NCPA - National Center for Policy Analysis

Kyoto Targets Emissions, But The Poor Will Take The Hit

July 24, 2002

The Kyoto Protocol requires participating nations to cut carbon dioxide emissions an average of 5 percent below 1990 levels between 2008 and 1012. It will harm economies worldwide and only minimally -- if at all -- reduce global warming. More importantly, the costs of Kyoto will be borne disproportionately by the world's poor due to rising energy costs, lower economic growth, job cuts and indirect effects on developing nations.

Reducing carbon emissions will increase the cost of housing, heating and cooling, electricity, transportation and consumer products. Specifically, according to the Heritage Foundation:

  • Direct energy price hikes alone could cost the average U.S. household an extra $1,000 per year.
  • Including effects on all consumer prices, energy costs could reduce average household income by $1,620 per year.
  • Cumulatively, by 2020, the Protocol could cost the average household $30,000 - equivalent to an income tax increase of 14.5 percent.

The portion of income consumed by energy costs could increase 10 percentage points for the poorest 10 percent of Americans. Families with annual incomes of less than $10,000 still spend nearly $1,000 each year on energy, on average. Kyoto would double this cost to 20 percent of disposable income, or almost $2,000 per year.

Furthermore, Kyoto would cost the U.S. between $330.2 billion and $467.8 billion in gross domestic product (GDP), or $1,105 to $1,565 per person in 2010.

Nor will the poor in the United States be the only victims: the Protocol will deny the poor in developing counties -- which are not required to make emissions reductions -- a chance to raise their standards of living. By shrinking the economies and energy markets of Kyoto signatory nations, trade between industrialized and developing countries will be seriously curtailed. Thus even non-participating nations face GDP losses up to 3 percent.

Source: H. Sterling Burnett, "Kyoto Misses Targets -- Hits Poor Instead," Brief Analysis No. 407, July 24, 2002, National Center for Policy Analysis.

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