Lessons from Kyoto

In December, world leaders will meet in Copenhagen to thrash out an international agreement on global climate change. This comes after the Kyoto agreement in 1998 that failed to carry US support and was, as a result, largely watered down before implementation.

There are many reasons for the failure of Kyoto. The US Senate made it clear from the start that it would not ratify anything that did not include developing countries and that imposed large short-term costs. Bush's outright dismissal of Kyoto once in office and failure to outline any other options also forced Europe to push ahead with Kyoto at any costultimately the concessions to Japan and Germany resulted in targets that in many countries would already have been met. The lack of biting enforcement mechanisms too made any costly commitment look risky to most.

Right now there are many alternatives on the table for Copenhagen that aim to fix these flaws. On including developing countries, many advocate a GDP threshold in which developing countries agree in advance to become party to the cap and trade or tax system, but benefit from technology transfer and trade without emission caps in the meantime. Another proposal is to rely on global taxes but allow developing countries to phase them in over a longer time period. Regarding concessions, one proposal argues for allocation of cap and trade permits at business-as-usual rates to all countries and create an international organization to buy and remove permits over time. This would mean that countries can progress at any pace but be paid for quicker progress. There are also a number of enforcement alternatives out there. One idea is to create 'buyer liability' laws in each country that hold any purchaser of carbon credits liable if the person they purchased them from does not reduce emissions. Others argue for trade restrictions as an enforcement mechanism but this is a messy and costly process.

All of these alternative proposals are very interesting and potentially go some way in ensuring that Copenhagen is not another failure but perhaps miss the point. Scott Barrett argues that the mentality underlying all these options of setting emission targets and timelines dooms them to failure. Without strong enforcement, he shows, a treaty is incapable of sustaining a cooperative climate policy, except by allowing parties to de little more than they would have done without a treaty. Because there are no good enforcement mechanisms, he argues that the agreement must be largely self-enforcing or in every country's best interest. In the short-term there is never going to be a carbon reduction target and timeline that satisfies this requirement, largely because the costs fall on countries that have least to lose.

Barrett's alternative is to broaden then deepen. Firstly, he encourages bringing most counties into a win-win technology and R&D group. No targets, no timelines, just a commitment to developing the technologies needed to cut substantial reductions. Secondly, he argues that these technologies can be incorporated into national mandatory requirements because, on a technology by technology basis, they will appear in each country's best interest.

By Barrett's measures, the best thing that can emerge from Copenhagen will be a R&D agreement and international fund. For someone like me who really wants to see more, it is scary that standards have been lowered so far. But the really scary thing is just how intelligent Barrett's assessment of the situation is. The enforcement and participation problems are undoubtedly the underlying causes of the Kyoto collapse. I do not see any robust solutions, but I also don't believe that the inevitable result should be lowered standards.

Sorry for the slightly technical nature of this article but it is an important topic and I hope that we can share ideas and questions here over the next few months.