OPINION/COMMENTARY

Kyoto and the End of Hot Air

THE GOOD NEWS is that the Kyoto Protocol aimed at reducing greenhouse gas emissions came into effect last week, legally binding the 34 industrialized countries that have ratified the treaty to cut their greenhouse gas (GHG) emissions by 2012. Good news not because the agreement can do much to affect the rate at which the globe is warming, if indeed it is. But good news nonetheless, and for two reasons. First, the participants have agreed to adopt America's position that the best way to keep the cost of compliance down is to institute an emissions trading system. Companies are assigned permits to emit a certain amount of GHG, and fined €40 per ton in the European Union if they exceed that "cap." To avoid such a fine, companies exceeding their cap can buy unused permits from firms who have found it efficient to reduce their own emissions and sell off unused "emission credits." It is ironic that this provision to allow cost-minimizing compliance was included in the Protocol at the insistence of the American delegation to the Kyoto meeting, over the objections of the Europeans. The Europeans have since warmed to the idea of emissions trading, while the Americans have cooled on the idea of any treaty at all. The second reason the coming into force of the Protocol is good news is that it is forcing the signatories to re-examine premises and practicality. The pro-Kyoto nations are finding that there is some merit in the American position that compliance with the treaty, at the pace it requires, is simply impossible without doing serious damage to economic growth. Tony Blair, who plans to make the fight against global warming the center-piece of his E.U. presidency, has found it necessary to seek a relaxation of the very ambitious targets he once embraced lest many British industries find themselves at a competitive disadvantage. Japan, the country that played host in 1997 to the Protocol's drafters, saw its GHG emissions rise by 8 percent last year, making it unlikely that it would achieve a 6 percent reduction from 1990 levels by 2012. And Canada, an enthusiastic backer of Kyoto, also finds itself in difficulty: like Japan, Canada agreed to cut emissions to 6 percent below 1990 levels, only to see them rising at an annual rate of 1.5 percent....