Climate bill (ctd)
This post was written by Richard Tol
The Climate Change Response Bill was debated in the Seanad yesterday. You can read the various interventions here.
Minister Cuffe is not very clear on the 2020 target, but seems to argue that the climate bill does not go beyond the current EU obligations. He offers two arguments. Second, Ireland will overcomply on its ETS obligations, and this will count towards Ireland’s non-ETS obligations. This is an accounting gimmick. Ireland would export its excess ETS permits to offset undercompliance elsewhere in Europe; emissions would not fall. Note that Ireland will just about meet its ETS targets according to the EER2010.
Third, Minister Cuffe seems to use the EU accounting method for land use emissions in 2020, and the UN accounting method for 2008. The increase in the carbon sink is much smaller than the Minister suggests if one uses the same method for both years.
Senator Glynn of Fianna Fail states that “[t]he Bill does not impose any legal obligations on Government to achieve the emissions targets set in the Bill and it allows for these targets to be changed.” That’s a remarkable position.
IBEC has published its analysis of the climate bill, including an estimate of the costs. That cost estimate is exceedingly optimistic for the following reasons:
- IBEC assumes that emissions from land use are accounted for according to the yet-to-be-enacted EU rules.
- IBEC takes the EPA’s with-additional-measures scenario as its starting point. That scenario is rich in wishful thinking, and IBEC does not count the costs of the “additional measures”.
- IBEC’s numbers are based on an engineering model. Such models are notorious for underestimating the costs of emission reduction.
- IBEC assumes that the marginal cost of -30% by 2030 is the same as the marginal cost of -30% by 2020. This would be true if the capital stock has an average life time of one year.
- The cost estimate assumes that the emission reduction burden is shared optimally between ETS and non-ETS. As I’ve argued before, the extra burden would fall on the non-ETS.
- The model covers emissions from energy only. The IBEC estimate therefore omits the costs of reducing non-energy emissions (methane from cattle).
Even so, IBEC reckons that the cost will run to €400 million per year. I do not know what the cost would be, but it would certainly be much higher than that.