Azara Blog: Kyoto Protocol allegedly has bigger impact on economy than previously thought

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Date published: 2005/11/08

The BBC says:

Meeting Kyoto Protocol targets on greenhouse gas emissions will reduce European economic growth significantly.

That is the finding of a new study from the International Council for Capital Formation, a market-based think tank.

It projects that by 2010, Spain's growth will have fallen by 3%, and that Italy's will shrink by 2%.

These are bigger figures than previous studies have found, and their release comes as world leaders struggle to find a successor to the Kyoto treaty.
ICCF managing director Margo Thorning said that these reductions took into account a projected uptake of green technologies.

"We have a fair amount of new, clean technology already embedded in our forecasts," she told the BBC News website, "so we're already assuming more use of renewables, more efficiency and so on.

"We also assume the development of a regime in Europe which all energy use would be subject to in an attempt to push emissions down."

Currently, the European Union's principal mechanism for reducing greenhouse gases, the Emissions Trading Scheme (ETS), includes only industrial producers.

But most of the EU's pre-expansion countries are some way off meeting their Kyoto targets, and there are moves to include the domestic and transport sectors in an expanded ETS.

The ICCF analysis suggests this would raise energy costs to a considerable degree, with electricity prices across the continent growing by an average 26% by 2010.

This means, it says, that economies would suffer, increasing unemployment by several hundred thousand people in each of the countries studied as well as reducing growth.
Funded as it is by industrial, trade and finance groups, including oil companies, some observers might not consider it surprising that the ICCF report casts a harsh light on the post-Kyoto world.

"The figures given for Spain are very different from all other studies done so far," commented Bert Metz of the Netherlands Environmental Assessment Agency (MNP), co-chair of the Intergovernmental Panel on Climate Change working group on mitigation.

"Other studies show changes in the order of 1% if you use options like emissions trading, 2% if you don't," he told the BBC News website.

"You can get any conclusion from any economic study by choosing your assumptions carefully."

The last point is the important one. Of course the same statement can be made about the IPCC models. Needless to say the "end of the world" types place great faith in models that show you can reduce emissions by a huge percent with no real effect on the economy and the "business as usual" types place great faith in models that show the opposite. (Well there are some "end of the world" types who want the world economy to be hammered, because they believe humans consume too many resources. Cheap low-emission energy would be a disaster as far as they are concerned.) The one certainty is that the rich people doing the models and making the decisions will not be the people who are most affected by rising energy costs.

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