Under the protocol, New Zealand must cut emissions between 2008 and 2012 to the levels prevailing in 1990.
Our energy use is at present about 15 per cent above the 1990 level, so to cancel out emissions we would either plant many more trees or cut back on energy consumption, as well as buying carbon credits internationally.
The person in the street has no idea how much all this might hurt our standard of living. Its impact has not been well analysed, and neither can it be as there are too many variables and unknowns.
But the research so far points to extra costs.
Institute of Economic Research director Alex Sundakov says the impact of the protocol could be "bigger than Think Big" - the series of large capital plant expansions in the early 1980s that were later sold at disastrous losses.
New Zealand's business organisations all agree we should ratify the protocol at the same time as our trading competitors, but not before.
The two largest, Australia and the United States, have said they will not sign, and Japan, the third largest, has still to declare its stance.
The Employers and Manufacturers Association, Business New Zealand, Federated Farmers, the Forestry Industries Council, Forest Owners Association, the Greenhouse Policy Coalition, the Petroleum Exploration Association, NZ Refining and others say New Zealand should foster moderate climate change. But rushing to ratify Kyoto will cut growth and not achieve the objective.
The Government argues that the costs will be offset by gains we will receive from carbon credits.
The information on this so far is speculative. Mr Hodgson has guessed that payments could be anywhere between $1 billion and $6 billion.
What we do know is we will be required to cut greenhouse gas emissions by cutting energy consumption, or pay for the right to continue consumption at present levels.
Economic modelling commissioned by the Government has just reported the cost of Kyoto to New Zealand at a 0.25 per cent of GDP in 2010, about $250 million in today's dollars, depending on the international price of carbon.
Independent research by the Institute of Economic Research estimates Kyoto could take $20 billion out of the economy over the next 15 years.
Under any scenario, the news is not good for growth.
Mr Hodgson maintains that there are great opportunities for industry development if New Zealand is among the first to sign. None has been identified.
The upside, the carbon credits in forests planted since 1990, will supposedly offset our methane and carbon dioxide emissions.
Unfortunately, no one seems to know how to get their hands on this "windfall". Forest-owners suspect the Government will expropriate the property rights created in them.
Moreover, the carbon in forests planted before 1990 - about two-thirds of all New Zealand forests - are ineligible for credits.
To avoid emissions from processing these older trees, foresters might well export raw logs, at a cost of jobs for New Zealanders.
Forest-owners will be penalised after 2008 if they convert their land to non-forest use, and to avoid this, pre-1990 owners may decide to harvest early, thereby increasing supply and reducing both prices and returns.
Over time the protocol will penalise energy-intensive industries such as cement manufacture, steel, pulp and paper, aluminium, and dairy and meat processing.
China, not a signatory to the protocol, would likely become the source of most of our cement, resulting in a net increase in the planet's greenhouse emissions.
A lot of our timber would end up being exported as logs to non-protocol countries for processing and for on-selling to markets such as the United States, for possible branding as sustainable-yield Kiwi pine.
New Zealand could exempt agriculture or other industries, as other countries expect to, meaning a disproportionate share of the burden would fall on the rest of the community.
Or we could see a carbon tax levied across a particular activity, with, say, a 5c tax levied on every litre of fuel. Costs for business and private motorists would rise.
To date, New Zealand has enjoyed relatively low-cost energy from hydro resources and natural gas.
The loss of this dimension to our competitiveness would slow job growth at the same time as cutting the returns of large energy users, farms, forests and every small enterprise hit by higher energy costs.
* Alasdair Thompson is chief executive of the Employers and Manufacturers Association (Northern).
* Fran O'Sullivan has been on family leave. Her column will appear next Monday.
nzherald.co.nz/climate
Intergovernmental Panel on Climate Change (IPCC)
United Nations Environment Program
World Meteorological Organisation
Framework Convention on Climate Change
Executive summary: Climate change impacts on NZ
IPCC Summary: Climate Change 2001
