NCPA - National Center for Policy Analysis


December 9, 2005

Signatories of the Kyoto Protocol are required to severely curtail their carbon dioxide emissions by 2010 and beyond. A new study from the International Council for Capital Formation (ICCF) finds that meeting these goals will hamper European economic growth.

The authors make a number of favorable assumptions like new, clean technology, more use of renewables, improved efficiency and a policy regime designed to push emissions downward. Even assuming very optimistic situations, the costs are high:

  • By 2010, Spain's economic growth will be reduced by 3.1 percent, Italy's will fall 2.1 percent, Britain's by 1.1 percent and Germany's by 0.8 percent.
  • Besides reducing growth, compliance will cause unemployment to rise by several hundred thousand people in each of the countries studied.
  • Everyone will suffer somewhat as electricity costs will grow an average 26 percent by 2010.

Proponents of the Kyoto Protocol argue that the ICCF's results are not reasonable. Nevertheless, even proponents assume that economic growth will diminish by one or two percent.

Source: Richard Black, "Kyoto to 'reduce Europe's growth'," BBC, November 7, 2005; based upon: "The Cost of the Kyoto Protocol," International Council for Capital Formation, November 2005.

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