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Enzi targets Global Warming Treaty as Fundamentally Flawed

Department of Energy report suggests White House is using "funny numbers"

October 14, 1998

Washington D.C. -- Senator Mike Enzi, R-Wyo, blasted the White House today for ignoring its own internal study of the costs of implementing the Kyoto global climate change treaty. The Energy Information Administration, an independent agency of the Department of Energy, concludes in its report that household energy costs could rise by as much as $1,740 annually in a worst-case scenario compared to the White House estimate of $100.

Enzi has spoken on the Senate floor several times this session calling attention to the administration's questionable accounting. Independent economists have consistently put the cost of the treaty as high as $2,100 per household per year, while a report by the administration's Council of Economic Advisers claimed that expense would be only $70-$110 over the same period. A new report issued last week by President Clinton's Energy Information Administration (EIA) singled out two areas where the administration has cut corners and not accurately reported the cost of the treaty to the American people. The EIA report notes that the administration is claiming potential savings from "proposed" electrical deregulation as an offset to the increased cost of the treaty.

Possibly most alarming, however, is the administration's emissions trading scheme in which the United States would purchase emission credits from other countries. Developing countries are not subject to the same emissions standards that are imposed on the United States. As a result, nations like China have an endless supply of emission credits that they can sell for whatever the market will bear. Enzi said it is like, "the naked man offering you his shirt." It's a win, win situation for those countries. Since they aren't bound by the terms of the treaty, they don't have to reduce their emissions. But, since they are a party to the treaty, they can use their position to make a quick profit selling emission credits they have no use for.

The success of such a plan would rely heavily on the number of countries that would participate. If the United States was limited to buying credits from European countries and Russia, credits would be more expensive and indirect costs to families would be significantly higher. If other countries such as China and India were involved, it would help to drive down the costs to the country and to families. The problem comes in not knowing which scenario will materialize.

"That's the assumption -- the more we buy the cheaper it gets," Enzi said. "That's like going to the mall and saving a lot of money because you got everything on sale. The EIA says the credits will cost us anywhere from $70 to $350 per ton. Simply put, that amounts to 15 to 70 cents per gallon of gas -- or a 20-80% increase in your electric bill. And we thought deregulation would save us money."

Enzi said that the estimate by the EIA that this treaty could cost American families between $350 and $1,740 per year is more in line with what private economists have been saying.

"The treaty will not reduce carbon emissions, and now we have proof that the administration's own numbers reveal a huge increase in costs that will have to be passed on to American comsumers," Enzi said. "If we can't even get the developing world to abide by copyright treaties, what makes anybody think they will voluntarily limit their emissions?