November 2001

The WTO and Kyoto

While Kyoto watchers have been focused on the proceedings in Marrakesh, Morocco, trade negotiators meeting in Doha, Qatar agreed on several Kyoto-relevant issues. The members of the World Trade Organization re-iterated their commitment to sustainable development in the draft Ministerial Declaration.

In the Trade and Environment section, WTO members agree to negotiations on “the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs).” The negotiations will be limited to the “applicability of such existing WTO rules as among parties to the MEA in question.”

Developing countries remain adamantly opposed to linking environmental or labor standards to trade, but agreed to include the environmental linkage issue in the new round of trade talks as the price for getting the European Union to agree to include reducing agricultural subsidies on the agenda. A CBS News story (November 14, 2001) immediately picked up on the connection with Kyoto: “In return [for putting agricultural subsidies on the table], other countries were willing to accept EU demands that the new talks should take consideration of some environmental issues, negotiators said. For example, the EU wants to clarify how agreements like the Kyoto accord on global warming relate to the WTO, and whose rules would take precedence in case of conflict.”

Triumph at Marrakesh?

Once again, the seventh Conference of the Parties to the UN Framework Convention on Climate Change finished the Kyoto Protocol at the conclusion of its meeting in Marrakesh on October 10. The agreement included agreeing that all remaining unresolved issues will be resolved at the next COP after the protocol is ratified and goes into force. COP-8 is scheduled for late October 2002, possibly in India.

The talks dragged on twelve hours beyond their scheduled close as Umbrella Group members (including Japan, Australia, Canada, and Russia) demanded and won more and more concessions from the European Union. Russia was granted 33 million metric tons of credits a year for carbon sequestration in its vast forests, which doubled the figure agreed at Bonn last July, plus significant relaxation of several rules. This includes not having to submit carbon sink inventories or verification in order to claim these credits.

Japan also won key concessions, including postponement of adopting the precise terms of compliance and enforcement until after the protocol goes into force. Final language on the use of several of the mechanisms, such as the Clean Development Mechanism, was also put off until next year.

The enforcement provisions agreed last July in Bonn at the continuation of COP-6 have been described as legally binding, but it remains unclear what this means. It was agreed that parties to the protocol that failed to reach their emissions targets in the first compliance period (2008-12) would have to make up the shortfall in the second compliance period plus a 30 percent penalty. However, no second compliance period or emissions targets for that period have been negotiated, so the agreed enforcement provision would seem to have little effect. The agreement in Marrakesh to postpone spelling out what constitutes compliance and how it will be enforced adds to the uncertainty.

Reaction from environmental pressure groups was mildly negative. A November 12 Reuters story quoted Bill Hare of Greenpeace: “Government may be congratulating themselves now, but what have they really achieved?” Eileen Claussen, president of the Pew Center on Global Climate Change, a well-funded industry-front group of corporations that hope to make money from limiting hydrocarbon use, told the Washington Post (November 11), “Without U. S. participation and with credits being granted for business as usual, I think the reductions you get off the baseline are very small.”

The United States delegation, true to its word, largely remained on the sidelines as an observer to the COP-7 negotiations. The Marrakesh talks and their triumphant conclusion attracted little media attention.

Kyotos main backers now hope that the protocol will be ratified in time to be celebrated at the World Summit on Sustainable Development in Johannesburg in September 2002. If the protocol is ratified before COP-8 in October 2002, then that conference will become the first Meeting of the Parties (or MOP-1). Once the protocol goes into force, any further changes to the protocol, such as those noted above, must then be agreed to formally as amendments.

Whither Japan, Australia, Canada?

With the conclusion of COP-7, attention now turns to ratification of the Kyoto Protocol. Ratification requires 55 nations and in addition these must include nations that comprised at least 55 percent of Annex I greenhouse gas emissions in 1990. Over forty nations have already ratified the protocol, but only Romania among Annex I nations has officially submitted its ratification. So reaching 55 percent of Annex I emissions is the only challenge. The major question marks are Japan, Australia, and Canada.

Japanese Prime Minister Junichiro Koizumi signaled his governments intention to proceed with ratification at a meeting with his governments Global Warming Prevention Headquarters staff on November 12, according to a Kyodo News Service story. The Prevention Headquarters released a statement laying out the steps it will take to prepare for ratification. Included in the statement was this exhortation: “[I]t is vital that each and every person in Japan changes his or her lifestyle in order to prevent global warming….”

