Cost of Kyoto five times above EU estimate

Implementing the Kyoto protocol might hit the EU economy five times as hard as predicted by the European Commission, according to research presented by pan-industry lobby group Unice on Thursday. The group called for a radical change in the EU's climate change policy.

Consultants Cowi found that current EU policies to meet Kyoto targets would most likely shave 0.48% off the bloc’s GDP by 2010 – two years into the protocol’s 2008-12 compliance window. The European Commission has forecast a drop in GDP of only 0.1%, though its study used a very different economic model.

Unice has published the figures ahead of a major stakeholder conference in Brussels next week that will kick-off EU debate on how the Kyoto protocol should evolve after 2012. The Commission will put proposals to ministers next spring and the EU should decide its stance in late 2005 for subsequent global talks.

Unice fears the EU may decide unilaterally to set even stricter emission targets even if the USA and some large developing countries refuse to participate. “The study shows that if we keep pushing forward these policies, there could be a problem,” Nick Campbell, head of Unice’s climate working group said.

Instead the EU must build a “truly international” climate regime, perhaps blending absolute emission caps with target-free strategies to reduce energy intensity and disseminate cleaner technologies. “EU leadership means getting [countries] round a table and seeing how to curb global emissions in such a way that doesn’t harm competitiveness,” he said.

The Cowi study says Kyoto will also dent EU competitiveness in other ways. Its models predict a drop in exports of around 0.5%, rising to as much as 5.1% for “energy-intensive” exports. Emissions outside the EU would rise by as much as a fifth as economic activity moves out of the block, eroding the benefits of lower emissions at home.

Unice’s statement coincided with an announcement by the UN that Russia has formally submitted its ratification of the Kyoto protocol. As a result the treaty will now enter force on 16 February next year.

Published with the permission of Environment Daily.

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