Environomics 101

By Pam Boschee

The energy bill, for better or worse, fizzled out again. At times during its troubled existence, cautious optimism allowed me to at least daydream of what its passage might mean to the electric industry. But, I admit that optimism was always shadowed by the nagging question: What makes me think a national energy blueprint (the first in 10 years) will come out of this Congress?

Its abandonment was anticlimactic. Just before Thanksgiving, it seemed to be all over except for the shoutin’—or perhaps more accurately, hog-callin’, considering how much pork was included in the bill.

Considering their track record over the last decade, Congress may be wasting its time and effort each session on development and refinement of an annual energy bill. The business of providing power continues without a new national energy bill, just as it has for the last 10 years.

One of the major factors faced in carving out any energy policy is the perceived environmental impact of that policy. And one of the major factors to affect that perception is economics. Unless you are completely unaffected by the economics of a decision, your opinion will most likely be determined by which side of the cost/benefit equation you find yourself.

This applies not only to our national situation, but, as the recent Russian indication regarding the Kyoto Protocol demonstrates, it also applies on a global scale.

A senior Kremlin official, Andrei Illarionov, stated that Russia might not ratify the international treaty requiring cuts in emissions of gases linked to global warming.

Just as the United States contends in its refusal to ratify the treaty, Russia claims that it would hurt the country’s economy. Illarionov, who serves as Russian President Vladimir Putin’s economic adviser, said the protocol would “doom Russia to poverty, weakness and backwardness.”

If Russia steps away from ratification, it will be the deal-breaker for implementation of Kyoto.

The Kyoto Protocol sets standards of cutting greenhouse gas emissions by 8 percent below 1990 levels by 2012. First signed by many nations at a conference in Japan in 1997, the pact requires ratification by a minimum of 55 countries, which must include the industrialized nations that accounted for at least 55 percent of that group’s carbon dioxide emissions in 1990.

So far, 119 parties (including Canada) have signed on, accounting for 44.2 percent of the 1990 emissions. Russia accounts for 17.4 percent, so its ratification would push the group over the bar.

However, Russia has points on both sides of the cost/benefit equation. At press time, the country may be hanging too precariously to the benefit side for comfort.

Benefit: Since the collapse of Soviet-era industry, Russia’s emission of gases has decreased by about 30 percent. Under the protocol’s formulas, Russia stood to gain financially from selling credits that would allow other countries to exceed the treaty’s limits. Some major Russian industries lobbied for Kyoto, seeing it as a way to use the credits to modernize aging plants.

Cost: Putin has called for the doubling of Russia’s gross domestic product by 2010. However, this may conflict with the treaty, which would require the Kremlin to overhaul Russian industries to cut emissions. Although emissions have fallen since 1990, they have started to slowly rise with the economic revival of the past five years. Under the treaty, a country can be forced to cut back on industrial production if it exceeds its emissions levels.

In a country with the economic pressures of Russia, revival of industrial production must be held as a priority. Consequently, it’s not difficult to make the leap over to the cost side of the equation in forming an opinion about environmental impact.

What happens if the Kyoto Protocol stalls? One possibility is that countries could sign a series of bilateral deals with other Kyoto members.

Canada’s environment minister said that Canada will implement the protocol even if Russia backs out.

The European Union warned this spring that 10 EU countries are “way off track” for agreed targets on cutting emissions. The European Environment Agency said its latest figures were “much more pessimistic” than last year’s mainly because Germany drastically scaled back its forecast for reductions.

Like it or not, environomics will continue to result in a flux in opinions, regulations and policies. So enjoy the respite from the barrage of energy bill predictions, contradictions and, on occasion, conniptions. The next session of Congress won’t start for a while. Enjoy the holidays.

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