NCPA - National Center for Policy Analysis

Economic Effects of Kyoto on Europe

April 25, 2002

Throughout the negotiations leading to the Kyoto Protocol, which set targets for countries to reduce carbon dioxide emissions by 2010 to below those of 1990 levels, supporters claimed the costs would be minimal. But a new report on Europe show that Kyoto stands to inflict devastating damage to the economies of European Union (EU) nations.

According to new estimates by the economic and energy consultancy DRI-WEFA:

  • Compliance with the Kyoto Protocol will cost Germany and Britain about 5 percent of their Gross Domestic Product (GDP) and increase unemployment by 1.8 million and one million respectively.
  • The Netherlands is set to lose 3.8 percent of its GDP and 240,000 jobs, and Spain 5 percent and one million jobs.
  • These DRI-WEFA findings assume a best case scenario in which efficient and widespread carbon dioxide trading will reduce the burden imposed by the emissions reductions -- meaning it could be worse.

Furthermore, all European nations will see rising heating fuel, gasoline, diesel and electricity prices. By 2010, prices will have risen by 10 percent to 20 percent.

  • Spain has a large trucking fleet, which will be seriously harmed by a 25 percent increase in the price of diesel.
  • Electricity prices will more than double for Germany, Britain and the Netherlands, causing widespread economic harm.
  • And the cost of heating oil would rise by nearly 50 percent.

The U.S. agreed to reduce emissions 7 percent, and the EU as a whole 8 percent. Germany and Britain thought they could do better and agreed to reductions of more than 10 percent. Climate alarmists in Europe want to reduce emissions 60 percent by 2050.

However, a recent scientific report from the European Science and Environment Forum demonstrates that there isn't a consensus that man is to blame for much of recent warming, and costs of warming have been modest.

Source: Roger Bate (European Science and Environment Forum), "Kyoto May Cost You Your Job," Wall Street Journal Europe, April 22, 2002.


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