Kyoto aftermath: Big battles still ahead as U.S. holds treaty key

Vice President Al Gore; The Clinton administration will be "tireless" in defending the treaty against the opposition of U.S. industriesellipse"The stakes are simply too high-environmentally, economically, and morally-for us to allow the special interests to get in the way of the common interest of all humankind." [9,079 byte]
U.S. Energy Sec. Federico Peña; "While the U.S. target of 7% below 1990 emission levels is several percentage points more aggressive than the President's original proposal, I believe the rapid pace of technological change, combined with the international trading and joint implementation initiatives, constitute a successful formula for achieving significant emission reductions." [10,574 bytes]
API Pres. Red Cavaney; The Kyoto treaty is not the fair agreement President Clinton had promised...It would act as a hidden tax, driving up consumer prices, and impose significant economic penalties on American families, workers, consumers, and farmers. [12,588 bytes]

In the aftermath of the Kyoto global warming agreement, the administration of U.S. President Bill Clinton has pledged it will not send the treaty to the U.S. Senate for ratification until developing nations agree to cut greenhouse gas emissions.

That is not expected to occur until the global warming talks resume next November in Buenos Aires. The U.S. plans negotiations with key developing nations in the meantime.

Also, participating nations will continue discussing the details of an international emissions trading system that the conference approved in theory. Under it, industrialized nations would get credits for reducing emissions in other countries.

Clinton administration officials plan to sign the treaty when it is offered about Mar. 15 but do not plan to submit it to the Senate for ratification until after the Congressional elections next November. The Senate would have until March 1999 to approve or reject the pact.

Meantime, reactions to the historic accord have ranged from declarations of victory, qualified by proponents of drastic steps to cut fossil fuel use who wanted an even tougher treaty, to predictions of economic catastrophe by those industries that would be hit hardest by such cuts.

Within the energy industry, oil and coal groups blasted the accord as having potentially devastating economic effects.

Meanwhile, natural gas groups saw some promise for their fuel playing a key role in reducing greenhouse gas emissions (see related story, p. 22).

In many corners, the reaction has been somewhat muted in recognition that the accord is just a first step. Tough negotiations loom for securing agreements with developing nations to voluntarily cut greenhouse gas emissions prior to the treaty's ratification by all signatories' legislative bodies. Any binding treaty that will result in significant changes in fossil fuel use in the key industrialized nations is not likely to be ratified if voluntary cuts by the developing nations are not forthcoming. The main reason for this is that predictions show that unfettered growth in greenhouse gas emissions by the developing nations will vastly overwhelm any of the cuts the industrialized nations agreed to at Kyoto (see chart, this page).

Treaty recap

The global warming treaty was prompted by warnings that rising concentrations of carbon dioxide and other so-called greenhouse gases threaten to dramatically raise the earth's temperature and cause a variety of catastrophic climate changes, including more-frequent droughts and floods and a rise in sea levels.

The agreement calls for the U.S. to reduce its greenhouse gas emissions 7% from 1990 levels by 2012, the European Union 8%, and Japan 6%. Overall, 38 nations would reduce their emissions of six gases by 5.2% (OGJ, Dec. 15, 1997, p. 17).

China, the world's second biggest polluter in terms of carbon dioxide, and India, in sixth place, were not obliged to reduce their emissions.

The pact will take effect after 55 nations representing 55% of 1990 CO2 emissions formally accept it. But it will be binding on individual countries only if those nations ratify it.

The U.S., which emits more greenhouse gases than any other nation, had first proposed to stabilize its emissions at 1990 levels but finally agreed to cut them by 7%.

Senate Majority Leader Trent Lott said, "This global warming plan faces a frosty reception in the Senate, whose members voted 95-0 in July to oppose any treaty that would give the developing world a free ride or seriously harm the U.S. economy."

He added, "This treaty would do both."

