Climate Change And Kyoto: Where We Are And Where We Are Going

Climate Change And Kyoto: Where We Are And Where We Are Going

Eileen Claussen, Executive Director
The Pew Center on Global Climate Change

Catherine N. Stratton Lecture Series
Massachusetts Institute of Technology (MIT)

October 6, 1999

It is perhaps easiest to begin a discussion of climate change and the national and international politics of climate change with the acknowledgement that what emerged from Kyoto in December of 1997 was a political deal, and not an agreement in substance. The United States and the "Umbrella Group," (including Canada, Australia, New Zealand and Japan) entered the final negotiating session hoping for a framework with a moderately stringent binding target for developed countries, binding obligations for developing countries, and a series of so-called "flexibility mechanisms," including emissions trading and joint implementation. The European Union argued for more stringent binding targets for developed countries only. And while most European countries were not totally opposed to the concepts of joint implementation and emissions trading, they were certainly skeptical of their value, and leery of how they might be implemented. The developing countries entered the negotiations committed only to insuring that they accepted no new commitments, a view that is consistent with the Berlin mandate, the internationally agreed authorizing language for the Kyoto negotiations.

What emerged from Kyoto? A collage with the Umbrella Group's framework, the European Union's targets, and no commitments for developing countries beyond what already existed in the Framework Convention on Climate Change. It is an agreement in principle, lacking in details and explanations on most issues, and subject to widely varying interpretations. Now that 18 months have elapsed since Kyoto, it is relevant to ask what has happened in the interim, and assess where we are going on the climate change issue.

We can begin this discussion with a review of European Union perceptions and activities. In Europe, there have been several changes that have occurred since the Kyoto Protocol was negotiated. For one thing, there is a growing interest on the part of many European countries in the concept and practice of emissions trading. The United Kingdom is now in the process of planning a domestic emissions trading experiment. The Danish government already has secured legislative authority to implement a trading program, and other emissions trading programs are under development in Norway and Sweden. These efforts may lead to a Scandinavian-wide trading system, or perhaps be folded into an EU-wide trading system (beyond the EU "bubble" of Article 17) being considered for the entire community by 2005. There is also an interest in Europe in experimenting with other approaches. The Germans are implementing a tax program, and the British have also proposed a carbon levy. In the Netherlands, a more traditional "policies and measures" program has been passed by the parliament. It is clear from all of this activity that there is a fair amount of planning and experimentation taking place in Europe, all within the context of the Kyoto agreement and the targets agreed in 1997.

But perhaps what binds Europe together the most on the climate change issue is the jaundiced view held of the United States by many in Europe. There is a strong sense among European governments that the U.S. negotiated the Kyoto agreement with no intention of ever implementing significant domestic emission reductions. This is the genesis of the widely held view that United States' implementation, if it was to occur at all, would be politically possible only if most of the reductions required were shown to be without cost or at a very low cost (with the majority purchased abroad through emissions trading and the Clean Development Mechanism). These impressions were key ingredients in the development of the European policy of limiting the quantity of emission reductions that can be taken outside a nation's borders, and are also at play, along with economic competitiveness considerations, in European reluctance to ratify the Kyoto Protocol without prior U.S. ratification.

Where, then, is the United States on the issue of Kyoto implementation? The Congress, of course, established a basic policy when the Senate supported the Byrd-Hagel resolution on July 25, 1997 by a vote of 95 to 0. This resolution urged the Administration not to negotiate an agreement with binding targets for the United States without the adoption of binding targets in the same compliance period by countries in the developing world. It also stipulated that the Administration should not be a signatory to a treaty that would result in serious harm to the economy of the United States. Since the Kyoto Protocol does not contain commitments for the developing world, many in the Congress have been vigilant in their efforts to see that there is no "backdoor implementation" of the Protocol on the part of the Administration. Over the past 18 months, there have been numerous proposed amendments and riders to appropriation bills that are strongly anti-Kyoto, most of which would prohibit the Executive Branch from speaking of, spending money on, or writing rules and regulations to implement the Kyoto Protocol. And while none of these amendments or riders has passed in its strongest form, many have passed in at least some form.

