[BETA] Fortnightly

DOES THE KYOTO CLIMATE CHANGE TREATY POSE A SEVERE threat to the U.S. economy or is that claim simply a "Chicken Little" prediction of detractors?

Pro-business Republicans, environmentalist bureaucrats and industry observers debated the merits of each position at the Ninth Annual Energy Efficiency Forum in Washington, D.C., on June 10.

One of the most vociferous opponents of the treaty was Rep. F. James Sensenbrenner Jr. (R-Wisc.), chairman of the House Committee on Science, who headed the Congressional delegation to Kyoto, Japan.

Other speakers included Ambassador Stuart E. Eizenstat, under secretary for economic, business and agricultural affairs, U.S. Department of State; J. Brian Atwood, administrator, U.S. Agency for International Development; Peter Coy, associate economics editor, Business Week; and Richard L. Sandor, chairman/CEO of Environmental Financial Products Ltd. and also a director of Central and South West Corp.

"The Kyoto Protocol agreed to by the Clinton Administration and over 160 nations last September poses a severe threat to the vitality of the United States economy in the form of drastic energy price increases, job losses in key manufacturing industries and an overall decline in our standard of living," Sensenbrenner said.

Quoting Wharton Econometrics Forecasting Associates Inc., Sensenbrenner said implementing the protocol would reduce household income by more than $2,700 annually in 2010. A Charles River Associates study, he said, predicts that gasoline prices would be a third higher in 2010 and 43 percent higher in 2020 than they would be without a treaty.

The rosier scenario painted by the President's Council of Economic Advisors -- household income reduced by as much as $110 annually because of utility costs and increased gasoline prices of as much as 6 cents a gallon -- assumes the U.S. won't decrease greenhouse gas emissions by the treaty's 30 percent figure, Sensenbrenner said. What it will do, he insisted, is decrease emissions by 3 percent and make up the rest by paying other countries to reduce emissions through a tradable credit system.

He said the Kyoto agreement was beyond salvation, especially considering the Byrd-Hagel amendment and the House's unanimous vote to exempt U.S. armed forces from restrictions posed by the protocol. "Without significant...changes to the treaty, I predict it will not pass the Senate," he said.

The Byrd-Hagel amendment establishes a standard of what the protocol would need for Senate ratification, including participation by developing countries and assurances that it would not hurt the United States economically.

Co-author of that amendment, Sen. Chuck Hagel (R-Neb.), echoed Sensenbrenner's comments."If the objective, in fact, is to address man-made greenhouse gas emissions into the next century, then the Kyoto Protocol is folly before it begins," he said. "We are not the problem. The problem is China, India, Mexico, South Korea and 131 other nations... They don't have environmental protocols or regimens.

"When you hamstring America and you say you're going down on your energy consumption by 31 percent by the year 2012, has anybody thought through what that does to our economy? What that does to your international competitiveness?"

As of early June, the White House hadn't released a detailed economic analysis