Lott warned the Clinton administration should not withhold the treaty from a Senate vote for a year due to "cynical, political reasons."

He said, "The President directed his negotiators to sign this treaty. The President should have the strength of his convictions to submit this treaty as soon as possible for the scrutiny of the Senate."

President Clinton said the pact was "environmentally sound and economically sound. I wish it were a bit stronger on international participation. But we opened the way."

Gore optimistic

In a Dec. 11 briefing, Vice President Albert Gore said, because industrialized nations have agreed "to a binding and realistic framework," U.S. air and water resources will be cleaner, "and our businesses will be more competitive in the new global economy.

"Over the course of the next century, it will mean that our children's future will be more secure from the dangers that scientists have warned about-more record floods and droughts, spreading infectious diseases, melting glaciers and rising sea levels, and stronger, more frequent storms."

Gore said the Kyoto talks were "among the most difficult negotiations ever held" and resembled "an intricate, three-dimensional chess game" involving more than 160 nations, many of which had "deep and profound differences."

Gore said, "In the end, the final agreement was based on the core elements of the American proposal. And make no mistake, we stuck by the President's principles, and we prevailed. This agreement reflects most of the key elements of the President's plan."

He said the deal recognizes that free markets, not government regulators, must tackle the problem.

"The agreement will enhance growth and create new incentives for the rapid development of technologies through a system of joint implementation and emissions trading. It creates binding limits. It asks us to do what we promised, not promise what we cannot do."

Gore observed the pact includes all six greenhouse gases. "There was a big fight there. We wanted all six of them; most of the rest of the world just wanted to cover half of the greenhouse gases. It's also based on the specific timeline that we proposed. And it will create a level playing field for American industry."

Ratification

Gore said the Kyoto meeting established a framework and a negotiation process that will permit additional talks to seek "meaningful participation by key developing nations."

"As we said from the very beginning, we will not submit this agreement for ratification until key developing nations participate in this effort. This is a global problem that will require a global solution."

Gore said the progress made in the Kyoto treaty on international trading of emissions reduction credits offers a mechanism for pulling developing nations into the treaty voluntarily.

"And based on what we heard during these talks in Kyoto, I can tell you that while the world was given the impression that there was a monolithic opinion on the part of the developing world, actually lots of these developing countries have a different position and want to be a part of this treaty. Some of them are suffering the impacts of global warming already."

He also said the administration will be "tireless" in defending the treaty against the opposition of U.S. industries.

"The stakes are simply too high-environmentally, economically, and morally-for us to allow the special interests to get in the way of the common interest of all humankind.

"So many times in our nation's history, we have banded together and successfully met what seemed to be an insurmountable environmental challenge. And, each time, the skeptics have said it couldn't be done at all or it could only be done at the cost of ruining our economy.

"From cleaning up our rivers and lakes, to combating acid rain, to tackling ozone depletion, and others, our technology and our innovation have allowed Americans to enjoy a cleaner environment and a stronger economy at the same time."

Gore said the administration has "completely ruled out new taxes of any kind as a means of meeting our obligations under this treaty.

"The President will propose in his State of the Union address new tax incentives-that is, tax cuts-to encourage the purchase of the new technologies that will be necessary in order to have more efficient uses of energy and generate less pollution."

Market-based plan

U.S. Energy Sec. Federico Peña said the Kyoto deal met one of Clinton's key objectives: international market-based efforts to reduce emissions that will be market-based.

"A framework both for international trading and for joint implementation was established. We will pursue reductions where they are most cost-effective to obtain. And we will let the market decide where, when, and how reductions will occur.

"Obviously, we would have preferred stronger language to ensure meaningful participation by developing countries. We will continue to work to see that those countries do their share by growing their economies with greater energy efficiency than that which characterized our own industrial revolution."

Peña said the time frame adopted by the negotiators in Kyoto was also Clinton's.

