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?
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
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.
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
"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.
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
"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
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.
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".
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
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.
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.
Kyoto's caps on emissions, Washington has stressed research in clean
technologies like hydrogen.
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
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