Finally, the Clean Development Mechanism under the Kyoto Protocol will reward investment in carbon-reducing projects in developing countries. I am certain that developing countries are keenly interested in taking advantage of this to attract investment in sustainable development projects with global benefits. So this is yet another means by which they will actively participate in the Kyoto Protocol. A third myth is that US jobs would migrate to developing countries not bound by emissions limits. The reality is that energy price differentials do not drive international investment flows.
Energy costs are a small share of the value of tradeable goods and services.
Given this small share of energy costs, differences in energy pricing are very unlikely to have a significant impact on investment location decisions or trade flows. A fourth myth is that the US cannot afford to implement the Kyoto commitments. Opponents of the Kyoto process suggest that gas prices will double and that electricity prices will skyrocket if we ratify the Protocol. These estimates are based on very skewed analysis of the terms under which the US would participate in the Kyoto Protocol. These estimates also come from the same people who claimed that the Clean Air Act would send the U.S. economy into a 20-year recession, that oddly enough, never seemed to materialize.