And what of the position and activities of the Administration? Upon negotiating the Protocol, and also upon signing it in November of 1998, the Administration has been clear that it does not view the agreement as complete, since it lacks the "meaningful participation" of key developing countries. It has studiously avoided being either vocal or positive about the agreement, and has not entered into a public dialogue on how it might be implemented domestically. The Administration has spoken publicly about climate change and the weather, and has attempted to work with the Congress to soften some of the language on proposed riders and amendments. In a more proactive way, it has attempted to show the Congress that Kyoto implementation can be virtually "free" if roughly 80% of the emission reductions are obtained abroad. Internationally, it has mounted a vigorous campaign to convince developing countries that they must "meaningfully participate" in the Kyoto agreement if the United States is to eventually ratify it. And it has pursued efforts to see that the emissions trading and Clean Development Mechanism rules are agreed.

It is easy to conclude from this summary of activity in the United States that the current mood would not allow for ratification of the Kyoto Protocol. The Administration is unlikely to submit it to the Senate for its advice and consent in the near term, and, even if it were submitted, it would stand little chance of ratification. Too much delay in submission, however, would clearly diminish the likelihood of meeting the targets contained in the first budget period (2008-2012). Administrative process in the United States is time-consuming. For the Kyoto Protocol to become U.S. law, the Senate would have to grant its advice and consent; both Houses of Congress would have to pass implementing legislation that would then have to be signed by the President; and a designated Agency would have to draft rules and regulations that would have to go through formal notice and comment procedures before they could be finalized and then implemented. Given that such legislation and regulation would clearly result in regional and sectoral economic impacts, similar but more significant in both size and scope than those of the acid rain provisions of the Clean Air Act, the odds of all of this activity occurring by 2008 are very small indeed. We should not forget that it took more than a decade from the first discussions of how to regulate sulfur dioxide emissions for acid rain purposes to the promulgation of rules and regulations under Title IV of the Clean Air Act. There is no reason to believe that imposition of greenhouse gas emission controls would proceed on a more rapid timetable.

What of the developing world? Activity there has been concentrated on understanding the potential of the Kyoto mechanisms for delivering investment dollars for clean development. This has been a difficult challenge as the negotiations have become more technical and as the international meetings are more widely separated in time, making exchanges of views within the G-77 less frequent. But moving beyond the mechanisms, it is clear that developing countries are highly unlikely to take on new binding commitments. This is based in part on their fear that emission limitations would place unacceptable constraints on their economic development, as well as the view that, even among environmental issues, climate change is less of a priority than either air or water pollution. Finally, there remains a strong view that the developed world needs to take action first in a significant way. And experiences over the past year in both Argentina and Kazakhstan, where developing baseline information and growth assessments have proven remarkably intractable, suggest that even for countries that are willing to consider voluntary targets, the path forward is difficult.

What can we then say broadly about the state of Kyoto implementation? The answer seems to reside in two circles. In the first circle, we have the United States declaring that it will not ratify the Kyoto Protocol without binding commitments from developing countries, and the developing countries arguing that they will not accept new commitments without U.S. and other developed country actions to implement the Kyoto Protocol. In the second circle, we can see the United States indicating that it will not ratify the Protocol if there is a ceiling on the quantity of emission reductions that can be taken abroad, and the European Union firmly announcing that the United States and others must be forced to accomplish at least half of their emission reductions domestically. What we need is to find a way out of these circles, move the process forward, and actually begin to address the problem of climate change. And there are some encouraging signs in the United States that suggest that a way out is not impossible.

The first change that has occurred since the winter of 1997 relates to the broader acceptance of the science of climate change on the part of both the general public and among opinion leaders in the United States. While climate change skeptics remain, the fact that there has been and will be a change in the climate is far more widely accepted than it had been in the pre-Kyoto period. This has made it easier for both businessmen and politicians to turn their attention toward the solutions - the technologies and the policies - that will be necessary to address the problem. Thus while Kyoto still remains a bone of contention, even a lightning rod, the reality of climate change, and the necessity of finding ways to deal with it, have changed the nature of the debate in the United States.

