NCPA - National Center for Policy Analysis

Kyoto Will Cost Canadians Some Green

February 3, 2004

The Kyoto treaty will cost Canada about $1 billion to reduce emissions by a mere 8 percent this year, studies suggest. However, when considering the implicit costs of administration, tax collection and other factors, costs will be far higher, say critics. For example:

  • The government will spend $150 million to administer a budget of $841 million; that's about an 18 percent administration fee.
  • Raising the money through sales taxes will cost about 17 cents for every dollar of sales tax collected.
  • The private sector will likely pay 20 times as much in compliance costs for every dollar spent on Kyoto -- an estimate based on studies of compliance costs of previous regulatory initiatives.

When factoring in these costs, estimates run at about $354 billion that must be spent before the year 2008 in order for the budget to have any effect on greenhouse gases, costing Canadians $4,700 per taxpayer per year for the next five years. Furthermore, subsequent targets of 8 percent reduction will likely cost more than $1 billion.

The U.N. Intergovernmental Panel on Climate Change estimates that the Kyoto protocol will reduce greenhouse gas emissions by a meager 0.4 percent. Moreover, the benefits gained from compliance are only about one-seventh of the cost, according to Yale Economist William Nordhaus.

Proponents of the Kyoto treaty admit that it will do little to reduce global warming. Jerry Mahlman of Princeton University notes that "it might take another 30 Kyotos over the next century," to reduce global warming.

Source: Kenneth Green, "High Costs of Kyoto Compliance Punishing Canadians," Environment and Climate News, December 2003, Heartland Institute.


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