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Argument: The Kyoto protocol would harm the American economy

Issue Report: Kyoto Protocol

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Mitt Romney, former Governor of Massachusetts, stated in a Feb. 23, 2007 press release titled “Governor Mitt Romney on the Current Environmental Debate” on his official campaign website: “Unfortunately, some in the Republican Party are embracing the radical environmental ideas of the liberal left. As governor, I found that thoughtful environmentalism need not be anti-growth and anti-jobs. But Kyoto-style sweeping mandates, imposed unilaterally in the United States, would kill jobs, depress growth and shift manufacturing to the dirtiest developing nations.

Republicans should never abandon pro-growth conservative principles in an effort to embrace the ideas of Al Gore. Instead of sweeping mandates, we must use America’s power of innovation to develop alternative sources of energy and new technologies that use energy more efficiently.”[1]

President Bush said in 2001, “harm our economy and hurt our workers.”[2]

Gwyn Prins1 & Steve Rayner. “Time to ditch Kyoto”. Nature. 25 Oct. 2007 – Strong Congressional Reservations. In July 1997, the Senate unanimously passed a resolution (S. Res. 98) stating that it would not ratify any global climate treaty that would seriously harm the U.S. economy or that failed to require developing countries to reduce their emissions within the same time frame as the developed countries. 6 Despite this Senate opposition, the Clinton Administration agreed to the Protocol five months later and then signed it on November 12, 1998. 7 Recognizing the lack of support for the Protocol on Capitol Hill, however, President Clinton never submitted it to the Senate for ratification–a step necessary for it to take effect.

Charli E. Coon. “Why President Bush Is Right to Abandon the Kyoto Protocol.” Heritage Foundation. May 11, 2001. – Severe Economic Consequences. A recent study notes that many climate policy experts now believe the emissions reductions called for in the Protocol could have an adverse effect on Americans. 43 The study finds, for example, that U.S. productivity following implementation of the Protocol would fall by $100 billion to over $400 billion in 2010. 44 An unrestricted global emissions trading system that includes developing countries could reduce this damage to between $100 billion and $200 billion. 45 Even if developed countries could buy credits from developing countries, they would still pay dearly to attract them at a time when developing nations are focused on economic growth. 46

The study also predicts that increases in prices for gasoline would range from about 30 percent to over 50 percent and increases in prices for electricity from 50 percent to over 80 percent. Further, workers would suffer reductions in wage growth of 5 percent to 10 percent a year, while living standards would fall by 15 percent. 47 Employment losses would be similarly significant. According to a WEFA analysis, if all mandated carbon emissions targets are achieved domestically, every state in the United States will lose jobs. 48 Total job losses are estimated at 2.4 million. 49 Low- and moderate-income families would be hardest hit.

U.S. competitiveness would be harmed as well. Developing countries would not need to raise their energy prices or product prices as the industrial countries would after implementing steps to meet their targets. 50 U.S. output of energy-intensive products, such as automobiles, steel, paper, and chemicals, could decline by 15 percent by 2020. 51 Rising energy costs would adversely affect U.S. agriculture as well, causing food exports to decline and food imports to increase. 52

Sterling Burnett. “Was U.S. wise to reject Kyoto treaty on climate change?”. National Center for Policy Analysis. 1 May 2005 – “The Kyoto Protocol for the control of greenhouse gases arrived stillborn in mid-February, and the event was a cause for celebration for anyone who cares about America’s economy and its workers.

[…]Kyoto wouldn’t help the environment, but it would do immense harm to the economy. According to Dallas Federal Reserve economist Stephen Brown, Kyoto’s emission cuts would reduce U.S. gross domestic product somewhere between 3.6 percent and 5.1 percent by 2010. The Department of Energy estimated that Kyoto would cause gasoline prices to rise by 52 percent and electricity prices to rise by 86 percent.

[…]Neither the Kyoto Treaty nor the Bush administration’s efforts will prevent further human-caused global warming. But at least the administration’s efforts have the virtue of promoting continued economic growth, which is necessary if the world is to adapt to the impacts of a warmer world – regardless of the cause.

John Carlisle. “President Bush Must Kill Kyoto”. February 2001 – Besides the lack of scientific support for man-made warming, an even more compelling reason for President Bush to kill the Kyoto treaty is its prohibitive economic costs. According to a 1998 study by the U.S. Energy Information Administration (EIA), the Kyoto treaty would cost the U.S. economy $400 billion per year, raise electric utility bills by 86%, hike the cost of heating oil by 76% and impose a permanent “Kyoto gasoline tax” of 66 cents per gallon. In total, if Kyoto were adopted each U.S. household would have to spend an extra $1,740 per year on energy.3

Given these unacceptable economic costs, during the presidential campaign, then-Governor Bush stated that he could not support the Kyoto treaty. Also, the Kyoto treaty’s onerous carbon dioxide emission reduction targets run completely counter to President Bush’s strong support for encouraging domestic energy development.

[…]while it is encouraging that our new President understands the economic and scientific arguments against Kyoto, it is nonetheless distressing that his Administration is still on record as supporting costly proposals to regulate carbon dioxide as a pollutant. The Bush campaign’s official energy policy statement, issued in September 2000, specifically states that a Bush Administration would seek to “establish mandatory reduction targets for emissions of four main pollutants: sulfur dioxide, nitrogen oxide, mercury and carbon dioxide.” 6 There is no indication from an Administration official that that position has changed.

Let’s hope that the President reconsiders the proposal to regulate carbon dioxide.

While not as stark as Kyoto, any domestic scheme to regulate carbon dioxide would impose unacceptable costs on the American economy.

A new EIA study shows that carbon dioxide regulation would add about $90 billion to the nation’s electrical generating costs – with the consumer ultimately picking up the tab. Specifically, the EIA examines the economic impact of regulating carbon dioxide under a multi-pollutant strategy that would also include regulation of real pollutants such as nitrogen oxide and sulfur dioxide. Besides the Administration’s apparent support for such a regulatory scheme, there are already five bills before Congress that would authorize caps on carbon dioxide emissions through a multi-pollutant strategy.7

But both the President and Congress may first want to examine the EIA’s ominous findings about the impact of carbon dioxide regulation on the U.S. economy.

Electricity prices are projected to increase by as much as 43% in 2010, with the average household having to divert an extra $200 from health care, housing and other vital necessities to pay the electric bill each year.8

The nation’s economic growth rate would be reduced by 1.2% and the unemployment rate increased by 0.6% in 2005 – which translates into about 1 million people being thrown out of work.9

Many coal-fired power plants would have to be phased out because it would be economically prohibitive for power plant operators to pay the government to release carbon dioxide as would be mandated by a multi-pollutant regulatory plan. Natural gas prices – already soaring – would soar even more as utilities scramble to replace coal-burning plants with gas-burning plants. By 2010, the extra demand for natural gas caused by the government-mandated switch from coal would increase the price of gas more than 60%, from $2.68 per thousand cubic feet to $4.33 per thousand cubic feet. Overall, the nation’s natural gas bill would increase by $25 billion.10

Surely, this is not what the Bush Administration means when it says it wants a new policy to increase the availability of affordable energy.

James Glassman. “Forget Kyoto.”. Wall Street Journal. 30 Nov. 2000 – Gasoline would rise by 50 cents or more a gallon [about 33 percent versus 2000 prices]; the cost of running industrial plants and energy-hungry computers would soar. According to a consensus of projections, the growth of gross domestic product in the U.S. would be cut by more than half as businesses moved offshore to escape the high [carbon] tax.[3]