Saturday, September 03, 2005

Does Kyoto leak?

Will countries without restrictions under kyoto just increace usage of carbon fuels?

Lets take an example -

If i wanted to start a activity that consumes fuel I might do some equasions and say - I want to convert 1 litre of petrol (or equivilent carbon fuel) and 1 dollar of materials into 1 product worth 5 dollars (minimal labour cost and fixed raw material etc costs) ex factory.

I then decide where I will set up my factory - as long as petrol costs under lets say 4 dollars a litre I will be happy.
In NZ I find that costs are $4.50 most of that being kyoto tax.
In russia I find it is $2.00 with a tax
and in china I find it is $1.50 with no tax at all

I go to china, set up, out compete any one in any western country, and everyone still gets their Widgets! A brillient socialist policy since it gives third world countries and countries in recession lots of jobs - but fairly weak environmentally.

Take for example an industry where there is a very large metal (eg aliminium) component - so you would use the large amount of energy to extract the metals. If you think this is not a big issue, being only one industry - check out how much energy the aluminium smelters use.

Other big users of fuel are aeroplanes and other forms of international transport. But what can you do to stop them filling up in countries without taxes?

I expect there ae some answers to these issues and I know countries like russia would try to sell carbon credits and so they would get profit from being under their targets (and may try to stay there) but what about all the other third world countries? And what will a country like China do when suddenly they tear past the level where they must change oil costs from lets say $1.50 to $4?

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