The Failure Of The Kyoto Process

The Bush Administration's decision to withdraw from the Kyoto process was a triumph of interests over the green ambition of Kyoto. US withdrawal will, however, by lowering the demand for carbon credits, reduce the likely inflow of investment funds to industrializing countries, as a result of the constraints of binding targets and the relative cheapness of emission reduction in some countries, and reduce the expectations of carbon traders and carbon consultants. Clearly, the only nations remotely likely to meet the target without trading were those, such as the UK, Germany, Russia, Ukraine and other economies in transition (EITs), where economic collapse or energy restructuring for thoroughly economic reasons had produced substantial windfall reductions in CO2 emissions. Any other outcome in future would have required politically impossible interventions in national economies, with political consequences that could not be foretold. In the end, too many hoped to benefit either from global warming itself, and hence had little incentive to act at great cost to themselves, or from current investments in advocated solutions.

Moreover, one of the factors which undermined Kyoto most of all was the low probability that any of the Annex I parties could realistically deliver on their commitments other than by serious economic decline. At the time of the Third Conference of the Parties (COP-3) in Kyoto, US emissions were already almost 10 per cent above 1990 levels, and were rising at about 1.2 per cent per annum. Even in the UK, some future rise was expected again. Given the momentum which comes from long lead times in the energy sector, it was always clear that the USA was unlikely to meet its Kyoto target, which was at least 25-30 per cent and perhaps as much as 40 per cent below 'business as usual' (BAU). Umbrella Group member Australia was already at +17 per cent by 1999 and had been estimated at the time of Kyoto to be heading for +30 per cent by 2010 under BAU. The BAU estimate by the European Commission for the EU was about +6 per cent, meaning that the Kyoto target for the EU was in reality about -14 per cent (Gummer and Moreland, 2000). But this compares with an effective cut of -20 per cent for Australia and around 30 per cent for the USA.

Some EU members were just as badly affected: for example, the Netherlands at +17 per cent in 2000 over 1990 as opposed to the target it has accepted of -7 per cent. There is clearly no way in which the Netherlands would be able to meet its target without emissions trading. A German-Dutch study by the research bodies Ecofys and the Fraunhofer Institute in October 2000 predicted that the EU's emissions would increase by 7-8 per cent on 1990 levels by 2010 compared with the 8 per cent reduction to which it had committed under Kyoto (Reuters, 19 October 2000). Within Europe, only the UK was likely to meet its target.

Some parties had an interest in a deal being made, provided there were generous provisions for emissions trading. Russia hoped to make $4 billion per annum by selling rights to 200 million tons of carbon dioxide, for which it would have surplus quotas at $20/ton, although at that time quotas traded on the Chicago market were then fetching only about 10-20 cents/ton (Moscow Times,

18 May 2001). Similarly, the potential for credits to be earned through sink creation and management varied enormously between parties. The ratio of all sinks created by human-induced activities to national emissions in 1990 - which gives an indication of the value of sinks to various parties - varied between 1 per cent for the Netherlands to 81 per cent for New Zealand (GACGC, 1998,6). For Germany the ratio was only 3 per cent.

This points towards there being substantial asymmetries in the distribution of costs and benefits associated with reducing emissions of CO2 in the energy sectors of parties and in the opportunities each had for gaining credits through sink creation. Where the parties stood on the various issues under negotiation was inevitably going to be affected by where they sat, in terms of interests. The USA withdrawal from Kyoto, therefore, was not just a reflection of lobbying on the part of the fossil fuel industry, as several NGOs have suggested. According to this view, Exxon's $1.2 million contribution to George W. Bush's election campaign is supposed to have been crucial in determining US national interests. The Guardian, for example, ran this line under the headline: 'How the high priests of capitalism run roughshod over fears for the planet' (Guardian,

19 April 2001).

This view is naively simplistic. Not only does it misrepresent the structural manner in which business power influences governments, but it also overlooks the substantial and very real differences of interest between the USA (and its Umbrella Group partners) and the EU detailed above. It also assumes that fossil fuel interests are undifferentiated, whereas oil is advantaged with respect to coal by Kyoto, gas to oil, nuclear to fossil fuels, and so on. The interests are nowhere near as simple as the Guardian's headline would have us believe and entirely ignores EU desires to reduce its very high, and possibly growing, dependence in energy imports.