Perhaps the strongest indicator of this change can be seen in the business community. As in other issues, responsible businesses are ahead of government in their willingness to acknowledge and work on this issue. This progressive stance became obvious when a large group of mostly Fortune 500 companies affiliated with the new Pew Center on Global Climate Change. In doing so, these companies announced publicly that they accepted the science, would establish their own emission reduction targets and meet them, viewed Kyoto as a first although incomplete step, and believed that addressing climate change can be compatible with sustained economic growth. The Center's Business Environmental Leadership Council now numbers 21 companies with combined annual revenues in excess of $550 billion. Some have already announced their emission reduction targets, all of which are at least as stringent as those in the Kyoto Protocol. One large Pew affiliated company, DuPont, has established a goal of a 65% reduction below 1990 levels by 2010, with an additional commitment of obtaining 10% of their energy needs from renewable sources. This is a stunning target, far in excess of the Kyoto negotiated 7% required for the United States as a whole. Even those companies that oppose significant action (being led primarily by the energy and transportation industries) have modified their positions. Many are inventorying their emissions, looking at technological solutions, and publicly claiming that they, too, are searching for solutions.

As the business community has split and become more openly progressive on the need to address the climate change issue, the Congress has also begun a slow transformation. Three bills dealing directly with climate change, the Murkowski-Hagel bill, the Chaffee-Lieberman bill, and the Lazio bill, have been introduced, and although their prospects for passage remain unclear, the fact that there is Republican-sponsored legislation that acknowledges the importance of the climate change issue reflects a significant shift in attitude. And it is no coincidence that most opinion polling done since Kyoto, of both the general public and opinion leaders, reinforce these views. In fact, many of the polls suggest, by wide margins, that there is a general recognition of the importance of this problem, an acceptance of the consensus science, a view that the United States should be a leader in developing technological solutions, and, interestingly, support for the Kyoto agreement even in the absence of action and commitments by other countries.

Finally, there is an enormous amount of energy that is now going into the definition of the Kyoto mechanisms and other issues left undone in the core Kyoto agreement. This energy, coming from government officials, environmental NGOs, and businesses, is a factor to be considered both in the United States and abroad. If the common view was that climate change was not a serious issue, or that the Kyoto agreement was, for all practical purposes, dead, it is unlikely that such a high degree of effort would be spent on defining it and refining it. Yet even in the United States, where the skepticism is clearly strong, working through the nuts and bolts of the agreement remains a priority for government and business alike.

What, then, can we say about the future of the Kyoto Protocol? Three things seem clear. First, given the political realities surrounding the Kyoto Protocol in the United States, it is unlikely that the treaty will enter into force in time to deliver on the first set of targets (2008-2012). Of course, if all other major emitting countries ratified the Protocol (including Europe and Russia), it is possible that entry into force could occur without the United States. But the chances of ratification from all of these countries in the absence of U.S. ratification are small. Second, the Kyoto mechanisms could be fully negotiated over the next several years, given the current state of debate and interest, although they would not take effect until the agreement entered into force. And finally, developing countries are unlikely to take on binding targets in the next decade, although many are taking significant actions. Whether they could be persuaded to continue taking these actions, even if it was clear that all developed countries (including the United States) had begun to take their Kyoto targets seriously, remains unclear.

These conclusions, in turn, raise a number of questions that deserve serious discussion. First, is it conceivable that the United States could ratify the Kyoto Protocol without developing country binding commitments? While unlikely, it is plausible if three conditions are met: first, US targets would have to be achieved without major difficulty, either because of changes in the economy, or by making them less stringent (either by lengthening the time required to meet them, or by reducing the level of reduction required); second, the Kyoto mechanisms would have to be available for use; and third, the biggest emitters in the developing world would have to be able to show convincingly that they are taking steps to reduce their emissions growth, and that these would continue during the period covered by the Protocol.

