1990: A Year Selected Very Carefully

Most of you will know that the Kyoto Treaty adopted CO2 reduction goals referenced to a base year of 1990.  But what you might not know is exactly how that year was selected.  Why would a treaty, negotiated and signed in the latter half of the 90’s adopt 1990 as a base year, rather than say 1995 or 2000?  Or even 1980.

Closely linked to this question of base year selection for the treaty is a sort of cognitive dissonance that is occurring in reports about compliance of the signatories with the treaty.  Some seem to report substantial progress by European countries in reducing emissions, while others report that nearly everyone is going to miss the goals by a lot and that lately, the US has been doing better than signatory countries in terms of CO2 emissions.

To answer this, lets put ourselves back in about 1997 as the Kyoto Treat was being hammered out.  Here is what the negotiators knew at that time:

  • Both Japan and Europe had been mired in a recession since about 1990, cutting economic growth and reducing emissions growth.  The US economy had been booming.  From 1990-1995, US average real GDP growth was 2.5%, while Japan and Europe were both around 1.4% per year (source xls). 
  • The Berlin Wall fell in 1989, and Germany began unifying with East Germany in 1990.  In 1990, All that old, polluting, inefficient Soviet/Communist era industry was still running, pumping out incredible amounts of CO2 per unit produced.  By 1995, much of that industry had been shut down, though even to this day Germany continues to reap year over year efficiency improvements as they restructure old Soviet-era industry, transportation infrastructure, etc.
  • The UK in the late 1980’s had embarked on a huge campaign to replace Midlands coal with natural gas from the North Sea.  From 1990-1995, for reasons having nothing to do with CO2, British substituted a lot of lower CO2 gas combustion in place of higher CO2 coal production.

Remember, negotiators knew all this stuff in 1997.  All the above experience netted to this CO2 data that was in the negotiators pocket at Kyoto (from here):

CO2 Emissions Changes, 1990-1995

EU -2.2%
Former Communist -26.1%
Germany -10.7%
UK -6.9%
Japan 7.2%
US 6.4%

In the above, the categories are not mutually exclusive.  Germany and UK are also in the EU numbers, and Germany is included in the former communist number as well.  Note that all numbers exclude offsets and credits.

As you can see, led by the collapse of the former communist economies and the shuttering of inefficient Soviet industries, in addition to the substitution of British gas for coal, the European negotiators knew they had tremendous CO2 reductions already in their pocket, IF 1990 was chosen as a base year.  They could begin Kyoto already looking like heroes, despite the fact that the reductions from 1990-1997 were almost all due to economic and political happenings unrelated to CO2 abatement programs.

Even signatory Japan was ticked off about the 1990 date, arguing that it benefitted the European countries but was pegged years after Japan had made most of their improvements in energy efficiency:

Jun Arima, lead negotiator for Japan’s energy ministry, said the 1990 baseline for CO2 cuts agreed at Kyoto was arranged for the convenience of the UK and Germany. …

Mr Arima said: "The base year of 1990 was very advantageous to European countries. In the UK, you had already experienced the ‘dash for gas’ from coal – then in Germany they merged Eastern Germany where tremendous restructuring occurred.

"The bulk of CO2 reductions in the EU is attributable to reductions in UK and Germany."

His other complaint was that the 1990 baseline ruled inadmissible the huge gains in energy efficiency Japan had made in the 1980s in response the 1970s oil shocks.

"Japan achieved very high level of energy efficiency in the 1980s so that means the additional reduction from 1990 will mean tremendous extra cost for Japan compared with other countries that can easily achieve more energy efficiency."

So 1990 was chosen by the European negotiators as the best possible date for their countries to look good and, as an added bonus, as a very good date to try to make the US look bad.  That is why, whenever you see a press release from the EU about carbon dioxide abatement, you will see them trumpet their results since 1990.  Any other baseline year would make them look worse.

One might arguably say that anything that occured before the signing of the treaty in 1997 is accidental or unrelated, and that it is more interesting to see what has happened once governments had explicit programs in place to reduce CO2.  This is what you will see:

Just let me remind you of some salutary statistics. Between 1997 and 2004, carbon dioxide emissions rose as follows:

Emissions worldwide increased 18.0%;

Emissions from countries that ratified the protocol increased 21.1%;

Emissions from non-ratifiers of the protocol increased 10.0%;

Emissions from the US (a non-ratifier) increased 6.6%;

A lot more CO2 data here.

Postscript:  One would expect that absent changes in government regulations, the US has probably continued to do better than Europe on this metric the last several years.  The reason is that increases in wholesale gas prices increase US gas retail prices by a higher percentage than it does European retail prices.   This is because fixed-amount taxes make up a much higher portion of European gas prices than American.  While it does not necesarily follow from this, it is not illogical to assume that recent increases in oil and gas prices have had a greater effect on US than European demand, particularly since, with historically lower energy prices, the US has not made many of the lower-hanging efficiency investments that have already been made in Europe.

  • dearieme

    IIRC I once read that the growth of US net release of CO2 is rather modest because reforestation of the US gives it a huge CO2 sink. Can anyone tell me whether I dreamed that up, or is it true?

  • Quote – “The US economy had been booming. From 1990-1995, US average real GDP growth was 2.5%…”
    Did your read what you wrote? Booming? On puny 2.5%? 😉 The number lies within statistical noise…

  • morganovich

    2.5% real GDP growth is pretty significant.

    figure 2-2.5% inflation and you are looking at 4.5%-5% nominal growth which is pretty high for a large, developed economy.

