June 1998

The terms of the global warming treaty that the Clinton-Gore Administration agreed to in Kyoto, Japan last December would, if implemented, commit the U.S. to severe restrictions in “greenhouse gas” emissions. Targets set for sharp cutbacks – which the Administration has promised to achieve by the period 2008 to 2012 – would be the first step in the Administration’s plan for long-term reductions in emissions. As explained in this report, these actions would adversely affect every individual, family, organization, and community in California. Less energy would be available for Californians or prices of energy would rise dramatically, or both.

Disagreements remain among scientists and policymakers on virtually all aspects of the “climate change” issue. For example, experts disagree over the nature and causes of potential climate changes, the steps that should be taken, and the sharing of economic costs to reduce greenhouse gas emissions. But in spite of these uncertainties, the Kyoto agreement requires the U.S. and other developed countries to make sharp reductions in carbon dioxide emissions. Furthermore, the restrictions would not apply to “developing” countries even though the growth in greenhouse gas emissions in the years ahead are expected to come from some of these countries, such as China and India.

The Clinton-Gore Administration has launched a campaign to convince the American people that the terms of the Kyoto treaty can be met with little or no cost or other adverse impact on the American people, and little negative impact on the economy. This report, however, concludes that the impact felt by every American would be significant and shows what the effect would be, specifically, in California.

Carbon dioxide (CO2) would be the key target for emissions reductions and would have the largest impact because of the our daily reliance on CO2 as a source of energy. In fact, the state of California would be particularly hard hit because of its heavy reliance on oil and natural gas.

Among the study’s findings on the impacts that various alternative measures would have in California are the following:

• Californians would likely have to make do with less electricity as well as higher electric bills. Proposed greenhouse gas emission reductions would force California to reduce substantially its dependence on electricity generated with natural gas and its heavy reliance on coal-based electricity imported from other states. Economical alternative sources of energy are not available. Californians (including schools, hospitals, nursing homes, and government agencies) already pay electricity prices well above the national average. Higher prices forced by emission limits considered by the Administration are likely to exceed any decreases resulting from the restructuring of the electric industry now underway in California.
  
  Estimated cost: Various taxes on electricity could result in annual additional costs to California’s electric bills of $2.6 billion to $10.4 billion, or $237 to $946 per household.
  
  
• Taxes on motor fuels are among other measures that might be imposed. As in the case of electricity, higher costs or taxes on motor fuels will hit consumers. Californians are especially vulnerable because of the state’s heavy dependence on motor vehicles.
  
  Estimated cost: A $.50 per-gallon increase in taxes on motor fuels would add at least $7.7 billion a year to Californians’ driving costs, or $715 per household – a 40 percent increase; a $1 per-gallon increase would add $15 billion, or $1,430 per household – an 80 percent-increase.
  
  
• Higher energy costs or new federal taxes would mean job losses in every community in California. Higher energy prices or new taxes imposed at the federal level on energy or emissions would mean fewer dollars available to spend on groceries, clothing, housing, medical care, and other services. The result would be a direct loss of job opportunities for people employed in stores, factories, offices, or on farms. Tax dollars that flow from California to Washington, D.C. take jobs out of every community.
  
  Estimated cost: A $.50 per-gallon increase in taxes on motor fuels would mean a community of 500 would see an annual dollar outflow of $122,500, or the equivalent of 4 job losses; a $1 per-gallon increase would double the job loss.
  
  
• Higher energy costs would mean higher prices for products from California’s factories and farms. It would also mean less ability to compete in U.S. or world markets with products from areas or countries that do not experience similar price increases. This would be a particular problem in California because of the state’s heavy economic reliance on exports of farm and industrial products. California’s factories and farms compete with many of the more than 120 countries – including China, India, and any nation in South or Central America – that are not required to reduce greenhouse gas emissions under the terms of the Kyoto Protocol.
  
  
• The elderly would be particularly vulnerable to rises in energy costs. Specific sectors of the population are particularly vulnerable to energy cost increases, such as older people living on fixed incomes. Approximately 11 percent of California’s population is 65 or older. A larger share of their income would have to go to higher energy and energy tax costs.

As the study shows, the impact of the Kyoto treaty favored by the Clinton-Gore Administration will be significant and far-reaching in this state, with the greatest portion of the burden falling on individuals, families, and communities. Those who will have to bear all the costs and impact of reduced energy supplies deserve to have objective information on the real implications of the Administration’s agreement and plans. This study provides that information to California consumers so they understand the potential costs and impact on their lives that these policies would have.

This Ideas In Action fact sheet is a digest of a longer study entitled: Impact of Potential "Greenhouse Gas" Emission Limits On the People and Economy of California. The study is available through PRI's Publications Department.

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