The Collapse of the Kyoto Protocol and the Struggle to Slow Global Warming

186 Pages·2001·0.62 MB·English

by  David G. Victor

The Collapse of the Kyoto Protocol
and the Struggle to Slow Global Warming
D A V I D G . V I C T O R
A Council on Foreign Relations Book
PRINCETON UNIVERSITY PRESS
PRINCETON AND OXFORD
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Copyright2001byDavidG.Victor
PublishedbyPrincetonUniversityPress,41WilliamStreet,
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Victor,DavidG.
ThecollapseoftheKoyotoProtocolandthestruggletoslow
globalwarming/DavidG.Victor.
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Includesbibliographicalreferencesandindex.
ISBN0-691-08870-5(acid-freepaper)
1.Globalwarming—Governmentpolicy.2.Greenhousegasmitigation—
Governmentpolicy.3.UnitedNationsFrameworkConventiononClimate
Change(1992).Protocols,etc.,1997Dec.11I.Title.
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Contents
Preface
vii
CHAPTER 1
CrisisandOpportunity
3
CHAPTER 2
Kyoto’sFantasyland:AllocatingtheAtmosphere
25
CHAPTER 3
MonitoringandEnforcement
55
CHAPTER 4
RethinkingtheArchitecture
75
CONTENTS
CHAPTER 5
AfterKyoto:WhatNext?
109
APPENDIX
TheCausesandEffectsofGlobalWarming:
ABriefSurveyoftheScience
117
Notes
123
WorksCited
155
Index
173
vi
Preface
T
helitanyofglobalwarminghazardsisnowfamiliar.Changing
temperaturesandrainfallmayharmagricultureandstressnatu-
ral ecosystems. Rising sea levels and severe storms may erode
and inundate coastal zones. Especially worrisome is mounting
evidencethatnastysurprises,suchasanabruptshiftinclimate,
become more likely as carbon dioxide and other “greenhouse
gases” accumulate in the atmosphere. (The appendix to this
bookgivesabriefsurveyofthescience.)Althoughuncertainties
arestillpervasive,thedangersofgreenhousegasesarenotbeing
ignored.Globalwarmingishardlytheonlyenvironmentalhaz-
ard,butinmanycountriesitisrisinghighasapolicypriority.
Withagrowingconsensusforaction,theworldnowfacesthe
challengeofdesigninganeffectivepolicyresponse.International
cooperationwillberequiredbecausegreenhousegasesarelong-
lived in the atmosphere—emissions from every country spread
worldwidetocreateatrulyglobalproblem.Cooperationisalso
required because controlling emissions may be costly. Most of
PREFACE
these emissions are the by-product of burning the fossil fuels
that powermodern industrial economies.Few nationsor firms
willdomuchtocontrolemissionsunlesstheyaresurethattheir
competitors will bear similar costs.1 A decade ago, the central
challengeforglobalwarmingpolicywassimplytomakeindus-
trialmanagers,governmentofficials,andthepublicawareofthe
dangers. Today, awareness abounds and the main impediment
to action is the lack of a viable architecture for international
cooperation.
Over the last eight years, governments have been building a
framework for action. In 1992 at the “Earth Summit” in Rio,
diplomats adopted the Framework Convention on Climate
Change.Thatconventioncreatedsystemsforreportingdataon
emissions of greenhouse gases and other essential functions; it
deferredagreement onthethornier problemofhow actuallyto
limitemissionsofgreenhousegases.Fiveyearslater,diplomats
completed the framework by adopting the “Kyoto Protocol,”
whichsetstargetsandtimetablesfor38nationstocontrolemis-
sions of greenhouse gases. For example, on average during the
years 2008–2012, emissions from the countries in the Euro-
pean Unionmust be 8% belowthe 1990 level.Japan’s required
cutis6%,whiletheUnitedStatescommittedtoreduceitsemis-
sions7%.
In the fallof 2000, as Iam writing this, diplomatsare trying
toworkoutaccountingrulesandothercrucialissuesthatthey
leftvagueinKyoto.Iftheyreachagreementonthesefinalitems,
legislatures in the industrialized countries must then decide
whethertoratifyandimplementthecommitmentstheymadein
Kyoto.Formanycountries,however,timehasalreadyrunout.
