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Kyoto & Our Collective Economic Future: Economic & Energy Underpinnings

Issue Analysis

Title

Kyoto & Our Collective Economic Future: Economic & Energy Underpinnings

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Both supporters and opponents of the Kyoto Protocol generally agree on one thing – the Protocol would not harm and may even benefit the economies of the world’s developing nations. Indeed, the assessment that Kyoto would be a net plus for developing countries almost seems self-evident. The Protocol would subject the United States and other industrial countries – but not the world’s developing nations – to binding emission reduction targets and timetables. And since all emission reduction schemes would make it more expensive for the regulated parties to use energy, the Kyoto Protocol would appear to create competitive advantages for developing country firms, which would be exempt from such regulation.

However, the conventional wisdom that assumes Kyoto would benefit or at least not harm developing countries is wrong. The “interdependence” of nations and the “globalization” of the world economy may be cliches, but they are also powerful realities that nations ignore at their peril. The United States is the primary market for developing country exports. The growth of developing country economies is thus tightly linked to the health of the U.S. economy. Any downturn in the U.S. economy caused by Kyoto-inspired regulation would wipe out billions of dollars annually in U.S. purchases of developing country goods. As CEI President Fred Smith put it, if Kyoto’s energy-suppression mandates give the U.S. economy a cold, developing countries, especially in Latin America, are likely to contract pneumonia.

In the following pages, energy analyst Mark Mills provides ample evidence that Kyoto would seriously harm developing country economies. He also explains why developing countries must electrify their economies in order to grow, and why, for both economic and environmental reasons, renewable energy technologies like wind and solar power cannot replace, or even significantly supplement, fossil fuel-based electricity in the foreseeable future. Mills’ lecture, presented to an audience of developing country embassy officials, makes a compelling case that an energy-starved world would be a world of starving people.