Climate Change Policy: All Pain, No Gain

Climate Change Policy: All Pain, No Gain

Model Predicts Heavy Economic Losses, Few Environmental Gains From Emission Controls
June 07, 1997

WASHINGTON, DC June 6, 1997 - Binding limits on greenhouse emissions will be devastating to families in the United States and other countries according to the report released by the Australian Bureau of Agriculture and Resource Economics (ABARE).

The Clinton administration is seeking to negotiate an international treaty that will require developed nations to severely curtail greenhouse gas emissions. The administration hopes to sign the agreement in Kyoto, Japan at the end of the year. "The Competitive Enterprise Institute has argued all along that the costs of Kyoto would wreak serious havoc on the U.S. economy. This report confirms our worst fears," says Marlo Lewis, Vice President of Policy for CEI.

The report, The Economic Impact of International Climate Change Policy, argues that binding limits on emissions to be negotiated in Kyoto will lead to serious economic disruptions to energy intensive industries throughout the developed world. The most likely target to emerge from Kyoto is to stabilize emissions within the developed countries (Annex I countries) at 1990 levels by 2010 and at ten percent below 1990 levels by 2020. The developing countries (non-Annex I countries) will be exempt from the treaty. According to the report the following is likely to result:

  • Binding targets will cause energy-intensive industries, including steel, iron, chemical, rubber and plastic, to flee from the developed countries to undeveloped countries taking with them hundreds of thousand of jobs.
  • A tradable emission strategy, touted by the administration as a way to lower abatement costs, will reduce U.S. comparative advantage since the U.S. will experience a smaller reduction in emission abatement costs relative to other Annex I countries. The resulting trade-related loss will substantially outweigh the small benefits from lower abatement costs.
  • The cost of the Kyoto treaty in the U.S. could be as much as $1,600 per person or $6,400 for a family of four.
  • Expected increases in emissions from countries such as China and India will erase any benefits which may arise from restrictions placed on the developed countries.

    "It is insane for the U.S. to throw away our industries and our jobs, especially when there are still serious scientific doubts regarding the reality of climate change," argues Marlo Lewis. Lewis notes that highly accurate satellite measurements have shown no warming whatsoever over the last 18 years.

  • CEI is a non-profit, non-partisan public policy group dedicated to free markets and limited government. For more information call Greg Smith at (202) 331-1010.