Analysis calculates loss to Canadian economy from pulling out of Kyoto

by Search Gate staff. Published Sun 18 Dec 2017 10:01
“Doing nothing about emissions costs the domestic economy"

If Canada had complied with the Kyoto Protocol instead of allowing its emissions unchecked, the cost to the Canadian economy would not be the $13.6 billion announced this week as Canada's reason for withdrawing from the Kyoto Protocol, according to new analysis.

If Canada had followed its pledge to the Copenhagen Accord, and reduced its CO2 emissions as part of the OECD through green investment and carbon trading to 20% below 2005 levels by 2020, the result in 2020 could have been a small increase in GDP and employment, compared to a no-action scenario.

This research is currently in press at the International Review of Applied Economics by researchers at Cambridge University's Centre for Climate Change Mitigation Research (4CMR), a partner Institute of the Tyndall Centre for Climate Change Research.

The $13.6 billion cited by Canada is the cost of buying emissions permits from other countries. In order to comply with the Kyoto Protocol, Canada needs to cover at least 700 million tonnes of CO2, with the average cost of a permit assumed to be $19.

Dr Annela Anger, Research Associate at Cambridge University and the Tyndall Centre said, “Our economic analysis of meeting emissions targets shows that over the medium term, investing in green technologies and keeping money in the domestic economy can lead to increases in GDP and employment.

“If countries do not invest in meeting Kyoto targets then they are expected to buy all emissions permits above their targets from other countries. This benefits foreign economy but not their own.”

“Doing nothing about emissions costs the domestic economy, as demonstrated by Canada.”

4CMR's economic modelling is undertaken with an energy-environment-economy computer model that analyses economic interactions at the global level. It examines the interconnected impacts of climate change policies on the overall performance of economies in 20 world regions, including explicit treatment of the US, Japan, India, China, Mexico, Brazil and the four largest EU economies.

‘A new economics approach to modelling policies for climate change mitigation’, by T Barker, A. Anger, U. Chewpreecha, and H. Pollitt in in press in the Journal, International Review of Applied Economics.

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