Willie Soon and David R. Legates

Towards a Global Carbon Regulatory Trading Scheme
In December 2009, lawmakers and representatives from around the world, along with scientists, numerous journalists, and various celebrities flew to Copenhagen, Denmark. For the most part, their goal was to promote a regulatory scheme aimed at controlling human carbon emissions by declaring the element a tradable commodity and establishing laws and regulations to govern the trade.

The proposed regulations were premised on the flawed notion, articulated by the United Nations Intergovernmental Panel on Climate Change (IPCC),[1] that increasing atmospheric carbon dioxide (CO2) concentrations will change climate dramatically and thereby cause major ecological and economic damage.

While many scientists, including us, have observed some changes in climate, the hypothesized dangerous consequences of rising atmospheric CO2 are too speculative for responsible regulatory policy. In analyzing climate policy, decision makers should be cognizant of three key considerations regarding the impact of projected rises in atmospheric CO2: (1) policy choices likely will have no measurable effect on the occurrence of severe weather; (2) positive effects on ecosystems and biodiversity are likely and should be weighed against the negatives; and (3) carbon trading schemes (such as the one touted in Copenhagen) are unlikely to lead to a reduction in atmospheric CO2.

Given these considerations, policy makers must carefully consider their objectives and the potential impacts, both positive and negative, of carbon emission control. If climate change regulation proceeds unchecked, it will likely produce policy that is out of touch with both the real world and objective science and will likely impose large costs on society that benefit only a small cadre of “climate entrepreneurs” and provide no meaningful effect on the Earth’s climate.

Consideration #1: Policy Makers Must Judge Humanity’s Ability to Control Global and Regional Climate Change.
It is true that a plethora of researchers have studied changing patterns in local, regional, and global temperatures, as well as rainfall, animal and plant life, and sea levels, and that many have drawn the conclusion that rising greenhouse gases (GHGs) are, to some degree, to blame for observed and/or forecasted changes in the climate. Policy makers, however, should not jump to conclusions. They have a responsibility to carefully consider the limitations of these studies and the impacts of factors other than manmade CO2. It would be wrong to attribute all observed impacts to climate change - even more so to GHGs - and even further to levels which could be controlled by humans. Herein lies our first consideration for policy makers: that rising atmospheric CO2 will not produce adverse weather and changes to climate beyond what will occur due to natural variation.

Policy makers should consider that the IPCC’s assumptions regarding future harm from rising atmospheric CO2 are contradicted by evidence, especially recent data that suggests the “global warming” narrative of climate change is seriously flawed. For example, the latest global temperature and ocean heat-content data[2] are both at odds with the claims of disastrous consequences. While researchers often select time periods to support their dangerous-warming hypothesis, it is now apparent that forecasts of continued surface and atmospheric warming and oceanic heat accumulation have been at odds with the observations for the last decade.[3] Similarly, computer modelers are having difficulty explaining the significant discrepancies between the increases in ocean heat content predicted on the basis of the dangerous CO2 hypothesis, and the observed ocean heat content data.[4]

Similar caution should be exercised when determining whether causes other than GHGs may be responsible for observed effects. Arctic temperature data from coastal stations in Greenland and averages over the Arctic Pacific, North Atlantic, Greenland-Iceland, and the entire circum-Arctic are noted to be at odds with this dangerous manmade warming hypothesis.[5] Such data indicates abrupt warming and cooling every few decades that fit well with natural fluctuations in solar activity.[6] By contrast, the steady rise in atmospheric CO2 concentrations over the past century, including especially the last fifty years, does not explain the variability in surface temperatures in and around the Arctic, further suggesting that the effect may be caused by something other than GHGs.[7] Similarly, evidence of warming in cities has indicated that warming and hydrological changes result directly from the “heat island effect” of urbanization and changing landscape cover, rather than from atmospheric CO2 concentration.[8] Consequentially, policy makers would be wise to also consider alternative causes for the observed effects.

While some researchers, including us, argue that factors other than GHGs are responsible for observed climate changes, many do not. Policy makers need not accept either camp’s findings, but should be aware of these alternative views and give them due consideration when making their decisions.

Policy makers also need to reconcile scientists’ failure to find a CO2 greenhouse-warming signal despite extensive and objective scouring of climate records from around the globe over the last century.[9] We and other scientists have reached a very simple conclusion: atmospheric CO2 is not an important driver of weather and climate.[10] This hypothesis lies in very sharp contrast to the speculations from computer climate models, which are predicated on a strong relationship between atmospheric CO2 and air temperature.[11] Such findings indicate that simulated computer modeling may be inherently limited in its ability to make accurate predictions regarding a system as complex as the global climate. This is not to suggest that computer research is a trivial pursuit; but rather, that it is not developed enough to generate reliable prognoses for policy making.

Policy makers owe it to their constituents to make informed decisions weighing all of the observed climate data rather than relying on outputs from the artificial worlds of computer climate models.