"He concluded that earlier timetables were neither realistic nor achievable without doing real economic harm. Our negotiators succeeded in winning agreement to his proposed time period of 2008-12 for reaching the desired emission reductions.

"While the U.S. target of 7% below 1990 emission levels is several percentage points more aggressive than the President's original proposal, I believe the rapid pace of technological change, combined with the international trading and joint implementation initiatives, constitute a successful formula for achieving significant emission reductions."

Peña said the administration's global warming strategy has three stages:

* First, the U.S. will spur research and development in new technologies and provide $5 billion in tax cuts and other investments to encourage business to invest in "clean" technologies. "We in the federal government will reduce our own energy use, and we will work with industries to achieve greenhouse gas reduction goals. And they'll get appropriate credit for this effort."

* In the second stage, the U.S. will evaluate the state of the economy and update global warming science. "We will develop international procedures for business to trade emission permits and to invest in clean technologies in developing countries."

* The third stage "involves meeting binding emissions targets through the implementation of domestic and international emissions trading systems. Our systems for trading emission permits would be developed like the successful permit trading system in the U.S. for sulfur dioxide."

Senate reaction

U.S. Sen. Frank Murkowski (R-Alas.), Senate energy committee chairman, claimed the U.S. was "hoodwinked" at the talks.

He said, "President Clinton promised the American people we would not agree to any deal lacking meaningful commitments for developing countries to reduce greenhouse gases. Yet this treaty contains no new commitments for developing nations and no agreement to introduce future commitments.

"It is fundamentally flawed and dead on arrival. If we are to make real progress on the climate issue, the President should promptly submit the treaty and allow the Senate to kill it so we can start work on an agreement that can really work."

Murkowski noted that China's greenhouse gas emissions would surpass those in the U.S. in 15 years but are not covered by the treaty.

He added, "This deal will increase U.S. energy prices. We will see it at the gas pump; we will see it in our electric bills; we will see it in our food prices."

Sen. Chuck Hagel (R-Neb.) said, "There is no way that the vote in the U.S. Senate will be even close. We will kill this bill."

Sen. John Chafee (R-R.I.), environment and public works committee chairman, called the treaty a "disappointment."

He said, "Possibilities for Senate approval of a treaty appear slim at the moment, but the very real danger of global warming continues to be a growing problem for the environment.

"The effort in Kyoto was an important and instructive first step, and I believe we have laid the foundation for substantial progress in the future.

"The threat of global warming is not going away simply because the Senate appears unlikely to ratify this agreement. Some might equate the lack of a treaty with the lack of a problem. That would be a great mistake in both policy terms and political terms."

Sen. Joe Lieberman (D-Conn.) praised the agreement. "Key elements of the American proposals that were aimed at real targets and timetables, flexibility, market mechanisms, reducing compliance costs for our industries, and starting the process of involving developing nations were, in the end, very much a part of the Kyoto agreement."

But he added, "Unless the developing nations help us build a more complete structure, the problem will remain unabated and undiminished.

"It is particularly important, in the months leading to the conference in Argentina next November, that the larger developing nations such as China realize that it is in the interests of their people to become part of the solution to the global warming problem sooner rather than later."

Other reactions

Alden Meyer, government relations director for the Union of Concerned Scientists, said, "Some pages of the treaty look like they were written with a hole puncher instead of a pen. Our first priority after Kyoto is to close these loopholes.

"However, given the fossil fuel lobby's ferocious opposition and multimillion-dollar propaganda campaign, adoption of the Kyoto treaty is a welcome accomplishment."

Some environmental groups complained about the lack of enforcement mechanisms in the pact. They said the protocol may prove to be no more of a guarantee of action on greenhouse gases than was a non-binding accord adopted 5 years ago in Rio de Janeiro.

Steven Guilbeault of Greenpeace International said conferees only agreed to "periodically review this protocol," and did not even set a time frame for those periodic reviews.

