Bush Policy vs. Kyoto
Some have said that the Bush Administration’s GHG intensity target reduction is comparable to average emission reductions that nations ratifying the Kyoto protocol must achieve.
The developed countries that undertake mandatory limits under the Protocol are required to reduce their emissions to 5.2% below 1990 levels (on average). As emissions have been steadily rising with economic growth in most developed countries, this target would require substantial reductions from projected emissions in 2010. Even assuming the U.S. GHG intensity target is met, the U.S. is projected (by the Department of Energy’s Energy Information Agency) to have GHG emissions at 30% above 1990 levels. So at first examination, it appears that the U.S. emissions reduction efforts will clearly not match those of other developed nations.
However, the argument that Kyoto countries actually need to do very little domestic emissions reduction (following the U.S. withdrawal), is based upon analysis relying largely on the expected purchase of excess emissions credits from Russia, Ukraine and Eastern European countries by the European Union, Japan, Canada and Australia (which has since opted not to participate in the Kyoto Protocol). These excess credits (or “hot air”) have primarily resulted from the economic contraction following the fall of the Soviet Union, when GHG emissions from these countries fell far below their 1990 levels. Including this “hot air,” global prices for greenhouse gas emission credits would be expected to be very low (<$5 / ton carbon).
Two energy-economic models, analyzing GHG emission projections and required reductions were used in the Administration’s analysis:
- DOE Energy Information Administration (EIA) - NEMS-WEPS model which gave 0% required reductions by Kyoto countries.
- Massachusetts Institute of Technology (MIT) Joint Program on the Science and Policy of Global Change - EPPA model which gave 7.2% required reductions by Kyoto countries.
These two estimates were then averaged to give a result comparable to the planned 4.5% US reduction.
A crucial point is that, like all models, a number of assumptions underpin these specific projections in the EIA and MIT analyses. These assumptions fall into 2 main areas:
- What are the expected business-as usual projections (BAU) for the U.S. and Kyoto countries through 2010?
- What policy decisions in Kyoto countries are made regarding domestic emission reductions and selling of emission credits?
Listed in the table below are some of the assumptions underlying the Bush Administration’s claim that U.S. efforts under its climate strategy will be roughly equivalent to those of the Kyoto countries. Also given are some alternative assumptions that are equally, if not more, plausible.
Assumptions underpinning the Bush analysis | Alternate and equally plausible assumptions |
BUSINESS-AS USUAL PROJECTIONS | |
US emissions relative to economic growth (GDP) will decline less quickly over the next decade than they did over the last twenty years - i.e., the Administration’s faster declining intensity target is a reduction from “business as usual.” | U.S. greenhouse gas emission intensity continues to decline at recently observed rates. |
Projected low emissions growth in Kyoto countries is partly due to policies already adopted in those countries to meet their targets. These policies are categorized as “business as usual.” | Policies already adopted by Kyoto countries are counted as “effort,” not “business as usual.” |
The economic rebound of the former Soviet economies is powered by cleaner forms of energy. | Economic growth in these transitional economies reverts to the historically high level of emission intensities. This substantially reduces the amount of “hot air” emission credits available for sale. (Note: Russia’s economy is starting to grow again, so it will likely need some of these credits). |
POLICY DECISIONS | |
Kyoto countries do not pursue low-cost domestic abatement opportunities for the full range of greenhouse gases. | Kyoto countries follow stated policy goals and enact low-cost domestic abatement opportunities, including reductions of non-CO2 greenhouse gases, as well as efforts in developing nations through the various Kyoto mechanisms. |
The former Soviet economies will freely trade all of their “excess” tons of emission credits, meaning that Kyoto countries can achieve all or most of their additional reductions simply by buying “hot air” credits. | Russia and the Ukraine act more strategically, holding back some of their “excess” emission credits to sell in a future global emissions market. |
If one or more of the alternative assumptions are correct, the effort undertaken by Kyoto countries would certainly exceed that required of the United States under the Bush plan.
For example, the MIT model finds if Russia and Ukraine act strategically, restricting sales of their excess emission credits and banking 30% of them for future trading, this act alone would raise the global carbon price to $25/tC, and require Kyoto countries to reduce emissions by 15.2%. This would be more than triple the US effort required under the Bush target. The cumulative effect of other alternate assumptions would further increase the effort by Kyoto countries vs. the U.S. response.
A further example comes from another well-known model (one not cited by the Administration) – the FAIR model of the Netherlands’s National Institute of Public Health and the Environment (RIVM). Their analysis find that average reductions by Kyoto countries will be 14% with a global emissions price of $9-$21 / ton carbon.
The implementation of the EU trading system and other measures within EU countries to meet their obligations – coupled with the growth in Eastern European economies (thus lowered availability of “hot air”) combine to suggest that a substantial portion of the Kyoto countries’ obligations will be met with real reductions generated internally. This stands in stark contrast to continued expected growth in U.S. emissions.