The cost of Kyoto

20 April 2005
A lot of hooey is talked about the costs of implementing the Kyoto Protocol. Opponents bandy around figures in the many hundreds of billions of dollars, with no reference to reality.

Investments in more efficient capital stock to meet the modest goals of the Protocol will probably cost about ten billion dollars. A key word here is "investment". When you install a new heating system it may cost you a thousand dollars, but save you twelve hundred. Your investment has yielded a 20% return at virtually zero risk.

Opponents of Kyoto ignore the payback on the investment and multiply its magnitude many times.

A new report from the US Energy Information Administration provides ammunitition for the pro-Kyoto camp. As the Financial Times reports (subscription only), reducing US emissions by 7% by 2025 would cost 0.15% of gross domestic product. The costs of implementing the Kyoto sized cuts under these calculations would be considerably lessthan 0.5% of GDP. And the investment in efficiency would yield a return too

The report, from a conservative, non-partisan body, supports many existing studies, and strenghtens the case of a European delegation visiting Paula Dobransky, US undersecretary for global affairs. Will the US administration ignore it?

For more on the US and Kyoto, see this classic openDemocracy interview with Benito Mueller

Caspar Henderson

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