Kyodo also reported on November 13 that Environment Minister Yoriko Kawaguchi had asked to meet with Keidanrenthe Federation of Economic Organizationsto seek support from business and industry. Yomiuri Shimbun reported the same day that industry remained opposed to ratification because higher energy costs would damage Japans international competitiveness. Industry leaders are not proposing, however, that Japan withdraw from the protocol. Instead, “We need to step up our efforts to urge Washington to return to the Protocol,” Yotaro Kobayishi, chairman of Japans Association of Corporation Executives, told the newspaper.

Although the Japanese economy appears headed for depression after a decade of recessions, it is hard to see how Japan can meet its Kyoto target of cutting greenhouse gas emissions to 6 percent below 1990 levels by 2008-12 without severe economic pain. Japan reacted to the OPEC oil boycott in the 1970s by forcing energy efficiency and conservation measures. Thus there is little “low-hanging fruit” to be picked. Emissions increases since 1990 have come almost entirely from transportation and households. Manufacturing emissions have gone up only one percent since 1990.

In Australia, the Liberal-National coalitions narrow election victory on November 10 returns Prime Minister John Howards government to office for a third term. Although Australia was given major concessions in Marrakesh, first indications are that Howard remains unlikely to move forward with ratification as long as the United States stays on the sidelines.

The Canadian government of Prime Minister Jean Chretien has been a major booster of the protocol throughout the negotiations, but this enthusiasm conceals two obstacles to ratification. First, as the head of a major economic forecasting institute told Cooler Heads, “It will be economic suicide if Canada ratifies Kyoto without the U. S. And there must be some people in the government who understand that.” Second, although the national government can ratify, under Canadas highly devolved federal system implementation will be impossible without the co-operation and support of the provincial governments. The government of Alberta has so far been most unco-operative and indeed hostile to regulating carbon dioxide emissions. Not co-incidentally, Alberta holds vast hydrocarbon reserves, far larger than the other provinces combined.

Richard Paton, president of the Canadian Chemical Producers Association told the Financial Post (November 12) that the Canadian government was engaged in “wishful thinking” if it believed that Canada can meet its emissions target. Paton spoke on behalf of a broad coalition of Canadian businesses. The coalition estimates that Canada will be 25 percent over its Kyoto target by 2010.

U.S. Emissions Soar in 2000

A new report by the Department of Energys Energy Information Administration shows that U.S. emissions of greenhouse gases increased by 2.5 percent over 1999 levels in 2000. That is a significant increase from the average yearly increase of 1.3 percent from 1990 to 2000. EIA attributes the increase “to strong growth in carbon dioxide emissions [3.1 percent] due to more normal weather, decreased hydroelectric power generation that was replaced by fossil-fuel power generation, and strong economic growth (a 4.1-percent increase in gross domestic product).”

Overall, U.S. greenhouse gas emissions in 2000 were about 14 percent higher than in 1990, the baseline year used in the Kyoto Protocol. The U.S. emission reduction target under Kyoto is 7 percent below 1990 levels. According to the EIA study, “Since 1990, U.S. emissions have increased slightly faster than the average annual growth in population (1.2 percent) but more slowly than the growth in energy consumption (1.6 percent), electric power generation (2.3 percent), or gross domestic product (3.2 percent),” indicating continued improvements in energy efficiency.

The growth rate in carbon dioxide emissions in 2000 was the second highest of the last decade with 1996 seeing a 3.4 percent increase. The study notes, “Although short-term changes in carbon dioxide emissions can result from temporary variations in weather, power generation fuel mixes, and the economy, in the longer term their growth is driven by population, energy use, and income, as well as the carbon intensity of energy use (carbon dioxide emissions per unit of energy consumed).”

The study can be found at

New Hampshire Special Interests Agree on Multi-pollutant Bill

New Hampshires utilities, conservation groups, and government leaders have reached a compromise on new legislation that will force its three fossil-fuel power plants to further cut the emissions of three pollutantssulfur dioxide, nitrogen oxides, and mercuryplus carbon dioxide.

“This amendment is a common-sense approach to the problem of pollution coming from older, fossil-fuel burning plants that have been grandfathered under federal law,” said New Hampshire Governor Jeanne Shaheen. “The revised Clean Power Act employs proven national market-based strategies for cost-effectively reducing pollution and sets aggressive targets for reducing that pollution.”

Shaheen also stated that New Hampshire will continue to work with other states to pressure the U.S. Environmental Protection Agency to force other power plants in the country, particularly those in the Midwest, to reduce emissions, which she claims affect her state. “Thats why Congress needs to pass a rigorous national law on this issue,” Shaheen said (Union Leader, November 7, 2001).