Consideration #2: Policy Makers Must Weigh Both Potential Benefits and Potential Costs of a Changing Climate.
Commentators and political activists often negatively characterize climate change as an unnatural process that is bound only to bring disaster. Unfortunately, some of these characterizations have become embodied in law through judicial decisions and legislative actions, which have caused a misunderstanding about the nature of climate change.[12] To avoid these shortcomings in the next round of climate change action, reasonable policy makers should reject the notion that a changing climate is completely one-sided. Instead, they should use the best scientific data available to weigh the potential positive effects of climate change against the negative effects and costs of policy intervention to determine which course of action to take. Thus, in evaluating the chemical and biological influences of rising atmospheric CO2, special attention should be paid to our second consideration for policy makers: that the negative effects on ecosystems and biodiversity of increases in atmospheric CO2 must be properly weighed against the benefits.

Policy makers must be careful to avoid the mistakes of turning scientifically inaccurate definitions into laws and regulations. In 2007, for example, the U.S. Supreme Court held that greenhouse gases fit within the Clean Air Act’s capacious definition of “air pollutant,"[13] creating a legal definition that does not match the science. Rather than being an “air pollutant,” atmospheric CO2 is the basic building block for all photosynthetic organisms: green plants, fresh- and ocean-water algae and photosynthetic bacteria.[14] It forms the basis of most food chains and is vital t o biological life. Legal definitions at odds with science make it difficult to enact sensible policy.

Imprecise language can also lead to exaggerations about the potential dangers of CO2 that could cause policy makers to misjudge the urgency of the situation. For example, today’s level of atmospheric CO2 - about 390 ppm (0.039 percent or the equivalent of about four cents in $100) - is not “dangerously high” from the perspective of photosynthetic organisms.[15] In fact, 390 ppm is far below the nutrient saturation level for these organisms and below the optimal level for growth.[16] This means more CO2 could enhance some critical ecosystems; yet few scientists, politicians, or “climate entrepreneurs” consider the positive benefits to these plants under elevated CO2 levels. Furthermore, some marine organisms may actually grow better and be more productive as a result of ocean acidification caused by dissolving CO2 in seawater.[17] As a consequence, some of the fast biological responses - most likely involving the positive synergistic interactions among changes in temperature, solar radiation, and bicarbonate - are likely to stimulate marine life and food production in the world’s oceans. Biologist and oceanographer Dr. Debora Iglesias-Rodriguez, summarized her findings on this topic this way:

Increased CO2 in the Earth’s atmosphere is causing some microscopic ocean plants to produce greater amounts of calcium carbonate - with potentially wide-ranging implications for predicting the cycling of carbon in the oceans and global climate modeling… Our research has also revealed that, over the past 220 years, [single-celled algae and phytoplankton] have increased the mass of calcium carbonate they each produce by around 40 percent. These results are in agreement with previous observations that [single-celled algae and phytoplankton] are abundant throughout past periods of ocean acidification, such as that which occurred roughly 55 million years ago.[18]

An examination of the procedures used in studies that come to contrary findings regarding the effects of CO2 on marine organisms[19] reveals that they have inappropriately claimed to examine the ocean acidification issue by adding hydrochloric acid to seawater, rather than taking the trouble to bubble CO2 through the water to more faithfully simulate natural conditions. The former procedure of adding acids or bases directly to the water bypasses the key involvement of CO2 with the carbonate and bicarbonate geochemical cycling in the ocean, which is why it generates an opposite conclusion from studies that properly bubble CO2 through water. It is clear that there will be both losers and winners in relation to ocean acidification; as such, relying exclusively on negative effects would be a poor recipe for a well-informed policy making.[20]

Recently, some ecologists and geologists have cautioned about the dangers of carbon myopia - of seeing and examining only the alleged dangers of rising CO2 levels in the atmosphere while ignoring the potential harmful effects of managing for CO2. Moreover, Putz and Redford cautioned that carbon-based conservation can be bad for biodiversity and harmful to both plants and animals.[21] They note that carbon-based discrimination will adversely affect non-arboreal plants, result in shorter tree species, and put non-forested ecosystems at risk[22] and that “tree planting among carbon investors could create perverse incentives leading to major biodiversity losses."[23]

Apart from a few species required for pollination and seed dispersal, “most vertebrates and invertebrates are superfluous, if not nuisances, in forests managed for carbon,” Putz and Redford conclude.[24] That means incentives to sustain and preserve those species will be limited, if not actually prove detrimental, when policy makers focus exclusively on reducing atmospheric CO2.

Clearly, there will be winners and losers in a changing climate, but policy makers must weigh the costs of the negatives (with the costs of trying to maintain status quo) against the positives. Not all biological, chemical, and ecological responses to rising atmospheric CO2 portend doom and gloom. Policy makers should focus their discussions on balancing the pros and cons, rather than pursuing a one-sided strategy of CO2 reduction.

