Economic Freedom, Economic Growth and Climate Change Policy

1
Economic Freedom, Economic Growth and Climate
Change Policy

• Dr. Margo Thorning
• Managing Director,
• International Council for Capital
• Formation

Brussels Office Park Leopold, Rue Wiertz 50/28
B-1050 Brussels, Belgium Tel [phone]
Fax [phone] Email mthorning_at_iccfglobal
.org Web www.iccfglobal.org Washington D.C.
Office 1750 K Street, Suite 400 Washington, D.C.
20006 Tel [phone] Fax [phone]
Prepared for presentation at COP 10, December
14, 2004 Buenos Aires, Argentina
2
CO2 Reductions Required by 2050 Under 550 PPM
Scenario
3
Where Does Europe Stand onActually Complying
with Kyoto?

• European Union is projected to be 7.5 above the
  1990 emission levels by 2010.
• EU leaders realize they cannot reconcile goals
  of increased EU industrial competitiveness as
  well as tighter future targets for GHG emission
  reductions.
• Economic research shows Kyoto and tighter
  targets could reduce EU GDP by 1.5 to 4
  annually.
• EU policy-makers are beginning to worry about
  the additional steps required to meet the targets
  including the impact of emission trading schemes
  on industry.

4
What Impact Would Emission Targets Have on Latin
America?

• Latin American emissions are projected to grow
  by 27 in 2010 and 82 by 2020
• Even holding emissions constant would reduce GDP
  levels and employment

5
Economic Freedom and the Adoption of New Energy
Technologies

• Economic Freedom Promotes Improved Living
  Standards protection of investment, openness of
  internal markets, overall share of output
  absorbed by government, political freedom
• Faster Economic Growth associated with adoption
  of new energy technologies which reduces energy
  intensity of emissions as living standards rise
• Barriers to new technology
• Pricing distortions
• Lack of markets
• Subsidies through State run enterprises
• Lack of protection for property rights including
  intellectual
• property
• Restrictions on foreign direct investment
• Lack of infrastructure, education, skills to
  handle new
• technology
• Import restrictions

6
Energy Intensity and Economic Freedom in
Developing and Emerging Economies
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Energy Intensity and Economic Freedom in
Developed Countries
Carbon per GDP (MMTC per 1995 )
Freedom Index
GDP per capita (1995 )
Energy per GDP (Btu per 1995 )
Country
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Promising Technologies to Reduce GHG Emissions

• Efficiency Improvements
• In current energy sources and in transport
• Advanced electrical grids
• Decarbonization and Carbon Sequestration
• Hydrogen production from water rather than
  natural gas
• Biomass and coal gasification
• Renwables
• Biomass
• Photovoltaic
• Wind
• Hydropower
• Geothermal
• Tidal
• Space Solar Power
• Nuclear Fission and Fusion
• Pebble beds reactors offer more safety

9
Carbon Emissions Per Dollar/ Output
Impact of New Technologies on Carbon Emissions
Million Metric Tonnes Carbon/Billion 1997
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Practical Strategies to Address Economic Growth
and Climate Change Policy

• Remove barriers to developing worlds access to
  more energy and cleaner technology by promoting
  economic freedom and market reforms
• Increase RD for new technologies to reduce
  energy intensity and develop alternatives to
  fossil fuels
• Develop sequestration through both natural and
  man-made technologies
• Promote nuclear power for electricity
• Expand bilateral cooperation with developing
  countries
• Promote a truly global solution