In Europe, Greenpeace agreed that the Kyoto agreement represents a turning point, but says the deal will not protect the world from dangerous climate change on its own.

"It is true," said Greenpeace, "that the 'emissions reduction' agreed may, in fact, allow a small increase-2% above 1990 levels-when, to put the world on target to ecological protection, a reduction of 20% is needed by 2005."

Stephanie Tunmore, Greenpeace campaigner, said, "Everyone has to analyze the agreement carefully before making any definitive statements on what it really means for global emissions and the climate.

"The agreement is weak, but the fossil fuel lobby has clearly lost. Governments must change regulations and market incentives to increase use of renewable energy, such as solar, wind, and wave technologies.

"They must build jobs in manufacturing of renewables technology and increase energy efficiency investment before the climate conference in Argentina next November."

Worldwide responses

Worldwide reactions to the emissions reductions plan forged at Kyoto have a common theme: there is much work to be done.

John Browne, group chief executive of British Petroleum Co. plc, welcomed the "limited progress" made at Kyoto that he said nevertheless represents a positive step on a long journey.

"We don't underestimate the amount of work that still needs to be done," said Browne, "and we believe business has a constructive role to play in the process.

"We believe that the development of systems for emissions trading and joint implementation are crucial ways of ensuring the optimum allocation of resources as countries work to meet these targets."

London's International Petroleum Exchange (IPE) declared itself ready to lead the development and operation of a global market in emissions permits, having examined current forms of pollutant trading.

IPE said it would outline to U.K. government next year principles that it believes should govern the establishment of a global market in emissions, as well as the means to achieve this goal.

Lynton Jones, chief executive of IPE, said, "We are delighted that the representatives at the Kyoto summit have considered a market-based solution to the problem of CO2 emissions."

Robert Priddle, executive director of the International Energy Agency, Paris, said commitments made at Kyoto represent a significant step towards mitigating climate change.

"Man-made damage to the climate," said Priddle, "can be reduced without hurting economic growth, if ambitious targets are cost-effective and realistic. Kyoto has started us on the road to a new, cleaner-energy economy.

"Each new capital investment offers an opportunity to contribute to a sustainable energy future. However, we as individuals must also transform our behavior as consumers of goods and services."

Ritt Bjerregaard, the European Commission's environment commissioner, said the Kyoto meeting was "a point of no return in the fight against the horrendous consequences of greenhouse gas emissions."

She said, "The process was never meant to be finalized in Kyoto, and we certainly would like to have achieved more. But it is undeniable that the problems posed by climate change are now firmly established in the minds of the politicians as well as of the public around the world."

She said the industrialized nations proved to be flexible in the talks, as demonstrated by the cuts they accepted. In the case of the U.S., "With the pressure from the senators, with all the pressure from the car manufacturers, the oil companies, etc., I think it was very surprising and encouraging that the Americans (managed) to come up with a figure of 7%."

Yuji Idemitsu, chairman of the Petroleum Association of Japan, said it would be difficult for Japan to achieve its goal of a 6% cut in emissions.

That was 3.5 percentage points more than Japan had wanted. Japan's oil companies already face thin retail margins, gasoline prices at historic lows, and prospects of consolidation.

Observers said Japan would have to achieve the bulk of its emissions cuts outside of the country in order to meet its target.

Jens Stoltenberg, the head of the Norwegian parliament's energy committee, said "Norway is likely to have much higher costs from the climate agreement than other industrialized countries."

He said lower world oil consumption could cut prices $1-2/bbl and lower Norway's sales 10-15 billion kroner/year, forcing a 1% drop in gross domestic product.

"There are big uncertainties linked to what oil prices will be in the year 2010. But if there are measures to reduce emissions of CO2, it will easily lead to lower demand and so lower prices."

But he added, "We are a very strong supporter of the agreement even if it leads to lower oil prices."

