The absence of a
than will covered Annex 1 countries begin-
Lovins, such as "America's energy-saving
ning sometime between 2015 and 2020.2 2 8
potential--sufficient `to cut industrial ener-
viable supply-side
Both the exemptions for developing coun-
gy use in half' . . . tags along [with Kyoto
strategy option
tries and the inertia of past and current
compliance] almost for free."2 3 6 Even a far
places the burden
greenhouse gas emissions limit the climatic
more modest assertion by a U.S. Department
impact of a "perfect" Kyoto. Full compliance
of Energy technology group that govern-
of meeting the
with the protocol would reduce anthro-
ment-directed energy efficiency invest-
Kyoto Protocol
pogenic warming (as estimated by the cli-
ments could substantially assist in meeting
mate models) by only 4 percent to 7 percent
the Kyoto Protocol's emission-reduction
requirements
(0.1°C0.2°C) by the year 2100.2 2 9That is why
requirements2 3 7 was downplayed by the
squarely on the
one prominent climate modeler has estimat-
Council of Economic Advisers in its July
demand side.
ed that "thirty Kyotos" are necessary to effec-
1998 report on minimizing compliance
tively address the alleged problem.2 3 0 Thus,
costs with the Kyoto Protocol.2 3 8 The coun-
the environmental benefits achieved by full
cil's dismissal of such an approach proba-
compliance with the treaty are infinitesimal
bly was due to the Department of Energy's
and probably not even measurable--at least
understatement of the costs of energy effi-
for "many decades."2 3 1
ciency subsidies and mandates and a gross
overstatement of the potential for reduc-
What are the costs of complying with the
tions in energy consumption.2 3 9
treaty? Carbon dioxide emissions cannot be
reduced without reducing fossil-fuel con-
Increased energy efficiency or lowered
sumption.2 3 2 So the question is, how expen-
energy intensity per unit of output does not
translate into reduced energy consumption
sive would it be to reduce fossil-fuel con-
per se. Despite a one-third reduction in
sumption to 7 percent below 1990 levels (or
energy intensity in the United States since
around 30 percent below what would oth-
1973, total domestic energy use has risen 20
erwise have been consumed by 2012)?2 3 3
percent.2 4 0 The rise has been due to robust
Close examination of the Clinton admin-
istration's economic projections regarding
economic growth (gross domestic product
reductions in greenhouse gas emissions
doubled in that period) and new applica-
reveals that "the political struggle over U.S.
tions using the energy "saved" from tradi-
compliance with the Kyoto Protocol is really
tional applications (consumer substitution
a fight about the future of the coal-fired gen-
and wealth effects). Such energy-growth
eration of electricity," according to Peter
factors can be expected to continue indefi-
VanDoren.2 3 4 Some administration officials
nitely in free-market economies.
As long as electricity rates fall, all other
believe that coal-fired power plants can be
things being equal, ratepayers will consume
cheaply replaced by natural gasfired power
more at the margin. Overall, national elec-
plants; others in the administration are less
tricity rates are expected to fall in real terms
certain.2 3 5 The belief that politically favored
by 20 percent to 40 percent over the next
renewable energy sources represent low-cost,
two decades as competition and customer
"silver bullet" solutions to global climate
choice drive average costs down toward
change is not taken seriously even by the
marginal costs by increasing the utilization
president's own Council of Economic
rate of surplus capacity and attracting new
Advisers, as discussed below.
low-cost capacity.2 4 1 Falling electricity rates
The absence of a viable supply-side strat-
egy option places the burden of meeting the
will increase energy demand, and greater
Kyoto Protocol requirements squarely on
usage, in turn, will lower rates further.2 4 2
the demand side. Yet there is no economi-
Both economic growth and competitive
cally viable solution based on substantial
electric rates will work against "conserva-
absolute reductions in energy usage despite
tion for its own sake."
the fantastic pronouncements from Amory
37