2006-03-28 18:17:23 - BRUSSELS, Belgium, March 28 /PRNewswire/ -- As the U.K. today faces the reality that its official policy for fighting climate change has failed to deliver its own ambitious targets, it must acknowledge the harsh impact of cap and trade systems, which fail to protect the environment but instead have a damaging impact on energy prices, economic growth and jobs.

The UK Government today announced that its Climate Change Programme Review, on which it has spent more than a year, will not deliver its key global warming target to cut CO2 emissions to 20 per cent less than 1990 levels by 2010.

The International Council for Capital Formation (ICCF) urged U.K. policymakers to stop one-sided catering to environmental pressure

groups and instead help to build practical, global solutions that will balance environmental goals with sound economic development.

"The high costs of compliance with a major pact like Kyoto are proving to be a heavy burden for industry and energy companies to bear," said ICCF Director Dr. Margo Thorning."If the U.K. stays this course consumers will ultimately pay the price in higher energy costs and lost jobs. In fact, indications are that the Emissions Trading Scheme is already raising UK energy prices."

A series of in-depth studies recently published by ICCF has analyzed the economic and energy implications of meeting emissions reductions defined under the Kyoto Protocol through an emissions trading regime in the United Kingdom, Italy, Spain and Germany.The studies show a significant rise in energy costs for consumers and businesses if the four countries meet their Kyoto emissions reduction targets in 2010 including:

* Increasing energy bills: An average increase in electricity prices of 26% and an average increase of 41% of natural gas prices by 2010 (across UK, Germany, Spain)

* Significant job losses: Job losses of at least 200,000 in each of Italy, Germany, UK and Spain to meet Kyoto targets by 2010 - rising to as many as 611,000 in Spain in 2010

* Damage to economy: A significant reduction in annual GDP below base case levels by 2010: 0.8% for Germany (18.5 billion Euros), 3.1% for Spain (26 billion Euros), 2.1% for Italy (27 billion Euros) and 1.1% for the UK (22 billion Euros).

These economic effects are already being felt throughout the European Union, as sentiments appear to be changing over cap and trade systems.Last September, mounting concerns over Kyoto led the UK Prime Minister, Tony Blair, whose own authority has been long waning, to state, "The truth is no country is going to cut its growth or consumption substantially in the light of a long term environmental problem.To be honest, I don't think people are going, at least in the short term, to start negotiating another major treaty like Kyoto."

ICCF noted that near-term emission reductions in developed countries should not take priority over maintaining strong economic growth and that the best course for the U.K. is to focus on the development of new, cost-effective technologies for alternative energy production and conservation while encouraging the spread of economic freedom and economic growth in the developing world.

"Energy use and economic growth go hand in hand," Thorning said."The U.K. should reject mandatory programs, look to free market policies based on technology and reducing energy intensity, and work with developing countries on cleaner development - promoting improvements in their living standards while slowing their very rapid growth in greenhouse gas emissions."

SOURCE International Council for Capital Formation
Web Site: www.iccfglobal.org