Consideration #3: Policy Makers Must Recognize the Possibility that Carbon Trading Schemes May Not Lead to a Reduction in Atmospheric CO2.
Recent failures of carbon emission trading, both in the Chicago Climate Exchange and in the E.U. Emission Trading Market, confirm the simple but harsh reality that carbon trading is an artificial and unworkable system that will likely cause more harm than good, since there are simply too many potential cheaters, too many opportunities to cheat and get away with it, and too many opportunities to make big profits by cheating. Professor Roger Pielke Jr. has critically remarked that “very complex policies full of accounting tricks, political pork and policy misdirection"[25] are now being devised to create the false promise of an international climate-solution. Even Science magazine reluctantly agreed on October 23, 2009 that:

The accounting now used for assessing compliance with carbon limits in the Kyoto Protocol and in climate legislation contains a far reaching but fixable flaw that will severely undermine greenhouse reduction goals… For example, the clearing of long-established forests to burn wood or to grow energy crops is counted as 100 percent reduction in energy emissions, despite causing large releases of carbon.[26]

This leads to our third consideration for policy makers: that carbon trading will not lead directly to a reduction in atmospheric CO2.

There is a dangerous paralysis creeping into our modern era as a consequence of unscientific carbon myopia. This paralysis is illustrated by the nightmare of carbon budget accounting, where the offset of carbon dioxide emissions can be achieved through additional storage and protection of carbon pools located in human settlements. Human settlements store carbon in natural pools such as vegetation and soil as well as in anthropogenic pools. Anthropogenic carbon pools encompass buildings, printed materials, landfills, clothing and living organisms.[27]

Those who have not followed the trading price of carbon emissions at the Chicago Climate Exchange will be intrigued to learn that carbon began trading at the modest price of $1 per metric ton in January 2004. [28] Prices then fluctuated wildly, reaching a peak value of $7 per metric ton in May/June 2008.[29] However, as public interest waned (most likely due, in part, to a lack of correlation between the extreme scenarios that have been posited and observations in the real world), the trading price of carbon emissions fluctuated around a low of $0.10 to 0.20 per metric ton between October and December of 2009.[30]

An initial investor in carbon emission reductions back in January 2004 has now lost 90 percent of his or her original investment on what has amounted to a tax on a gaseous atmospheric component that is essential for all life and on the hydrocarbon energy that powers 85 percent of the U.S. economy. Speculators who entered the carbon market on May 30, 2008 have lost 98.6 percent of their investments.

In a similar fashion, trading at the E.U. Emission Trading Market has collapsed. Trading peaked around 30 Euro in April 2006, dropped to less than 1 Euro in February 2007, and eventually reached 0.03 in December 2007[31 ]a fall to 0.1 percent of its peak value. Ironically, at least part of the reason for the fall was that too many carbon emission credits were allocated relative to actual emissions. Moreover, E.U. emissions have actually increased over the same time period by 10 to 54 percent in some countries during this first phase of the E.U. carbon trading experiment.[32] For example, emissions as of the end of 2007 for both Greece and Ireland were 25 percent above their 1990 levels; Portugal’s emissions were 38 percent above and Spain’s were 54 percent above.[33] These, of course, are the very outcomes that carbon trading was supposed to prevent.

The second phase of E.U. trading also is not promising, as new hurdles and questions have arisen. This is exemplified by the September 2009 decision of the European Court ruling against the European Commission’s plan to cut emission quotas for Poland and Estonia. The court held that the two countries could not be compelled against their will to abide by lower emission quotas imposed by the European Commission subsequent to the acceptance of the Kyoto Protocol.[34]

As further proof of the disconnect between the world imagined by the politicians and scientists who rushed to Copenhagen and the real world in which we live, the Australian government is proposing to trade carbon under its own emission trading scheme, at a set price of A$10 per ton per year, until July 2012, at which time the cost and price will be dictated by market forces.[35] We are willing to bet that its value will be much less than A$10 by December 2012 if a free market is allowed to prevail.

Given the problems associated with carbon trading systems namely the potential and opportunity for cheating to occur and the precipitous drop in value that has been observed in carbon credit policymakers should carefully consider the negatives before enacting carbon trading systems.

Conclusion

Prudent policy makers should not get swept up by the shortsightedness of the alarmist media coverage of human-induced global warming. Rather, given the potential costs and impacts, they should be suspicious that advocates have subverted science to further their own causes.[36] Understandably the extent of uncertainty regarding the role and impact of rising atmospheric CO2 may come as a shock to those swept up by the fanaticism. Given the uncertainty involved, policy makers should consider the scientific data carefully.

Decision makers should consider the following questions: Do we really want a future based on the grievous misunderstanding engendered by carbon myopia? Can humanity really afford to ignore the real harm that would be caused by adhering to these fallacies about carbon? We must have the courage to stand against climate alarmism and stand for rational stewardship and for reliable, affordable energy. We urge political leaders of the world to do the right thing and to reject any deal that would tax or restrict carbon emissions. Only in that way can they protect the jobs, health, welfare, economic opportunities, environmental quality, living standards, and civil rights that depend so critically on hydrocarbon energy.