Kyoto Causing Economic Anguish in Japan, Britain

Published January 1, 2005

One of the reasons the U.S. Senate unanimously rejected the Kyoto Protocol was the treaty’s disproportionate punishment of the U.S. economy relative to other nations. The economies of nations with a lighter burden than the United States are nevertheless beginning to feel the economic pains associated with Kyoto.

Japan Contemplates Energy Tax, Outsources Jobs

The Asahi Shimbun reported on October 4 that Japanese companies are beginning to flex their muscles in opposition to environmental taxes connected with the Kyoto Protocol.

Industry has reacted negatively to suggestions from the agriculture and environment ministries that some form of carbon tax is needed. The newspaper noted, “The move has sparked fierce opposition from industry executives, particularly heavy users of fossil fuels such as coal and oil. Companies say an additional financial burden unique to Japan would undermine their international competitiveness.

“At a news conference on Sept. 17, Akio Mimura, chairman of the Japan Iron and Steel Federation, warned that steelmakers will have no choice but to relocate production abroad if the environment [carbon] tax is introduced.” It should be noted that the outsourcing of Japanese industry is part of the Japanese government’s plan to meet Kyoto targets.

As the Asahi Shimbun pointed out, Japanese government departments are far from unanimous in favor of the proposal. “The industry ministry, heeding calls from various industries, has traditionally taken a dim view of the proposal. The Finance Ministry is also circumspect, saying it is still unclear whether the new tax will be effective in containing greenhouse gas emissions. Hiromitsu Ishi, chairman of the government’s Tax Commission, said … it will be difficult to introduce the environment tax next year because the government will have to look into a variety of options.”

As an alternative, the Japan Business Federation argues that greenhouse gas emissions should be cut through voluntary, private-sector efforts instead of coercive steps such as an environment tax.

Japan Business Federation officials point out that since 1997, various industry associations have worked to cut emissions in advance of the Kyoto Protocol. From Kyoto’s baseline year of 1990 through 2002, for example, industrial carbon dioxide emissions have been cut by 1.7 percent.

British Renewable Energy Plan Judged Unworkable

In Great Britain, a pair of economists has revealed the true extent of the effort needed to meet the current government’s alternative energy commitments.

Prof. Andrew Oswald, an economist at Warwick University, and Jim Oswald, an energy consultant, told the Daily Telegraph on October 7 that the government’s plans would require 100,000 new wind turbines or 100 new nuclear power plants. That many wind turbines would “cover an area the size of Wales or a six mile-wide strip around the entire coast of Britain.”

“The enormity of the green challenge is not understood,” said Mr. Oswald. “Many people think that hydrogen is a simple alternative to oil, but in fact it will require a huge investment in either wind farms or nuclear plants.”

Ford Plans Voluntary Cuts

Although the Bush administration has received some criticism from environmental activists for choosing to encourage voluntary emissions cuts from U.S. companies rather than impose the strict mandates of the Kyoto Protocol, many U.S. companies are answering the administration’s call to cut carbon dioxide emissions on their own initiative.

Ford Motor Company appears to be making plans to join the roster of companies that look forward to increasing constraints on hydrocarbon energy use as a “business opportunity.”

According to an article in the October 4 New York Times, “Ford’s goal, according to its own internal projections, would require an improvement of about 80 percent in the fuel economy of its cars and trucks by 2030, according to people who have been informed of the plan. The goal was laid out by the company’s chairman, William Clay Ford Jr., and other executives at a meeting on August 3 at their headquarters in Dearborn, Mich.”

The Times noted, “those strategies could be more reliance on hybrid technology or other advances, like cleaner diesel engines and hydrogen fuel cells.”

Ford’s strategy has already won plaudits from its usual foes in the environmentalist movement. Daniel Becker of the Sierra Club told the Times, “This is a stunning change of direction for Ford, whose emissions are greater than all of Mexico. This really is a better idea. We will continue to work with them to ensure that they implement this commitment.”

However, there are signs the company’s new direction was the result of alarmist pressure. In May, commenting on the release of the scientifically absurd film The Day After Tomorrow, Mr. Ford said, “If you look at where society is headed, whether it’s the Kyoto compact, whether it’s the Hollywood movie that’s coming out this summer on global warming, all of those things will truly have an impact on the debate. I don’t want Ford to be caught unaware or for us to be always saying, ‘No, we can’t do something.'”

Iain Murray ([email protected]) is a senior fellow at the Competitive Enterprise Institute, where he specializes in the debate over climate change and the use and abuse of science in the political process. Myron Ebell ([email protected]) oversees global warming and international environmental work at CEI and chairs the Cooler Heads Coalition, a subgroup of the National Consumers Coalition that focuses on climate change issues.

For more information …

visit the Web sites of the Competitive Enterprise Institute,, and the National Consumers Coalition,