have been published over the past few years showing the opposite effect. For example, Walter C. Oechel, professor of biology at San Diego State University, reported several years ago that the tundra on the North Slope of Alaska has actually become a net source of carbon dioxide to the atmosphere. This may happen because warming in the region has lowered the water table, thereby accelerating the rate of soil decomposition." Arctic and boreal forest ecosystems could provide a strong positive feedback on atmospheric CO2 concentration," Oechel writes.

Schlesinger says when he looks at the tree ring record over the past 100 years, it's impossible to see stimulation of growth from the 30% rise in carbon dioxide concentration over the century (280 to 360 ppm). "When you factor out changes in temperature and precipitation, there is usually no residual that would be linked to carbon dioxide," he says.

However, the effect of elevated carbon dioxide on trees is still an open question. Last August, an experiment with a 15-year-old loblolly pine plantation began at Duke University. Some of the trees are subjected to high levels of carbon dioxide, which is emitted from riser pipes among the trees to give an air CO2 concentration of about 560 ppm. Those trees seem to be growing somewhat faster, Schlesinger says, but it is unclear yet whether they are responding in a statistically significant fashion.

Timing of emission reductions
Some scientists who agree that global warming poses a potential risk from climate change still suggest that nations should not take action to reduce emissions now. Ronald G. Prinn, director of the Center for Global Change Science at MIT, for example, says current science can't tell us whether we will need to substantially lower emissions. He and his MIT colleagues recently developed a coupled model of global economic development, climate processes, and ecosystems.

Within this model, they made some assumptions about future human activity and about fundamental climate processes to produce seven forecasts of climate conditions and found that global average temperatures at the surface would rise 2 to 9 °F (1 to 5 °C) by 2100. "We do not know which of these paths (or indeed, other plausible paths) we are heading along in the absence of regulation," he says. "If we are on the lowest warming path, the impacts are likely to be small."

Consequently, Prinn says, "we need to take the steps now to make the political agreements and develop the technological capabilities to substantially lower emissions if and when the science shows that to be necessary."

With similar model results, Alan Robock, professor of meteorology at the University of Maryland, College Park, comes to quite different policy conclusions. NOAA's Geophysical Fluid Dynamics Laboratory climate model shows an average global warming of 7 °F (4 °C) by 2100 if no efforts are made to control emissions, he says. Other model experiments described in the 1995 UN IPCC report forecast that the global average temperature will rise 2 to 6 °F (1 to 3 °C), he says. Even if the increase is 1 °C, "the average rate of warming would probably be greater than any seen in the past 10,000 years," he says, and some regions of the globe would warm much more than the average. A 1 °C temperature change would pose significant threats of crop failures in the breadbaskets of the world, of stronger and more violent storms, and of coastal flooding, he explains.

Therefore, Robock favors taking action now. "Any solution will have to be a long-term one, and the sooner we get started, the less the eventual maximum climate change," he says.

It may, in fact, matter very much how soon nations begin to take action to reduce emissions. Thomas F. Stocker and Andreas Schmittner, researchers at the Physics Institute at the University of Bern, Switzerland, published a paper in August that shows that global warming can severely weaken or possibly even permanently shut down ocean circulation in the North Atlantic [Nature, 388, 862 (1997)]. This circulation, called the thermohaline circulation, is like a conveyor belt of water moving north on the surface and sinking at high latitudes and then returning southward in the deep ocean. It includes the Gulf Stream, which makes Europe much warmer than it otherwise would be.

If no controls are put on worldwide emissions, the atmospheric concentration of carbon dioxide is likely to reach about 750 ppm by 2100, Stocker calculates. If this happens, the thermohaline circulation likely would shut down permanently, he writes. But if the carbon dioxide level of 750 ppm is attained more slowly, "the thermohaline circulation simply slows down," he concludes.