In Canada, Japan, and the United States, emissions have risen
since the early 1990s. Turning these economies around so that
theycouldcomplywiththeKyotolimitswouldrequireacostly
crash program. At this point, to catch up and comply with the
Kyotolimitsby2008wouldrequireimposingsubstantial,politi-
cally unrealizable, costs on their economies. Even in Europe,
viii
PREFACE
where policy makers profess a much greater willingness to pay
foremissioncontrols,mostcountriesarenotontracktocomply
withtheKyotolimits.2Whatwillgovernmentsdoasthesereali-
tiessinkin?
Thisbookexplorestheimpendingcrisis.Myargumentisthat
the gap between actual emissions and the Kyoto targets is not
merely the result of giddy ambition that led governments to
promisemorethantheycoulddeliverduringtheearlymorning
hourswhen theyclinched theirdeal inKyoto. Rather,the gaps
are fundamental flaws in a regulatory system improvidently
basedonsettingtargetsandtimetablesforcontrollingemissions
ofgreenhousegases.
Emissions vary with economic growth and technological
change, neither of which can be planned by governments ac-
cording to exacting targets. Since governments cannot plan fu-
tureemissionslevels,theycannotbesurethattheywillcomply
withparticularemissionstargets,suchasthoseintheKyotoPro-
tocol.Theproposedsolutiontothisproblemis“emissiontrad-
ing,” which allows governments (and firms) to trade emission
credits and debits. A nation in surplus can sell to another in
deficit,allowingbothtocomplywhilecostingsocietylessthan
if each were forced to implement emission controls entirely on
its own. Without emission trading, deficit nations such as the
UnitedStatesneverwouldhaveagreedtostringentemissiontar-
getsinKyoto.TradingisthelinchpinfortheKyotoframework.
However,theproblemwithtradingisthatitrequiresallocat-
ingpermitsthatareworthhundredsofbillionsofdollars.Inthe
past, countries have been able to allocate and launch trading
systems within their own borders. For example, the United
States has created a countrywide emission trading system for
sulfurdioxide,akeyprecursortoacidrain.InEurope,govern-
mentsareauctioningtensofbillionsofdollarsoflicensesforthe
third generation of mobile telephones (the so-called “3G auc-
tions” or “spectrum auctions”). However, success in these lim-
ited domestic experiments offers little assurance that interna-
ix
PREFACE
tionalpermittradingwillwork.Tradingofcarbonpermitsacross
bordersrestsoninternationallaw,whichisaweakforce.Nations
canwithdrawiftheirallocationprovesinconvenient,andthere
are few strong penalties available under international law that
can keep them from defecting. Yet the integrity of an emission
trading system requires the impossible: that major players not
withdraw.
Theimpossibilityofsolvingtheallocationproblemismoving
tocenterstageasdiplomatsattempttoexpandtheKyotoframe-
worktoincludedevelopingcountries.Emissionsfromthedevel-
oping world are rising rapidly and, within the next three de-
cades,arelikelytoexceedthosefromtheindustrializednations.3
YetdevelopingcountriesarecurrentlyexemptfromKyoto’slim-
its.Theinterestsoftheindustrializedanddevelopingworldsdo
notoverlap,whichseriouslyunderminesthehopeforachieving
anacceptableandstableallocation.Industrializednationswant
to allocate emission permits according to the status quo—that
is, large allocations for today’s big emitters. Developing coun-
tries want to overturn the status quo. Deal-makers imagine a
grandbargainthatcouldbalancetheseconflictinginterests,but
Iarguethatnodealisdurable.Thegrandbargainersmightreach
apact—justasthediplomatsinKyotofinallygottoagreement—
butchangingcircumstanceswillaggrievesome.Astheaggrieved
andinconveniencedexit,thetradingsystemwillunravel.
Kyoto’s troubles are the consequence of a public policy pro-
cess that has been astonishingly uncritical about how best to
manageglobalenvironmentalproblems.Thatprocesshasmanu-
factured a conventional wisdom that the only way to control
pollution is to set inviolable targets and timetables for control-
lingemissions.Thatwisdomwaslockedintoplacewiththesuc-
cessofthe1987“MontrealProtocolonSubstancesthatDeplete
theOzoneLayer,”whichsettargetsandtimetablesforconsump-
tion of chlorofluorocarbons and other chemicals that thin the
ozone layer. Few observers have given much attention to
whethertheMontrealprecedentisappropriateforapplicationto
x
PREFACE
other global environmental problems; I will show that global
warmingisquitedifferentanddemandsaverydifferentsolution.