U.S. petroleum industry reacts

The American Gas Association and the Interstate Natural Gas Association of America both said they would study the Kyoto protocol but noted that natural gas clearly will play a large role in reducing worldwide greenhouse gas emissions.

Red Cavaney, American Petroleum Institute president, said the pact was not the "fair agreement" Clinton had promised.

He said the deal would act as a hidden tax, driving up consumer prices. "It will impose significant economic penalties on American families, workers, consumers, and farmers."

He said, "The climate issue is a legitimate concern for all Americans, and we certainly do not advocate doing nothing. In fact, a number of programs are already under way within the petroleum industry making prudent, economically justifiable, voluntary reductions in greenhouse gas emissions."

William O'Keefe, an API vice president who chairs the Global Climate Coalition-which represents a broad range of American businesses and industry-said that, under the pact, "For the first time in history, the U.S. would allow a foreign body dominated by developing countries to restrict and control the U.S. economy.

"U.N. bureaucrats will be able to dictate investment and job creation in the U.S." O'Keefe said the deal could cost the American economy $150 billion/year and 3 million jobs.

"If this were truly an environmental agreement, the countries that will emit the majority of future greenhouse gas emissions would be on board. They aren't, and it is easy to see why. Our folly will bestow enormous economic advantages on our international competitors."

O'Keefe said the deal would force a 30% cut in U.S. energy consumption in a little more than 10 years. "There is no practical way to achieve that objective without damaging the economic record that is the envy of nations around the world."

More views

Eugene Trisko, counsel to the United Mine Workers of America, said the Kyoto pact failed to meet two of three requirements Clinton had set: meaningful participation by developing countries and joint implementation of greenhouse gas emissions management.

"This is a bad deal for American workers and consumers, and a complete cave-in to China, India, and other rapidly growing economies that remain exempt from any greenhouse gas commitments."

The Edison Electric Institute said, "The treaty trades American economic growth for nothing more than paper promises from our international competitors.

"It is economic suicide masquerading as an environmental agreement. Without developing country participation, worldwide emissions of greenhouse gases will continue to rise. But the only thing going up in the U.S. will be energy prices."

Chrysler Corp. Chairman and CEO Robert Eaton said, "For months we have urged the administration not to bind this country to reductions of greenhouse gas emissions with arbitrary deadlines.

"Innovation and invention don't often come with dates certain. The administration chose to do that anyway."

Eaton added, "Without participation by all nations, little or no environmental benefit will be realized. To the extent there is a problem, it will evolve over the next century. In the near term, we should not take any action that could harm the U.S. economy or put at risk American jobs."

Canadian reaction

Alberta and industry spokesmen condemned Canada's agreement at Kyoto to a 6% cut in emissions and said it will lead to job losses and industry closures.

Alberta Energy Minister Steve West said the Kyoto deal was "not acceptable" to the province. "Federal negotiators put too much emphasis on the deal, rather than protecting Canadian interests."

Alberta produces more than 80% of Canada's oil and gas. The 6% cut is twice the target level originally planned by Ottawa when it went to Kyoto.

Federal and provincial ministers had agreed in November to set greenhouse goals without compromising economic goals. That agreement called for stabilization of greenhouse gas emissions at 1990 levels by the year 2010.

The Canadian Association of Petroleum Producers said it was disappointed with the position taken by Canada. CAPP represents 170 companies that produce about 95% of Canada's oil and gas.

Pres. David Manning said CAPP has not seen an analysis of how much the 6% cut would cost.

The Canadian Petroleum Products Institute said the 6% reduction Ottawa agreed to at Kyoto is closer to 20% because Canada is now behind on an earlier commitment to reduce greenhouse gases from 1990 levels.

The Canadian Energy Pipeline Association (CEPA) pointed out that Canada's greenhouse gas emissions were expected to be 19% above 1990 levels by 2000, which meant a 25% cut to meet the Kyoto target.

"Achieving this target will require fundamental changes in the daily lives of all Canadians," CEPA Pres. Myron Kanik said.