In the future, Stocker says, decisions about when to reduce carbon dioxide emissions will not only need to consider the final highest atmospheric concentration reached and the costs of emission reductions, but the rate of increase of greenhouse gases in the atmosphere. A weakened circulation could also have positive feedbacks in the climate system, he says. A lowered circulation could transfer less heat and less carbon dioxide to deep water. Consequently, the level of carbon dioxide in the atmosphere would build up even more rapidly.

Economics of emission reductions
One of the most perplexing and polarized aspects of the climate-change issue is the economic impact of forcing emissions reductions. Some models predict that reducing greenhouse gas emissions would stimulate the growth of the U.S. economy. Others show that emission cuts would devastate it.

What makes the conclusions so different is that different assumptions and variables go into the economic models. Robert Repetto, vice president and senior economist at the World Resources Institute, a Washington, D.C.-based center for policy research on global environmental issues, analyzed 16 widely used economic models, including three used by the Clinton Administration, to predict the effect of climate policies.

He found several key assumptions that cause differences in the models' conclusions. The assumptions are whether nonfossil energy sources are available at competitive prices, whether nations will use joint implementation or emissions trading internationally, whether revenues from energy taxes or emission permits are used to offset taxes on labor and capital, whether firms will respond quickly to increased energy prices and reallocate their expenditures, and whether potential damage from climate change is considered.

However, when the effects on GDP of stabilizing emissions at 1990 levels by 2010, and holding them steady after that, are analyzed, all 16 models find rather minimal effects, Repetto says. Even if the most unfavorable assumptions are used in the models, they predict a negative change in GDP of 2.5% by the year 2020. This means the economy in 2020 would be only 75% larger than today's instead of 77.4% larger, he explains. If, on the other hand, models used the most favorable assumptions, a 2.4% increase in GDP is predicted for 2020. In other words, the economy would be 79.8% larger. What the studies that predict devastating effects on the economy don't say is that the studies' calculated percent decrease in GDP is a small decrement in a very large increase, Repetto explains.

Some studies have concluded that stabilizing emissions would have devastating effects on energy-intensive industries such as chemicals, petroleum refining, cement, paper, steel, and aluminum. One of these studies, "The Impact of High Energy Price Scenarios on Energy-Intensive Sectors," was conducted by the Department of Energy's Argonne National Laboratory, Argonne, Ill. It assumed that emissions reductions would result in very high energy prices in the U.S., says Joseph J. Romm, DOE's acting assistant secretary for energy efficiency and renewable energy. In addition, it assumed that joint implementation and emissions trading would not be used to offset the costs of emissions reductions and that developing countries would have no new obligations under a climate treaty. As would be expected with such a large energy price increase and no offsetting factors, the Argonne report found gradual reductions in output and employment and reduced exports in energy-intensive industries.

In another government study, five DOE labs performed an extensive analysis of the economic effects of reducing U.S. emissions to 1990 levels by 2010." This analysis [‘Scenarios of U.S. Carbon Reductions'] finds that the nation's energy savings would equal approximately the costs of achieving these reductions," says Romm. One problem with traditional economic analyses, he notes, is that they underestimate the effect of technological innovation. "Industry usually finds cheaper, more innovative ways of accomplishing environmental objectives than anything government and industry can predict," he says.

To get around this problem, DOE conducted what it calls a "bottoms-up" analysis, estimating costs from data about the performance of various technologies. A number of technologies and measures have great potential for cost-effective emissions reductions, Romm says. In the utility sector, he explains, large reductions in carbon dioxide emissions could be achieved by switching to natural gas; cofiring coal plants with biomass such as wood waste; extending the life of nuclear plants; and using modern efficient wind turbines, which now produce electricity at a wholesale price of about 3.5 cents per kWh, close to the price of new coal-fired generation.

In the industrial sector, advanced turbine systems-gas turbines with 29 to 70% lower carbon dioxide emissions- would do much to cut emissions, Romm says. These are very close to commercialization. In buildings, advanced fuel cells capable of producing electric heat and power could lower emissions, he adds. And in transportation, advanced fuel cells and cellulosic ethanol made from agricultural or wood waste are two ways of improving energy efficiency.

