For Immediate Release: June 15, 1998

Californians To Be the Victims of Sharp Restrictions on Energy Use

Sacramento – A new study shows that the costs of the Kyoto Protocol agreed to by the Clinton Administration last December in Japan would be enormous and felt by every individual, family, organization, and community in California. If approved and implemented, the impact would be particularly severe in states like California with a heavy dependence on fossil fuels, the treaty’s key target for reducing greenhouse gas emissions.

According to the study’s author, Glenn R. Schleede, President of Energy Market and Policy Analysis in Reston, Virginia and former Vice President of New England Electric System, "The Kyoto Protocol would have an adverse effect because resulting large price increases for energy will take money out of the pockets of every family; reduce the number of jobs in every community, city, and state; and make it more difficult for U.S. products to compete in U.S. and world markets."

In the study entitled Impact of Potential "Greenhouse Gas" Emission Limits on the People and Economy of California, Schleede shows the impacts that various alternative measures could have, based on actions that would likely have to be taken to achieve the Administration’s emission reduction commitments. The cost burdens of some of these alternative measures include the following:^*

• A $.50 per gallon tax increase on motor fuels could mean an added cost to California drivers of $7.7 billion per year, or an additional $715 per household per year. A $1.00 per gallon additional tax could increase costs by $15 billion, or $1,430 per household.
  
  
• A $.60 per million Btu (British thermal units) tax on natural gas, petroleum, and coal could cost Californians $3 billion per year, or $291 per household per year. A $1.00 per million Btu tax could cost $5.3 billion, or $485 per household.
  
  
• A tax on electric generating utilities of $40 per short ton tax on carbon dioxide could cost Californians $7.9 billion per year, or $725 per household per year.
  
  

A tax on carbon associated with utilities’ use of coal to generate electricity could cost anywhere from $2.6 billion per year or $237 per household per year (for a $50 per metric ton carbon tax) to $10 billion, or $946 per household (for a $200 per metric ton carbon tax).

A 30 percent surcharge on consumers’ electric bills could cost $6.2 billion per year, or $567 per household per year.

In addition to dramatic increases in costs associated with energy use and production, the treaty could also mean huge losses in the number of jobs throughout the state. Taxes that transfer money from California to Washington result in job loss. The study shows that every $500 million lost to federal taxes means a loss of 16,250 jobs. A $.50 per gallon tax increase on motor fuels could, therefore, mean a loss of 52,600 job opportunities in the Bay area and a loss of 123,600 job opportunities in the Los Angeles area.

"Consumers in this state need to understand how drastically they will be affected by the Clinton Administration’s proposed programs, since they are the ones who will shoulder the burden" said Dana C. Joel, Director of Research for the Pacific Research Institute, one of the two non-profit groups that commissioned the study. The other organization sponsoring the study is Consumer Alert, a nationwide consumers’ group based in Washington, D.C.

This study is the second analysis by Schleede to look at the impact the Kyoto Protocol would have on a given state. A similar study looking at the effect in Texas of greenhouse gas emission limits was released last September.

For a copy of the study or for more information on either studies, contact Jennifer Berkowitz at (415) 989-0833.

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The Pacific Research Institute for Public Policy is a non-profit organization dedicated to the promotion of the principles of individual freedom and personal responsibility. The Institute believes these principles are best encouraged through policies that emphasize a free economy, private initiative, and limited government. By focusing on public policy issues such as health care, welfare, education, and the environment, the Institute strives to foster a better understanding of the principles of a free society among leaders in government, academia, the media, and the business community.