[ NEWS OF THE WEEK C0 2 EMISSIONS REDUCTIONS: Global pact calls for nonbinding cuts ast week 143 nations, including the U.S., reached a compromise on a treaty aimed at controlling global warming by reducing emissions of carbon dioxide and other greenhouse gases. The accord is to be signed at the United Nations Conference on Environment & Development (UNCED), popularly called the Earth Summit, to be held in Rio de Janeiro next month. The compromise is the result of six negotiating sessions during the past year and a half. It allows President Bush to go to the Earth Summit without being accused of destroying the chances of adopting a climate treaty. He announced May 12 that he would attend the meeting for a "short time." The final text of the treaty is deliberately vague. All major industrialized countries except the U.S. sought an agreement to stabilize carbon dioxide emissions at 1990 levels by the year 2000. The U.S., however, insisted on avoiding specific targets and timetables for reduc-
L
ing greenhouse gas emissions, and finally succeeded in convincing other countries to sign the nonbinding proposals. Thus, in one paragraph, the treaty text says each government shall take measures to mitigate climate change "by limiting its emissions of greenhouse gases" not covered under the Montreal Protocol on Substances That Deplete the Ozone Layer, and by "protecting and enhancing its greenhouse sinks and reservoirs." These policies, the treaty says, will show that the developed countries are taking the lead in modifying longer term trends. It adds that returning "to earlier levels of emissions" by the end of the decade could contribute "to such modification." However, the treaty does not define earlier levels. The next paragraph states that six months after the treaty goes into effect, the governments are to report their emissions and the measures they have taken to return emissions of green-
Costs of curbing C02 emissions analyzed The costs and benefits of action to mitigate global warming are widely debated. Two new studies issued last week—by Consad Research Corp., and by the Institute for International Economics—come to vastly different conclusions about the costs of curbing carbon dioxide emissions. Pittsburgh-based Consad says at least 600,000 workers in the U.S/s most basic industries would lose their jobs by the year 2000 if a tax were levied on the carbon content of fossil fuel to reduce carbon dioxide emissions. It is assumed the tax will start at $15 per ton of carbon, and reach $80 per ton between 2000 and 2005. The study was prepared for the Global Climate Coalition, which is funded by the National Association of Manufacturers and other industry groups, including the Chemical Manufacturers Association.
4
MAY 18, 1992 C&EN
The industries most adversely affected by a carbon tax would be chemical, coal, metal mining, oil and gas extraction, utility and transportation services, and paper products. However, the study apparently does not fully account for the number of new jobs that would be created as a result of the tax. Consad president Wilbur A. Steger, coauthor of the study, calls the volume of new jobs "meager." However, he says, job losses would be less severe if the tax's revenues were used to reduce corporate taxes, and thus encourage labor use and capital investment. In the second study, William R. Cline, economist at the Washington, D.C.-based Institute for International Economics, takes a long-term look at the cost of stabilizing carbon dioxide emissions, and at the monetary damage that could be caused by global
house gases "to 1990 levels." But no deadline is given for stabilization of these emissions. The agreement also allows countries to implement measures to reduce greenhouse gas emissions jointly with other governments. The governments are to review the adequacy of these measures at periodic intervals. Nevertheless, despite the agreement's vagueness, this is the first global treaty that is aimed at reducing greenhouse gas emissions. It is stronger than the 1985 Vienna convention on stratospheric ozone depletion, but weaker than the first Montreal protocol signed in 1987. Moreover, it represents a change in U.S. policy. Until a few weeks ago, the Bush Administration was willing to sign only a broad statement of the global warming problem. Maurice Strong, secretary general of UNCED, says the treaty is "better than most of us feared," but "not as good as most of us hoped." However, he does
warming. He estimates that accumulation of greenhouse gases is likely to cause a warming of 10 °C by approximately 300 years from now. At that time, high temperatures would produce annual damage to the U.S. economy of 6% of gross domestic product (GDP), which would be about $350 billion at current prices. Over a shorter term, the annual damage to the economy from a doubling of carbon dioxide—which is expected to occur between 2025 and 2050—would be about $60 billion, or 1% of GDP. The total annual costs of using carbon taxes and other means to stabilize emissions would peak at about 3.5% of GDP by about 2040, and plateau thereafter at about 2.5%. Consequently, Cline concludes the long-run stabilization costs are far less than the monetary damage incurred by global warming. He says it is necessary to project costs and benefits over centu-