  • Alan McIntire

    2.5% per year is 13 1/7 % over 5 years. That’s well outside statistical noise.-

  • You are now so accustumed to socialist economy and __socialist thinking__ that you are blind or unaware that well oiled economy can develop at 8-12 % rate as well. What are the hinders “in large, developed economy” which stifles quick development? Social fringes? “Compassionate” society? Health care for all? That’s what textbooks called attributes of socialism or sociallist economy. How on earth you can name puny numbers “pretty high”. Either your schools’ education is so tragically low or you are examplification of the drop-out hype so much lamented by MSM lately. BTW small inflation aka money pressure makes conditions for more production. But why you are at ease with 4.5% only instead 12% I will not understand.

    @Alan McIntire
    False inference. Nota bene 9% x 5 = 45%+ (ther’s a formula for that which will give well over 50%). You are good at numbers, pretty bad in logic. 1.1% x 10 yr will match your 13 1/7% and “That’s well outside statistical noise.-” What of it? Will you still claim it is “outside statistical noise” or “pretty high”? C’mon, gimme a break! Think!

  • Alan D. McIntire

    I was disputing your “The number lies within statistical noise…”

    The formula is (1.025)^5 = 1.1314+. That’s where I got the 13 1/7 %.
    Now you can plug in your (1.011)^10 figure and get an 11.56% increase,
    so your statement “1.1% x 10 yr will match your 13 1/7%” is also wrong.

  • pft

    Much of our GDP growth has been fictitous capital growth that does not require much energy. Much of our manufacturing has been moved to China. So somehow imports must be taken into account. But your point is well taken. We are one of the greenest countries around, especially when you take into account Alaska.

  • stas peterson

    Your comment about so much industry moving to China is more urban myth than reality, and I am sick of such drivel.

    The tonnage of Steel produced by America is about as high as it ever was, and suitable for a well developed country. The players in the business are new, and include foreign owners. Traditional makers using 3% iron oxide ore are fading; but they have lost out to those makers making steel from 95% steel “ore” (ie scrap). The US steel industry is now the most energy efficient in the world. And only it has access to large “mines” of 95% steel “ore”.

    Native US automakers have declined, but the numbers of autos assembled in NA has continued to slowly grow.
    Once again the players are different and include a lot of foreign makers. But so what? Is a Toyota plant in Alabama or a Nissan factory in Tennessee any less a maker of autos than ancient abandoned plant in Detroit?

    Certainly there are many industries that have gone overseas, but it’s not as much as you would think. There is also a reverse migration underway, as industries discover they can’t be as responsive when thier factoies are a continent away.

    The US dollar is stressed serving as both the international currency and a domestic money as well. Its decline has shocked many a busineman and who is faced with unfavorable exchange rates for the first time in that direction.

    Teher si a cultivated malasie inAmerica that we are not doing well. Certainly theri is a short teerm energy price siisue. But beyond the next few years, a glowing future beckons. The US is solving its problems.

    For several reasons there is a feeling that the US has pollution problems, and the Cjhicken Littleisim of AGW adds to that. But trh US energy problesm are very short term. tehr eris fainally a substitute for transport. Copious energy supplies are coming without resort to fossil. America has almost completed its efforts in cleasing its environment. Its air water are cleaner than any where else inthe world and its standards are literally decades ahead of even the EU. Nuclear fission has been perfected and the obstacles to cosntructing it removed. Fusion energy is coming inexhorably. But it is not widely recognized. It has faced its racial problems and has worked to close them.

    The nature of political advocacy never allows one to claim success. The practicing Racists in America, like J Jackson, can’t admit that de facto and de jure black racism is dead. They would be out of jobs.

    The enviromental organizations could never admit that the air is virtually clean everywhere but California, or their doantion appeals would die. There isi also an industry of tort attorneys who have grown up extorting sums for percieved slights. They can never admit that most coal miners with silicosis are dead; children eating lead paint are microscopic and leadapinthasn’t been made in 20 years or more. People dying from asbestos don’t exist any more. Tobacco smoking has had a massive decline.
    they must find new extortable threats or starve. So they stil advertise that the US is an unhealthy place, medicines are suspect, and of course, this is counter to the rising life expectancy.

    With all the propagnda that the world is going to hell in handbasket being disseminated, for various reasons, and largely false, is it any wonder that there is a temporary funk.

  • stas,

    Your comments about industries choosing th stay in NA is currently accurate. I wonder, however, if that will continue to be the case when/if carbon credits or carbon taxes make their activities unprofitable. Time will tell.

  • Mike

    Wow Stas…

    I think your post just gave me an erection.

    In all seriousness, thanks for posting that. I had no idea about some of the things you mentioned.

  • “Native US automakers have declined, but the numbers of autos assembled in NA has continued to slowly grow.”

    Let’s change the NA for NAU or better yet, for the World. Why not?
    And you end up with world wages and world standard of living. Why not?

    BTW. I read the US citizens receive food stamps (attribute of war, third world country, or sociaslism). I remember the times of food stamps here in Poland in the first half of 80s, a decade+ before our communism has fallen. Are you living in socialism still or in communism yet?

    Przemysław Pawełczyk

  • What was going on in 1990?

    In the comments:

    Of course we are [responding irrationally to high fuel prices], see this from CNN. People cutting back on mass transit, police, road repair and maintenance.

    I’ll add that I think people are driving less efficiently and communities are probably not managing traffic lights well, further driving down fuel efficiency.

    I plotted gas consumption and vehicle miles driven one year change for Jan 07 to April 08. When the change in gas comsumption is bigger than the change in miles driven, fuel efficiency is declining. There are huge declines in efficiency in Feb 08 and March 08.

    Interestingly, I also happened upon a report (via futurepundit) that says gasoline consumption is down 1.7%, the first significant reduction in consumption in 17 years. In August 1990, oil prices spiked upward. We entered a recession in September 1990 until September 1991.