The Lessons of Kyoto

Before September 11, the Bush administration was often criticized for going it alone in foreign relations, notably in its decisions to abrogate the Anti-Ballistic Missile (ABM) Treaty and to reject the 1997 Kyoto Protocol on global warming. Since September 11, while the United States has built a broad coalition against terrorism and is talking seriously to Russia about the ABM treaty, it is still quite alone in its stance on climate.

Indeed, U.S. business also seems to be isolated on this issue. Before Kyoto, the U.S. Senate, in response to lobbying by both business and labor, had voted 95 to 0 to oppose any climate change treaty that lacked meaningful participation by developing nations. Nevertheless, the Clinton administration then signed on to a Kyoto deal that committed industrialized nations to cut greenhouse gas emissions and involved essentially no participation by developing countries.Kyoto required the United States to reduce emissions of carbon dioxide (CO₂) by about 30% relative to business as usual by 2010, implying deeper cuts in the consumption of fossil fuels, the main relevant source of CO₂ emissions, than most other industrialized countries were required to make.

Not surprisingly, the protocol draft was opposed by many U.S. interests concerned about economic costs and unfair international competition, and it had no chance of Senate ratification. When the new Bush administration rejected the Kyoto Protocol, I — and many other observers — felt it was simply burying a long-dead corpse.

But we were wrong. Negotiations continued after the U.S. rejection, and a final deal was struck that is likely to be implemented by many industrialized nations. Although there is some opposition from business and labor in the European Union and Japan to the higher fuel costs and/or tighter regulation required to reduce CO₂ emissions, there are few public displays of that opposition. That is, in part, because business participation in the political process is generally less visible abroad than it is in the United States. But it is also because foreign business leaders seem generally more reconciled than their U.S. counterparts to the inevitability of ever stricter environmental controls, and more confident that their governments will not impose economically damaging climate change policies.

But the Kyoto Protocol really got its second life when the remaining negotiators adopted some creative accounting that weakened the protocol substantially. As it now stands, full implementation of the final deal by all industrial nations other than the United States may have almost no impact on their aggregate CO₂ emissions. The environmental community is not complaining about this, because it strongly prefers a very weak agreement that can be tightened in the future to the apparent alternative — no agreement at all.

The result is that industrialized nations can ratify the Kyoto Protocol, pleasing their green voters and making a claim to environmental leadership, without imposing noticeable costs on domestic businesses or consumers. Even if the Bush administration might like to negotiate its way back into a similarly sweet deal, it cannot now do so gracefully, after having so publicly and loudly rejected the whole process.

Thus it seems likely that most industrial nations will impose very weak controls on the emissions ofCO₂ (and other greenhouse gases) by the end of this decade, while the Bush administration either will do nothing to reduce emissions or will offer modest proposals intended mainly to reduce criticism from environmentalists. (If the U.S. environmental community holds out for expensive measures, nothing at all will happen.) And the developing world will mainly watch from the sidelines.

This outcome will complicate any serious attempt to slow climate change, which will require global participation and tight policy coordination. The longer the United States, other industrialized nations and the developing world head down different policy tracks, the harder the necessary participation and coordination will be to achieve. On the other hand, Kyoto represents only the first of what will likely be many rounds of international negotiations on this issue, and there is time to undo its unfortunate effects.