ers Association. "Of course, we will be concerned about implementation. But it appears to give us the flexibility to continue the tremendous volunteer effort U.S. business has made developing technologies to become increasingly more efficient in its use of energy." By contrast, Sen. Albert Gore Jr. (D.Tenn.) regards the treaty as a major disappointment, although better than no agreement at all. It falls far short of what other major nations were willing to accept and what «was critically needed, he says. 'There are no assurances that anything will change, no assurances that any nation will take any step to reduce emissions of carbon dioxide that are causing global warming. The real danger is that people will be fooled into believing we've actually done something," Gore: treaty is a major disappointment says Gore. Daniel A. Lashof, senior scientist at consider it "more than an empty frame- the Natural Resources Defense Council, has similar thoughts about the role of work/7 Russell Train, chairman of the World the U.S. The treaty would have been Wildlife Fund, also is optimistic about "much better" if it were not for the efthe treaty. "I tend to feel it is a positive, forts of the U.S. to undo it, he says. The constructive step forward. Anything as climate treaty should have been much major as this is not going to be accom- stronger than the 1985 Vienna convention on ozone, he adds, because the sciplished quickly/' he says. Industry representatives generally are ence of global warming is more mature pleased with the accord, as well. "It is a than the science of ozone depletion was delicately balanced treaty," says John B. in 1985. Shlaes, executive director of the Global The lack of commitment to binding Climate Coalition, an industry group goals that the U.S. intends is underthat includes the Chemical Manufactur- scored in a memo from White House domestic policy counselor Clayton Yeutter to Rep. John D. Dingell (D.Mich.). The word "aim" in the agreeries, because the oceans cause such a ment "was carefully chosen," Yeutter long time lag in the greenhouse efwrites. "It does not constitute a commitfect. "The likelihood is we will need ment, binding or otherwise. Nor does [it] to take fairly aggressive action to prescribe or imply any kind of timetacurb global wanning," the Washingble," he adds. ton economist says. On May 13, the executive body of Yeutter emphasizes the U.S. refused to the European Community proposed agree to stabilize carbon dioxide emisa carbon tax on fossil fuel, as well as sions at 1990 levels by 2000 because "we a number of other measures to help did not believe such a commitment to be achieve stabilization of carbon dioxin the best interests of the U.S." In reide emissions. Energy-intensive Euports on emissions, "we will probably ropean industries may be granted embellish our information to make it limited exemptions from the tax. The helpful to other nations," he continues. tax will not be put into effect, EC Two bills that aim to stabilize carbon says, unless the U.S. and other major countries take similar action. Busidioxide at 1990 levels by 2000 have been ness leaders and environmentalists introduced in Congress. An amendment generally agree that a carbon tax is to the energy bill introduced by Rep. one of the easiest and perhaps the Henry Waxman (D.-Calif.) (H.R. 4750) cheapest way to achieve reductions and a bill introduced by Gore (S. 2668) in such emissions. European indusboth would stabilize greenhouse gas tries, however, are lobbying furiousemissions. In his memo, Yeutter says he ly to defeat the tax. will advise Bush to veto any such bill. Bette Hileman
Utilities make first pollution rights swaps The first trades of emissions allowances were announced last wreek, part of a government-inspired effort to cut utility emissions of an acid rain precursor, sulfur dioxide. The moves by three coal-burning utilities set the stage for national trading in rights to emit sulfur dioxide and provide the earliest indications that a "marketbased" approach to reducing such emissions nationwide may work. In the first trade, Wisconsin Power & Light (WPL) said it will trade between 15,000 and 25,000 allowances to Duquesne Light Co., Pittsburgh. WPL will receive between $250 and $400 for each allowance, that is, the right to emit one ton of sulfur dioxide per year. This exchange, which the two utilities negotiated, is worth at least $3.8 million. WPL also will sell the rights to emit 10,000 tons of sulfur dioxide to the Tennessee Valley Authority at a price in the same range as the first sale, making the total exchange worth at least $2.5 million. A private broker, Clean Air Capital Markets of Washington, D.C., arranged the swap. Both trades are multiyear ones, with the allowances usable for emissions generated between 1995 and 2000, says Joseph Shefchek director of environmental affairs and research at WPL. Under the Clean Air Act of 1990, the Environmental Protection Agency will assign coal-burning utilities a limited number of rights to emit sulfur dioxide, beginning in 1995. The act mandates that such utilities cut back total emissions of the gas to 8.9 million tons annually by the year 2000 from 18.9 million in 1980. Because the intent is to reduce regional emissions, individual utility performance is less important than aggregate emissions. Therefore, utilities that can reduce emissions at a low cost can sell allowances to utilities for which immediate compliance with the new rules would carry a hefty price. Although WPL says the swap announcement was made to "kick start" trading in emissions allowances, it is not revealing the exact price of the allowances. The price eventually may be revealed in public utility commission filings, but that will come too late to provide a benchmark for future trades. MAY 18,1992 C&EN
5
