When Will the Kyoto Protocol Come into Force

In an attempt to maximize the efficiency of investments and thereby lower the economic costs of emissions reductions, the Kyoto Protocol established three "flexibility mechanisms":

(1) joint implementation, whereby an Annex I country could invest in emissions-reducing projects in another Annex I country and receive some credit against its own target, provided that such project entails "a reduction in emissions by sources, or an enhancement of removals by sinks, that is additional to any that would otherwise occur' ' ( Article 6);

(2) a "Clean Development Mechanism," similar to (1) but involving voluntary projects in developing countries (Article 12); and

(3) international trading of emissions rights among the Annex I parties, whereby a government or company could purchase "unused" emissions from abroad (Article 17).

The United States government appears particularly eager to make use of these mechanisms—especially emissions-trading with Rus sia and Eastern Europe—as a means of easing the pain of domestic reductions. The U.S. also hopes that in time even developing countries can be integrated into a global emissions-trading scheme, thereby opening vast potential sources of emissions rights to the carbon-hungry American economy. But many European nations, politically committed to costly domestic emissions-reduction programs, claim that their industries will suffer if U.S. competitors can avoid the equivalent strong medicine by means of offshore compliance. Thus, there is already serious disagreement over the extent to which these mechanisms should be permitted to supplement domestic actions. From the perspective of the poorer countries, trading away emissions rights could be regarded as limiting options for their own future development, or a form of neocolonialism. On the other hand, when the time comes for payments, it is questionable whether the large, untied, and untraceable transfers of wealth to former communist and/or developing nations will be politically palatable to electorates in the West.

The flexibility mechanisms, moreover, have only been established in principle. Operating details, including definitions, guidelines, rules and procedures, reporting, accountability and verification, have been postponed for future deliberation. Although there are precedents for domestic emissions trading (e.g., sulfur dioxide in the U.S.), nothing comparable has ever been attempted on a global scale. It will be extraordinarily difficult to negotiate a trading system for an ephemeral "commodity" among nations at widely varying stages of economic development.

It is not hard to imagine fractious North-South controversy over criteria for allocating emission rights to developing countries— according to population size, for example, as a reward for lax family planning? What happens if a country, having received hundreds of millions of dollars by selling unused rights, subsequently elects a democratic government that repudiates the "irresponsible actions" of its predecessor and insists that expanding energy use and land-clearing are essential to meet the basic needs of a desperate populace? What kind of bureaucracy would be needed to administer the system? What potential transaction costs may be involved? What possible abuses need to be safeguarded against? Will wild price gyrations be modified, for example via a futures market? Will prices of emissions rights be too low to stimulate meaningful domestic change in energy use? Or so high that they foster evasion? The questions multiply quickly.

Another critical issue left unresolved at Kyoto is the determination of "net changes in greenhouse gas emissions from sources and removals by sinks resulting from direct human-induced land-use change and forestry activities, limited to afforestation, reforestation, and deforestation since 1990, measured as verifiable changes in stocks . . . " (Article 3). As a potentially powerful offset to emissions from other sectors, this clause is crucial for determining compliance with the reduction targets.

The U.S. could, for instance, substantially offset its electricity, transportation, and industrial emissions by reporting carbon absorption due to agricultural soil uptake as well as forest growth. Europeans, however, are skeptical about measurement and verification of such sinks. They also argue that they are being penalized for their more responsible forest management prior to 1990, which means that they have less deforested area to replant. Further, it will be extremely hard to distinguish between naturally induced and anthropogenic changes in carbon uptake by soils and forests. There is not even technical agreement on definitions for afforestation, reforestation, and deforestation. Even worse, some developing countries may be tempted to lay waste to old-growth forests in order to sell credits to Northern entrepreneurs for reforestation offsets.

Thus, the current situation is characterized both by deep controversies over fundamental issues and by the possibility that important nations may have difficulties in meeting their reduction targets. It appears problematic, therefore, whether the Kyoto Protocol can become binding international law in its present form. For the protocol to come into force, it must be ratified by at least 55 nations, including Annex I countries that together accounted for at least 55% of total Annex I carbon dioxide emissions in 1990 (Article 25). As mentioned earlier, only about 30 countries — none of them in Annex I— have ratified as yet.

The chief American negotiator at Kyoto, Stuart Eizenstadt, admitted to the U.S. Senate in 1998 that it might be "years" before the treaty would even be submitted by the Executive Branch for Senate approval, which requires a two-thirds majority vote. Eizenstadt also expressed doubt whether the protocol would come into force without U.S. ratification (Franz, 1998). This is not surprising, since the U.S. alone accounts for approximately 33% of Annex I 1990 emissions and, in a rare display of negative unanimity, the Senate in 1997 had voted 95-0 to reject any protocol that did not contain "meaningful participation" by developing countries. Absent Congressional support, the Clinton Administration has found it impossible even to secure legislation for measures to begin curbing the still-rising U.S. emissions before formal ratification. Powerful American industrial interests have mounted a concerted campaign against the protocol.

A protracted U.S. delay could cause other Annex I countries to pause in their own ratification process, not least because of worries about competitiveness in international trade. As doubts grow within the European Union about its own ability to meet Kyoto targets, its member countries are also not rushing to ratify. Governmental hesitation fosters a wait-and-see attitude by industry and discourages the long-term investments needed for an energy transformation. Unfortunately, the worst of treaties is one that is not credible.

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