Gwyn Morgan, CEO of Alberta Energy Co. Ltd., Calgary, called the Kyoto deal "bizarre, not achievable, and absurd."

Eric Newell, CEO of Syncrude Canada Ltd., said he endorses environmental efforts but was critical of the Kyoto deal. "Until we engage Canadians in debate and get their understanding, it doesn't matter what we sign; it won't happen. Internationally, I'm very concerned the developing world is not included. By 2010, their emissions will surpass the rest of the world. Any agreement without them is totally meaningless."

Robert Hornung, of the Alberta-based Pembina Institute environmental group, said the treaty is a good first step and goes further than his group expected.

Government promise

Canadian Prime Minister Jean Chretien said a review by federal and provincial governments will be held before any decision to ratify or implement the Kyoto emissions agreement.

The planned review will look at the environmental, scientific, and financial implications of making the cuts. The prime minister said talks with the provinces would assume that Canada will proceed with a 6% cut, but he noted Canada has been a participant in prior international treaties that it did not ratify.

Chretien said his environment and energy ministers will begin meeting to prepare a plan for the implementation of the Kyoto deal, but it will take some time.

CAPP's Manning said the prime minister now has an opportunity to revisit the greenhouse gas issue and to get a better understanding of how industry can respond to it.

Manning said the provinces, along with industry and other stakeholders, must be part of the consultative process in developing plans to deal with emissions.

The CAPP president said a clear statement is needed from Chretien that there will be a consultative process but added that Canada will not ratify any deal unless the U.S. does.

Implementation

Federal Natural Resources Minister Ralph Goodale said Canada wants to be part of the solution to the emissions problem. He said Canada was looking for a balance between its environment and the realities of its economy, and the agreement achieved that balance.

Canadian Environment Minister Christine Stewart said Canada would most likely reduce greenhouse gas emissions to 1990 levels before its originally announced target of 2007.

The Liberal government, which admitted earlier this year it could not keep its 1993 election promise to stabilize greenhouse gas emissions by the year 2000, has yet to outline plans for achieving its Kyoto targets.

The only initiative announced so far, a $60 million (Canadian) program to promote energy efficiency in buildings, would only reduce greenhouse gases by less than 1 percentage point of the necessary amount, Stewart said.

She said the government wanted to begin implementing reduction levels in the next 18 months. It must first negotiate with the provincial governments, which would ultimately implement many of the reduction initiatives.

She and Goodale will meet their provincial counterparts in January.

Self-delusion?

Jerry Taylor, natural resource studies director for the Cato Institute, Washington, D.C., said the Kyoto pact was "part political fraud and part wishful thinking.

"Computer models used by the agreement's supporters project that the agreement will only reduce global temperatures by a small fraction of one degree a hundred years from now.

"Moreover, the fact that there is absolutely no enforcement mechanism in the treaty and that three quarters of the world's population are exempt from the agreement, means that any nation that complies with the treaty will be incurring all costs and no benefits."

Taylor said the agreement is far more restrictive than advertised and would require the U.S. to cut its CO2 emissions a third by 2010.

"The notion that those cuts can be achieved cheaply and painlessly, with no significant social disruption, is absurd. No mainstream economist holds such an opinion.

"The idea that government can pick the ideal energy technologies for tomorrow is a triumph of hope over experience. Remember government's promise that nuclear power would be too cheap to meter? That synthetic fuels would replace oil and gasoline? That solar and wind power would soon be a cheap substitute for oil, gas and coal?

"The idea that technologies presently available-if more widely adopted-could significantly cut energy use cheaply and painlessly is likewise nonsensical.

"State public utility commissions have poured more than $10 billion into subsidizing 'silver bullet' (electrical generating) technologies and have discovered to their chagrin that they perform far less well than advertised and significantly increase electricity rates without gaining anything close to the projected energy savings," Taylor said.