SINCE THE SIGNING OF THE KYOTO PROTOCOL LAST December, the Clinton Administration has assured the public that greenhouse gas emissions reductions can be achieved with little or no cost to the American people or the U.S. economy.
Disputing this claim is a Consumer Alert & Pacific Research Institute (www.pacificre search.org) report, Impact of Potential 'Greenhouse Gas' Emission Limits on the People and Economy of California.
Using California as an example, the report shows that meeting average emissions levels targeted from 2008 to 2012 would mean economic penalties that will affect every citizen and company in the U.S.
California's population of 32.6 million and its large economy - exceeded in size by only six nations in the world - make an interesting case study. Any greenhouse gas emission reduction would force the state to reduce its dependence on oil. Yet oil supplies 43.4 percent of the state's energy. Natural gas, which supplies 25.8 percent of energy used, also would have to be reduced, as would electricity imported from other states - about half of which is generated with carbon-based fuels.
Economical, alternative sources of energy aren't available, according to the report.
As a consequence, electric bills would increase from 12.5 to 50 percent. Further, an increase in taxes on motor fuels of 50 cents per gallon would add at least $4.7 billion to California's annual driving costs. This translates into an increase of 40 percent in motor fuel costs.
Higher energy costs also would mean higher prices on products originating in California and less ability to compete in world markets. Because 120-plus countries don't have specific reduction obligations under the Protocol, products from those countries would gain an economic edge.
What is the bottom line for California?
A 60-cent per million Btu tax similar to the one proposed in 1993 by the Clinton-Gore Administration and applied only to natural gas, oil and coal used within California's borders would add $3.18 billion, or 6.1 percent, to the state's annual energy cost according to the report. A tax of $1 per million Btu would add 10.6 percent to California's annual energy costs.
Impact On California's Electricity Prices
Potential taxes or other measures.
Additional Annual Tax Cost Percent Increase In Electricity Based on California's 1996 Energy Use Prices to Recover (in billions) Tax Costs
• Per ton tax on carbon associated with fossil fuels used to generate electricity for California (in-state and imported)
• $50 per ton tax $2.6 12.5%
• $100 per ton tax 5.2 25.0
• $200 per ton tax 10.4 50.0
• $40 per ton tax on CO2 associated with fossil fuels used to generate electricity for California (in-state and imported) $7.9 38.4%
• 30% surcharge on electric bills 6.2 30.0
• $.02 per kWh tax on electricity used 3.4 16.3
• $.02 per kWh tax on electricity produced with natural gas, coal & oil (in-state and imported) $4.1 19.9%
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