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-------Original Message-------
Date: 06/28/05 08:08:26
Subject: [euratom] Kyoto: waste of cash or green lifeline?
Kyoto: waste of cash or green lifeline?
By Alister Doyle
Bonn, Germany - A waste of more than $1 300(about R9 000) a year for
every American, undermining economic growth and jobs? Or a lifeline
for the planet costing just an annual $20 for each European?
The UN's Kyoto protocol on curbing global warming looks utterly
different when viewed from Washington, which opposes the 150-nation
pact, or from its main backers in the European Union, Japan or Canada.
So who is right?
'I think the United States was wrong'
Experts say there is no sign that investors are shifting to favour
the United States out of worry that Kyoto's supporters are shackling
their economies with vast costs to curb emissions of heat-trapping
gases from power plants, factories and cars.
"I think the United States was wrong" to say that Kyoto was too
expensive, said Artur Runge-Metzger, head of the European
Commission's Climate, Ozone and Energy unit. "This is a huge
opportunity to get on a path towards clean energy."
US President George Bush will meet the main backers of Kyoto at a
July 6-8 Group of Eight summit in Scotland, where British Prime
Minister Tony Blair hopes radical action will be agreed to combat
global warming.
But given Washington's reaction to Kyoto, hopes that further concrete
measures can be agreed look slim.
The United States says the EU got off lightly in its targets for
cutting use of fossil fuels and shifting to cleaner energies such as
solar and wind power under Kyoto.
"The reductions (in greenhouse gases) the EU have to make were modest
compared to what might be required by the United States," said US
senior climate negotiator Harlan Watson.
Supporters of Kyoto, which entered into force on February 16, see it
as a tiny first step to avert what could be far higher costs of more
storms, droughts, heat waves and rising sea levels that could drive
thousands of species to extinction by 2100.
The EU Commission reckons Kyoto will cut the EU's annual gross
domestic product (GDP) by 0,06 percent by 2010 when it has full
effect, Runge-Metzger said. That would work out roughly at $20 for
each EU citizen in 2010 alone.
"We think this is affordable, in fact it disappears in the noise of
the statistics," Runge-Metzger said. Japan and Canada also see costs
as manageable.
In the past, US officials have estimated Kyoto could mean a brake in
US economic output of up to $400-billion by 2010 in the worst case,
or 4,2 percent of GDP. That would mean more than $1 300 for each
American that year.
Bush pulled the United States, the world's biggest polluter, out of
Kyoto in 2001, branding it too costly and unfair because it omits
developing nations from a first round of cuts until 2012.
Kyoto obliges participants to cut emissions of carbon dioxide - the
main greenhouse gas - by 5,2 percent below 1990 levels by 2008-12.
"The costs for the EU probably work out at the cost of a light lunch
for each citizen," said Alexander Ochs of the German Institute for
International and Security Affairs. "Views about Kyoto's effects are
more at the level of belief than fact."
Some investors might be attracted to companies that stress
environmentalism by promising to respect Kyoto, he said. Others may
prefer to invest in firms that stress profit over what might turn out
to be unreliable climate science.
Watson said the United States would have faced a bigger burden under
Kyoto than its main allies, partly because of US heavy reliance on
domestic coal for generating electricity. Coal emits more carbon
dioxide than gas or oil when burnt.
"Europe's overall reduction from business as usual is 4 to 5
percent," he said. For the United States "we would estimate in the
order of 30 to 35 percent reduction versus business as usual."
And east European EU members are far below target because of a
collapse of Soviet-era smokestack industries, he said.
Watson also said it was hard to assess the impact of Kyoto on
investment flows since there were so many other factors at play. "A
lot of heavy industry is going to China. Clearly that's happening in
any event."
China, along with all other developing nations, has no targets for
limiting emissions under Kyoto's first period to 2012, though lower
costs, rather that its exemption from the environment pact, are
driving the shift.
"There are much more important factors like tax rates, wage rates for
deciding investments," said Runge-Metzger, noting a shift in EU
investments to lower-cost members in east Europe.
After quitting Kyoto's caps on emissions, Washington has stressed
research in clean technologies like hydrogen.
Kristian Tangen, managing director of Oslo-based Point Carbon
analysis group, said most models estimated that Kyoto's first period
will cost its backers 0,1-0.3 percent of GDP.
He said the EU's flagship Emissions Trading Scheme (ETS), creating a
market for carbon dioxide emissions quotas, would have little impact
for an investor deciding whether to buy shares in, for instance, a
German or a US steelmaker.
EU sectors exposed to international competition, like steel or cement
makers, had generally been given more allowances than they were
likely to need, he said. By contrast, many companies in need of
buying allowances were in the power sector, often shielded from
international competition.
Top emitters of carbon dioxide under the ETS include German energy
groups RWE AG and E.ON, Swedish power company Vattenfall, Spanish
utility Endesa, Anglo-Dutch steel and aluminium company Corus Group
and energy firm Royal Dutch/Shell.
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