The Kyoto Protocol: A Flawed Treaty Puts America at Risk A discussion of the proposed United Nations' Global Climate Treaty and its impact on the American way of life. The Kyoto Protocol: A Flawed Treaty Puts America at Risk CONSAD Research Corporation, one of the Nation's leading economic forecasting firms, conducted a May 1998 economic analysis of the proposed Kyoto Protocol. Their analysis parallels findings by other leading economic forecasters which detail the negative impact this treaty will have on employment, economic output, and standard of life for working families, senior citizens, and those who live on fixed or low-incomes. The CONSAD study finds that as many as 3.2 million American jobs will be at risk due to regulatory actions that will be required in order to meet the emissions reductions mandated by the Kyoto Protocol. The study also provides a 50-state breakdown of job losses and economic dislocation that will result should these policies be implemented. ISSUE OVERVIEW In December 1997, the Clinton Administration entered into a handshake agreement on a legally binding international treaty that will have major impacts on every facet of the U.S. economy. The Kyoto Protocol will require the U.S. to reduce greenhouse gas emissions by an average of seven percent below 1990 levels during the fiveyear period of 2008-2012. As a result, American working families and senior citizens will be forced to pay higher energy and consumer costs and millions of American jobs will be lost to foreign competitors. All of this economic pain, for a treaty that scientists can't even agree is necessary. On October 22, 1997, President Clinton outlined for the Nation what he described as the official U.S. position regarding the upcoming treaty negotiations in Kyoto. The President stated that the United States would pursue a comprehensive framework in Kyoto that included three elements, • The U.S. would reduce emissions • The proposed treaty language • The proposed treaty would also It is important to note, while the While there is little doubt that the Why did the U.S. go from bad to worse in Kyoto? Countries with rapidly emerging economies, such as China, Mexico, India, Brazil, and others, are exempt from action under the Kyoto Protocol. U.S. Position • Reduce emissions to 1990-levels by 2008-2012 • Flexible mechanisms (emissions trading and Joint Implementation) • Ensure meaningful participation by key developing countries Upon arriving in Kyoto, the U.S. negotiators found the participants to be hopelessly deadlocked. Representatives of the European Union were critical of the U.S. because they felt the positioned outlined by President Clinton was not harsh enough. China and other countries exempted from action under the proposed treaty language were adamant in resisting the U.S. suggestion that they accept any responsibility for reducing greenhouse gas emissions in their countries. Despite the President's earlier pledge that the U.S. negotiators would walk away from Kyoto without a treaty rather than accept an agreement contrary to the best interest of the U.S., that did not happen. Vice President Gore went to Kyoto. Admitting to some that it would be better for the U.S. to accept a bad treaty than to have no treaty, he instructed the U.S. negotiators to show "increased flexibility." From that point on, the U.S. surrendered on every key point of the President's original plan. It is important to note that while the stated goal of the Kyoto Protocol is to reduce world greenhouse gas emissions, the truth is that total world emissions will only be about 0.04% lower in 2010 than they would have been under a business-as-usual scenario. Why? Because of the 168 nations involved in negotiating the Kyoto Protocol, only 38 nations will be required to take action. Countries with rapidly emerging Kyoto Protocol • Reduce emissions 7% below 1990levels by 2008-2012 • Limited emissions trading to • Failed to ensure participation by economies, such as China, Mexico, India, Brazil, and others, are exempted from action under the Kyoto Protocol. Despite the fact that many of these countries have the fastest growing economies in the world and will be among the biggest emitters of greenhouse gases by the year 2010, they are not required to take any action. Although it is described by its supporters as a "work in progress", the Kyoto Protocol is, in fact, a flawed treaty that will have a profoundly negative impact on every aspect of American life. CONSAD'S SUMMARY FINDINGS CONSAD Research Corporation, a leading economic forecasting firm which has done work for the U.S. Department of Energy, U.S. Environmental Protection Agency, U.S. Department of Commerce, as well as numerous private corporations and foundations, was asked to provide analysis of the economic impact associated with the Kyoto Protocol mandates. They found that as a result of this treaty: millions of Americans in high- consumers will be forced to pay ✔American businesses will become less competitive as they are forced to compete with foreign companies based in countries that are exempted from the Kyoto mandates. American consumers and businesses will pay more for gasoline, electricity, natural gas, and other necessities. Increased energy costs will make American products more expensive at home and less competitive abroad. As a consequence, the U.S. economy will slow and millions of American workers will join the unemployment lines. To meet the mandates of the Kyoto Protocol, the U.S. must reduce its energy consumption by approximately 30 percent. To reduce consumption, steps would have to be taken to drive up prices in order to coerce consumers to use less energy. Emissions trading would require the purchase of credits or allowances from other countries. Like a hidden tax, credits or allowances are added costs that would be passed along to consumers. In its analysis, CONSAD estimated the cost of these permit fees to be in the range of $140 to $265 per ton of carbon emitted by 2012. CONSAD Research's key findings are, implementation of the Kyoto Protocol will mean: • Consumers and businesses will • U.S. Gross Domestic Product Key strategic industries (alu- Every region of the U.S. will expe- • The highest job losses will be in high-skilled, high-wage employment sectors, with many U.S. workers being forced to take employment in lower-paying jobs in service-related industries rather than facing prolonged periods of unemployment; and • The U.S. standard of living will decrease as working families are forced to reduce consumption of goods and services in every major category, including food, energy, and health care. ALL PAIN AND NO GAIN A thoughtful America should quickly and firmly reject implementation of the Kyoto Protocol. It is "all pain and no gain" for American working families, senior citizens, and those who live on fixed or low-incomes. The interest of the American public must be given the highest priority when negotiating any international agreement. That was not the case in Kyoto, and until such time as it does, Americans from all walks of life should stand up and be counted as opposing a flawed treaty and the threat it represents to every aspect of the American way of life. Like a hidden tax, credits and allowances are added costs that would be passed along to consumers. The concept of value added relates to the portion of the value of output that is attributable to the capital and labor used in production. It excludes the value of the intermediate inputs, such as raw and processed materials and product components, that are purchased and used in production. The total value added in all firms in all industries is the gross domestic (GDP) of the economy. |