ChaSles River,. .Rosy assumptions http://www.globalclimate.org/criver.htm Global Climate Coalition A voice for business in the global warming debate Climate Economics Climate Science Climate Chanae Primer What Others Are Saving Climate Chanae in the News Climate Watch Brief Newsletter Climate Links GCC News Releases GCC Studies GCC Mission HOME 1 of2 Charles River Associates analysis of Administratior assumptions about costs The Clinton Administration has publicly offered optimistic assumptions about it will take to implement the Kyoto Protocol on global warming. In reality, the c to American families could be ten times the estimates made by the Administr, because: The Administration has been excessively optimistic about the likelihood an international trading system for trading greenhouse gas emissions credits. Dr. Janet Yellen, the chief White House economic advisor, has the cost at between $14 and $23 a ton; economist W. David Montgome Charles River Associates found the cost could be $170 a ton or more. Under that forecast, the cost to the U.S. Gross Domestic Product will bc over $100 billion, about ten times the Administration’s forecast. To achieve the goals of the Kyoto Protocol, the Administration has assL that dcoal-fired electric utilities in the United States could be convertec natural gas by the year 2010 when the treaty takes hold. Dr. Montgomei found this to be unrealistic and questions whether it will be economicall! feasible for utility owners to make that rapid a change. Replacing coal-fired power plants with natural gas will be an enormousl: costly undertaking. There are many reasons - prices of trading credits abroad, lost jobs in the coal industry, limits on natural gas production. T Administration appears to have ignored all these factors. To estimate the increased costs on American families of implementing i Kyoto agreement, the Administration measured only part of the costs th which comes directly from rising energy prices. Dr. Yellen’s study left th enormous indirect costs to reverberate through the whole economy. According to Dr. Montgomery, costs to American families should be multiplied by two to four times when all factors are considered. 7/9/99 12: I O PM Cha~lesRiyer,.Rosy assumptions http:Nwww.globalclimate.org/criver.htm These flaws in the Administration’s own analysis mean that instead of dramatically reducing its own emissions when the Kyoto treaty takes effect, tk United States will instead spend billions to purchase emissions credits - mair Russia - to offset our own inability to meet the goals of the Protocol. We will forced to make a massive transfer of wealth to other countries that are actual producing less greenhouse gases that they were in 1990. The alternative of ti to meet the ambitious schedule by reducing energy use in the United States i under the Administration’s own assumptions, likely to entail costs five times i large as the cost of buying permits overseas -- and ten times as much under more realistic assumptions made by Dr. Montgomery. 2of2 7/9/99 12: I 0 PM