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Study Says Carbon Cuts May Hurt U.S. Economy Report Indicates Impact Would Be Less On Japan, Eurpore

TUESDAY, SEPT. 30, 1997

U.S. reductions of carbon dioxide to stabilize so-called greenhouse gases would put U.S. industry at a competitive disadvantage against Europe and Japan, an economic study concluded Monday.

The findings by the Economic Strategy Institute, a research organization financed largely by corporations, are expected to be used by industry groups in their arguments against committing the United States to binding carbon reductions as part of a global warming treaty.

President Clinton has said the United States will seek some binding commitments among industrial nations at a December climate conference in Japan, but the administration has yet to provide details.

But the issue has prompted a flurry of activity by business groups, fearing the United States will commit to reducing carbon emissions to 1990 levels in 2010. Environmentalists have argued reductions should be even deeper and have urged the president to agree to carbon cuts below 1990 levels as early as 2005.

The study by the Economic Strategy Institute concluded that such a reduction would require sharp increases in energy prices to spur efficiency and a shift away from fossil fuels, especially coal and oil.

It cited studies indicating a gasoline price increase of up to 50 cents a gallon, higher home-heating costs, and additional energy costs for a broad range of industries. The airline, automobile, steel, chemical and semiconductor industries would be hit hard by foreign competition, the study said.

The study said European countries and the Japanese would be able to achieve the 1990 targets with less sacrifice. “The proposed measures … would put U.S. companies across a wide range of industries at a serious competitive disadvantage in global markets,” said Clyde Prestowitz Jr., president of the institute and one of the study’s authors.

Last week the Energy Department released a study conducted by researchers at three federal laboratories that played down the potential economic costs of dealing with global warming.

That study suggested huge economic costs could be avoided if technology is used to prompt greater energy efficiencies. Such technologies are either already available or within reach, the federal study said.


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