EU vs. USA on CO2:

European nations have assumed the mantle of global leadership on climate change while the United States sits on the sidelines. This standard narrative contains some truth, but it also grossly overstates Europe's demonstrated commitment to reducing greenhouse gas emissions. The reality is more complex.

While talking tough about the need to reduce emissions, many European nations are moving in the opposite direction. Only two (the United Kingdom and Sweden) look likely to meet their Kyoto targets, while some are falling woefully behind. In parts of Europe there is actually movement away from emission-free energy sources, such as nuclear power, toward carbon-based fuels due to other environmental concerns.

The implmentation of the E.U.'s emission trading scheme has facilitated this trend. Thus far, E.U. nations have refused to adopt emission caps that require actual emission cuts. To the contrary, the volume of emission allowances sought by E.U. nations has been greater than past emissions, making the trading scheme virtually worthless as an emission reduction scheme.

An editorial in today's WSJ (for subscribers only) adds some interesting statistics to this picture. From 1990-1995 and 1995-2000, the growth of carbon dioxide emissions in the U.S. was significantly greater than in the E.U. Since 2000, however, this has changed, as illustrated below.

Consider also that from 2000-2004, the U.S. economy also grew at a much faster rate than did that of Europe, as did the U.S. population. Clearly, then, the U.S. must be doing something right when compared to the nations of Europe.

There is much to fault in U.S. climate policy, including the failure to cut subsidies for fossil fuels or provide greater opportunities for market-driven innovation in the energy sector, but Europe is hardly providing a model the U.S. should follow.