Bush's decision was to drive a stake through the heart of Kyoto as far as the USA was concerned. Despite rhetoric to the contrary, his presidential rival Al Gore Jr (had he won the election) would not have effectively done much different, given the hostile nature of the Senate which would have to ratify the Protocol. Kyoto under Gore would have been, as it was under the Clinton Administration, 'undead', hence the 'vampire' metaphor above. But Bush was emboldened both by continuing scientific scepticism, which was more visible in the USA than in Europe, but also by a range of possibilities which, thanks to the US interest position, looked more attractive to him than to any European leader. This was so in a direct political sense, also, because whereas most European governments were of a social democratic complexion and were seeking to harvest the green vote which posed a threat to their hold on power, Bush was a conservative politician who had actually come to power assisted by the green vote. Without the bleeding of support from Gore to Green Party candidate Ralph Nader, Bush most certainly would not have won the 2000 presidential election.

One factor which provided support to Bush's more explicit interest-based approach was an influential paper from one of the leading greenhouse scientists which suggested that the focus on CO2 and thus energy competitiveness was misplaced and unnecessary. James Hansen, who had done much to get the greenhouse bandwagon rolling in 1988 with his testimony to a congressional hearing, published a joint paper in August 2000 suggesting that, while CO2 was the main GHG, non-CO2 GHGs were collectively just as significant, and that it might be easier both technically and economically to reduce emissions of methane, nitrous oxide, CFCs, tropospheric ozone and aerosols such as carbon soot rather than necessarily focusing on emissions of CO2 (Hansen et al., 2000). This point was made to Bush by Senators Hagel, Helms, Craig and Roberts in their letter to him of 6 March, to which Bush responded on 13 March, foreshadowing his decision to quit Kyoto.

Anthropogenic radiative forcing resulting from increases in well-mixed GHGs from about 1750 to the year 2000 is estimated to be 2.43 Wm-2. Of this 1.46 Wm-2 is estimated to come from CO2, 0.48 Wm-2 from methane, 0.34 Wm-2 from halocarbons (HFCs substituted for CFCs under the Montreal Protocol plus perfluorocarbons and sulphur hexafluoride), and 0.15 Wm-2 from nitrous oxide. In addition, however, the increase in tropospheric ozone has added 0.35 Wm-2 and black soot from fossil fuel combustion 0.20 Wm-2. In total therefore, the non-CO2 forcings amount to 1.52 Wm-2, or about the same as CO2, which underscores Hansen's point that it might be preferable and more cost-effective to concentrate mitigation efforts on these non-CO2 factors. Combined with the emerging technology of CO2 removal and sequestration (already happening in Norway, admittedly helped by a $45/tonne carbon tax) and advances in nuclear energy, Bush could both believe that Kyoto was not the best answer and see economic reasons for so believing.

The Bush Administration's initiatives on climate change, announced in early July 2001, included $120 million for climate research to address the uncertainties highlighted by a National Academies of Science report. It included sink creation schemes in El Salvador, Brazil and Belize. But it also included an agreement with an international team of energy companies (BP-Amoco, Shell, Chevron, Texaco, Pan Canadian, Suncor Energy, ENI, Statoil and Norsk Hydro) to develop technologies for carbon dioxide capture from fossil fuel plants.1 These options not only appeared reasonable to the Bush administration, they looked preferable to an international agreement which was structured so as to favour the EU, perhaps by as much as two orders of magnitude.

To understand why the interests of the USA and the EU were so markedly different in relation to the proposed Kyoto obligations, we must look at the relative natural energy resource endowments and thus at the politics of nuclear energy and coal in Europe.

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