Global climate treaty draws criticism of business Higher energy costs, loss of jobs, tax revenue feared by Md. manufacturers

Economy

May 15, 1998|By Sean Somerville | Sean Somerville,SUN STAFF DpA

Maryland manufacturers yesterday said the global climate treaty negotiated in Kyoto, Japan, would raise energy costs, threaten thousands of state jobs and shrink tax revenue by millions of dollars.

"This has the potential for incredibly serious negative economic impact," said J. Alexander Doyle III, president of Micro Machining Inc., a Woodlawn machine shop, and chairman of the Maryland Manufacturers Association.

The agreement calls for major industrialized nations, including the United States, to reduce greenhouse gas emissions to levels 6 percent to 8 percent below 1990 levels by 2012.

The agreement exempts developing nations such as China, Mexico, Brazil and India.

The Senate has passed a resolution voicing disapproval of the treaty by a vote of 95-0. But the Clinton administration may try to implement components of the treaty through federal regulatory agencies. Scott Spendlove, acting director of an energy task force for the American Legislative Exchange Council -- a bipartisan group of state legislators -- termed the agreement troublesome.

At a news conference called by the state's manufacturing organizations, he said scientists haven't confirmed the presence of a long-term warming trend and that exemptions would create competitive disadvantages for some nations.

"The economic costs, which the Kyoto protocols acknowledge in exempting developing nations, would be extremely burdensome to nations like the U.S. dependent on exports, energy production and energy consumption," Spendlove said.

Some businesses are not so sure. Early this month, 13 companies broke ranks with many counterparts to form an alliance known as the Pew Center on Global Climate Change.

The companies, including Bethesda-based Lockheed Martin Corp., called the agreement a "first step" to tackling climate change, but added that it needs improvement.

"Not all business thinks it should be put in the trash can or that we should ignore this problem," said Eileen Claussen, the Pew Center's executive director. "What we're interested in doing is trying to find a response that makes sense for the environment and the economy."

But citing a number of studies, Spendlove said the treaty would be disastrous. He said the United States would lose about 1.8 million jobs. In Maryland, real output in the manufacturing sector would drop by 3.3 percent in 2010, he said.

Spendlove said gasoline prices would jump by more than 50 cents a gallon, and household energy bills would increase about $1,000 a year.

Another study said Maryland could lose $473 million in tax revenues by 2010, and another $291 million by 2020.

Spendlove said 10 states have adopted resolutions opposing the Kyoto protocol.

His group and Sen. John Ashcroft, a Missouri Republican, want to block enactment of the treaty unless it is ratified by the Senate.

Maryland business advocates said the treaty would affect utilities such as Pepco and Baltimore Gas & Electric Co.

Ultimately, the treaty would hurt energy intensive companies such as Bethlehem Steel Corp., Doyle said.

Claussen said the effects are unknown. "We don't think the answer is clear right now," she added. "Most of the analysis wants to show that the economy will be ruined or" that the treaty will be free of any costs at all.

"Neither of those is the correct answer," she said.

Pub Date: 5/15/98

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