Industry responses
Five years ago, nearly all industries, except solar and wind companies, were opposed to taking action to combat predicted global climate change. Now, industries show a wider range of responses to the climate-change issue. In general, the natural gas and renewable energy companies favor early action to reduce emissions. The Business Council for Sustainable Energy, which includes among its members renewable energy firms, as well as large manufacturing and traditional energy companies such as Enron, Honeywell, Maytag, and Southern California Edison, is very supportive of President Bill Clinton's moderate plan for cutting greenhouse gas emissions. "This plan is what we have advocated from the beginning-clear, modest steps to get us back to 1990 emissions levels," says Executive Director Marvin.

In contrast, most coal and oil firms and energy-intensive companies-such as aluminum, steel, and chemical firms- claim that the science of global warming is still very uncertain. Therefore, they say, mandatory limits on greenhouse emissions are premature and could devastate the economy. "Reducing greenhouse gas emissions in the U.S. will come with a hefty price tag and be paid for by American families," says the Global Climate Coalition.

An exception to most oil firms is British Petroleum, which announced in May that precautionary action to avert climate change should be taken now. The company decided to increase sales in solar technologies, currently at $100 million annually, to $1 billion annually over the coming decade and to take concrete steps to reduce emissions within its own operations. "It would be unwise and potentially dangerous to ignore the mounting concern [over global warming]," said John Browne, BP's group CEO.

In October, Royal Dutch/Shell followed suit by deciding to invest more than $500 million over the next five years in renewable technologies, primarily solar energy. It also plans to expand its tree plantation business, saying biomass will become increasingly important for power generation as wood becomes available from sustainable plantations. Royal Dutch/ Shell expects the future global energy mix to become more diversified, with renewable technologies playing a much larger role in somewhat the same way that oil displaced wood toward the end of the 19th century.

Similarly, the insurance industry has become concerned about climate change. Many reinsurance and insurance companies, particularly those based in Europe, believe that the frequency of extreme weather events has increased globally and that this change is caused by elevated levels of carbon dioxide in the atmosphere. Consequently, they are actively promoting early action to control greenhouse gas emissions and are spending millions on research on climate change. They have formed the UN Environment Program group of insurance companies, which says in its position paper that the" property insurance industry is the financial sector most likely to be directly affected by climate change."

The nuclear industry regards itself as the answer to part of the global warming problem. "If the U.S. is to have any hope of achieving the emissions reduction goals set by President Clinton," says Joe F. Colvin, president and CEO of the Nuclear Energy Institute, a lobbying group for the nuclear industry, "it needs to establish a solid, sensible framework for the relicensing of existing nuclear energy plants and the construction of new, advanced-design plants in the 21st century." He adds: "Nuclear energy stands alone as the only large-scale, nonemitting source of electricity available."

Much of the conflict over global warming policies revolves around questions of fairness. The perceptions of how fair certain policies are differ depending on the country affected by the policies. There is a fairness question about whether to require industrialized countries to take the first steps to reduce emissions while exempting developing countries. There is a fairness question about whether all countries should be required to make equal cuts in emissions in the future when some have already made strong efforts and some have accomplished little.

The dilemma of countries such as Australia also concerns fairness. Should Australia, which manufactures large quantities of energy-intensive products such as aluminum for the rest of the world, be required to reduce emissions as much as countries whose exports are less energy intensive?

There is a fairness question about whether countries with very low per capita emissions should have to cut their emissions as much as countries with high per capita emissions. And there is a very serious equity question about whether extremely poor developing countries, where most of the citizens are living on less than $1.00 per day, should be required to put controls on their emissions. Countries may not be able to negotiate a meaningful climate treaty in Kyoto until they resolve some of these issues.

ACS Pubs Chem Center