Ironically,oneofthemostimportantinnovationsintheMontreal
Protocolistheinclusionofan“escapeclause”thatkicksinwhen
controllingemissionsbecomestoocostly.Thatprecedentisex-
tremely important for application to the global warming prob-
lem. One of the central reasons that governments are wary of
implementingstrictlimitsongreenhousegasesisthepossibility
thatthoselimitswillbe muchmorecostlythantheyhadantici-
pated.Yetthe“escapeclause”innovationisthemostcommonly
ignoredlessonfromtheMontrealProtocolexperience,anddis-
cussion of adding an escape clause to the Kyoto Protocol has
triggeredvehementopposition.
Emissiontradingisalsotheresultofuncriticalthinkingabout
whatworksininternationalpolitics.Oncegovernmentshadfo-
cused on setting targets and timetables for greenhouse gases it
was merely a small step to imagine trading of those allocated
targets.Again,diplomatshadasuccessfulprecedentinmind—
theU.S.systemfortradingsulfurdioxidecredits—butgavetoo
little attention to whether the precedent was applicable to the
globalwarmingproblems.
WhileIarguethatthecoreoftheKyotoarchitectureisflawed,
noteveryelementiswrongheaded.Amongtheimportantcontri-
butionsoftheKyotoprocesshavebeenthecontinuedeffortsto
get countries to report useful data on their emissions of green-
house gases and policies for controlling those emissions. The
1992 Framework Convention laid the foundation for that data
collecting and analytical effort, and the Kyoto Protocol helped
tosustainthemomentum.AlsoimportantisKyoto’sCleanDe-
velopment Mechanism (CDM), which offers a way to engage
developingcountriesinaglobalefforttobuildcleanerandmore
efficientenergysystems.TheCDM,whileremainingilldefined,
is important because it provides a basis for channeling market
forcestowardssensibleprojects indevelopingcountries,rather
thanrequiringaheavy-handedcentralpublicfundtomakesuch
xi
PREFACE
investments. A key challenge for diplomats will be to flesh out
thepositiveelementsoftheKyotoframeworkevenastherestof
thesystemrunsaground.Equallytaxingwillbetolockinprog-
ressontheseimportantelementssothatthesuccessortoKyoto
neednotstartatzero.
Theinterestofthisbookforthegrowingcommunityofpolicy
makersengagedwiththeglobalwarmingissueshouldbeobvi-
ous.Scholars,also,willfindthatIengagetopicsatthefrontiers
of their research. Atmospheric scientists, biologists, and forest-
ers will find here the latest results from efforts to measure the
fluxes of greenhouse gases applied to the problem of whether
it is possible to monitor and verify compliance with the Kyoto
Protocol(itisn’t).4Economistsandpoliticalscientistswillrecog-
nize the tools of game theory and the logic of collective action
applied to the thorny problem of how nations might allocate
valuable emission permits.5 Economists will also find reflected
in these pages the important debate over whether “price” or
“quantity”measuresarethebestwaytoregulatepollution.6
Fundamental to this book is the relationship between prop-
erty rights and institutions, a central topic in economics and
political science.7 Launching an emission trading system re-
quirescreatinganewformofpropertyright—therighttoemit
greenhousegases—andinstitutionstomonitor,enforce,andse-
curethosenewpropertyrights.IarguethattheKyotoProtocol
failsprincipallybecauseinternationallawisapoormechanism
forsecuringpropertyrights.Thisproblemmultiplieswhenthe
trading of theseproperty rights must include the participation
ofcountriesthatdonothavestrongandimpartialnationallegal
institutions, which is the case in most of the former Soviet
Unionandmostdevelopingcountries.8Yetthese“illiberal”na-
tions are exactly the ones whose inclusion is critical for the
maintheoreticalbenefits ofemission tradingtoberealizedbe-
causetheyofferthelowestcostopportunitiesforemissioncon-
trol.Underinternationallaw,Iargue,itisnotpossibletocreate
xii