The second question that requires a response relates to whether a serious domestic emissions reduction program would be possible in the United States in the absence of a ratified international agreement. Such an effort would be necessary both to spur developing country activity, but also as a prerequisite for a serous response to the climate issue. Again, the development and implementation of such a program might be possible, beginning with either legislation that would protect emissions baselines for companies that voluntarily reduce their emissions, or with a credit for early action law that would actually provide an incentive for action. Such an effort could also possibly be expanded into proposals that would provide incentives for capital stock turnover or for the development of the carbon free technologies that would be necessary in the coming decades. Other market-based approaches might also win favor as the public policy debate moved forward.

Third, it is important to ask whether other countries that are responsible for significant emissions might move forward without the United States. At the present time, this seems highly unlikely, particularly since, even within Europe, some countries (e.g., the Netherlands) have tied their ability to ratify the Kyoto Protocol to U.S. ratification. But if it appears that U.S. ratification is increasingly unlikely over the next decade, it is not impossible for Europe to rethink its position and, in response to a green public, move forward unilaterally with emission reductions and incentives for technology development. Whether such an effort could actually take hold and spread to other large emitters (e.g., Japan) without U.S. participation is impossible to judge at this time.

All of these questions beg the obvious question: would it be better to throw out the Kyoto Protocol and start again? The answer here can only be a resounding "no!" When 150 countries spend almost a decade negotiating a complex international treaty, turning away from it in one or two years would raise more questions than could be answered. What would substitute for the Kyoto Protocol that would both be a start in addressing the issue and be more politically palatable, not only in the United States, but also elsewhere in the world? And how could such a proposal to abandon the Kyoto Protocol come from the United States, a country that engineered most of the Protocol's design? And if the United States did submit an alternate proposal, would it be credible to any country at all? The reality is that the Kyoto Protocol is unlikely to be cast aside even if it does not deliver on its 2008-2012 target, although it is almost certain to evolve over time with amendments and supplements that make it more effective, more comprehensive, and more practical. How then should we proceed?

There are at least three sets of actions that would go some distance in both moving the debate forward and achieving some real emission reductions. First, it is important to continue work on negotiating and clarifying the Protocol itself. Sensible rules and guidelines dealing with the operation of the Kyoto mechanisms (Clean Development Mechanism, joint implementation, and emissions trading) that do not involve re-negotiation of what was negotiated in Kyoto (i.e., no artificial ceilings) would be a start in making governments and affected entities more comfortable both with the process and with the product. There are, as yet, no protocols for achieving or assessing compliance. These need to be developed and negotiated. How sequestration, in forests and soils, should be treated requires considerable work, and should be undertaken in a thoughtful and systematic way. Many of these tasks are already included in the Buenos Aires Plan of Action. And whether the target dates in the plan can be met or not, the work should continue until satisfactory agreements are reached.

Second, a treaty is only as good as the actions of its parties in fulfillment of their treaty commitments. The United States and 178 other countries are now party to the Framework Convention on Climate Change. And while this treaty was judged by its parties to be inadequate to the task of dealing with the climate change issue, it does obligate the parties to take measures to reduce their emissions. In light of the obvious fact that Kyoto, or any progeny of Kyoto, does or will demand more actions rather than less, the United States and other governments should be implementing substantive programs that seriously respond to the overall Convention goal of stabilizing atmospheric concentrations of greenhouse gases at levels that will prevent dangerous anthropogenic interference with the climate system. The extent to which these programs are already tested or experimental, voluntary or mandatory, incentive-based or requirement-based remains to be debated and decided. But the fact that they need to be designed, discussed and implemented is incontrovertible.

And finally, neither the Framework Convention nor the Kyoto Protocol deal in a satisfactory way with what an equitable international commitment might actually be, now and in the long term. If we are to emerge from the current quagmire of "who goes first," we will need the outlines of a broader framework that is based on a realistic assessment of what is actually occurring around the world on this issue, and takes into account, at a minimum, the issues of responsibility (past, present and future) and the ability to pay for climate mitigation. Beginning this dialogue within national governments is essential; and taking it forward into the international arena is a necessity if we are to make progress in addressing the very serous and challenging issue of climate change.