IDENTIFICATION
LEGAL
CLUSTERS
GEOGRAPHIC
CLUSTERS
TRADE
CLUSTERS
ENVIRONMENT
CLUSTERS
OTHER
FACTORS
I. Identification
The United Nations Framework Convention on Climate Change (UNFCCC)
is an agreement that was reached by 165 nations in 1992. The participating
countries agreed to work together to combat global warming and climate
change. At the third meeting of the UNFCCC in December, 1997, 175
nations agreed to the Kyoto
Protocol. The Protocol sets
a legally binding agreement for 39 developed countries to reduce their
greenhouse gas emissions by 5.2 percent (using 1990 as the base year) for
the years 2008 to 2012. Specifically, the United States must reduce
emissions by 7 percent, the European Union by 8 percent, and Japan 6 percent
(Boukhari, 1998:12). The Protocol
does not mandate any reductions for developing countries. The treaty
provides that each country show progress towards that goal by 2005.
The treaty will enter into force after it is ratified by 55 countries, a total which must include developed countries representing 55 percent of carbon dioxide emissions. (UNFCCC, "84 Signatories...", 1999). The Protocol allows flexibility in meeting the reduction targets. Forestry that absorbs carbon emissions will count towards reduction, carbon permits may be traded between countries, and countries can receive credit for helping less developed countries limit the effects of carbon emissions. Supporters of Senate ratification of the Kyoto Protocol include organizations such as Greenpeace and the Environmental Defense Fund, the White House, and the International Climate Change Partnership that includes member companies such as General Motors and British Petroleum. The Protocol has been approved by the U.S. House of Representatives, but at this point ratification by the Senate appears improbable. Most senators in Congress oppose ratification (Fairbanks, 1999:15). The Senate has tied its approval to developing countries participation in the control mandates. Foreign officials from these developing countries have expressed doubts that the White House will be able to convince the Senate to honor the United States' own commitments, so they do not want to go out of the way and commit themselves (Judis, 1999:18). The only nations not subject to restrictions by the Protocol that have agreed to voluntary curb their emissions are Kazakhstan and Argentina (Fairbanks, 1999:15).
The UNFCCC points out that it is only fair that developed countries initially take on the burden of reducing emissions, exempting, at this point in time, developing nations. Historically, developed countries are the one mostly responsible for greenhouse gases. Currently, industrial nations account for 64 percent of carbon dioxide emissions (Srodes, 1998: 15). All the early industrializers such as Europe and the United States created their wealth by polluting the atmosphere, therefore they should have the largest role in cleaning it up. Developing countries have a right to economic development, even if it comes at a time period much later than developed nations. At this point in time, these poorer nations do not have the technological or economic resources to cope with the problem. If they are allowed to develop and prosper, they will achieve these resources, and be able to participate in the future fight against emissions reduction (UNFCCC "Understanding...", 1999).
The Kyoto Protocol has been receiving vast amounts of attention
in the United States from politicians, businesses, industries, interest
groups and organizations. This is because the Protocol has implications
for each of the aforementioned groups. There is a general consensus
that curbs on carbon dioxide emissions will impact domestic trade,
jobs, and consumers. Specifically, the agreement is expected to have
significant effects on the Chemicals, Petroleum Refining, Paper, Iron and
Steel, Aluminum, and Cement Industries. It will affect the entire
Energy Industry, with effects spilling over to the jobs and consumers connected
with it (Global Climate Coalition, 1999). Consequentially,
there are a vast number of interest groups associated with these industries
who oppose the Protocol. However, even the opponents of Kyoto
agree that something must be done to combat emissions problems. They
also agree that even if Kyoto is not ratified, there is likely to
be some sort of regulatory standard in the future regardless. This
attitude has prompted industries to lobby for legislation that may help
them with this dilemma.
A partial solution welcome to many of these interest groups would be S.547, the Credit for Voluntary Reductions Act, introduced in the Senate March 4, 1999 by Senator John Chafee. This bipartisan legislation addresses the concerns of many companies. Should the Protocol win ratification and take affect in 2008, companies want to be sure they get credit for any reductions they achieve before that time. The bill gives credits that can be financially valuable for early actions to control waste gases that Kyoto would strictly limit. It gives ton for ton credits to companies that can document reductions in their greenhouse gas emissions under various voluntary federal programs (Chafee, 1999). The legislation was immediately heralded by both concerned industries and environmentalists.
The
Global Climate Coalition (GCC) is an organization comprised of trade associations
and companies whose goal is to coordinate participation on global climate
change. One of its largest members (although the group has recently
collectively disbanded) is the American Automobile Manufacturers
Association. The GCC argues that ratification of the Kyoto Protocol
would cause redistribution of output, employment, and emissions from developed
to developing countries, harming significantly the six aforementioned energy
intensive industries (Global Climate Coalition, 1999).
The GCC cites various studies that have concluded that prices will rise
for U.S. consumers while wages will fall or jobs be eliminated completely
for workers whose employment is associated with the Energy Industry.
What the GCC does support is legislation such as S. 547, the promotion
of voluntary programs. "Voluntary programs let the marketplace dictate
the best way to meet environmental goals" (ibid.). The GCC asserts
that voluntary agreements are more effective because they encourage industry
innovation to address environmental problems and cooperation between
business and government. They also assert that environmental objectives
are achieved faster with voluntary programs than with mandates and
regulations. The recent proposal of S.547
seems to be an important
victory for the lobbying efforts of the GCC and its members.
An option available to businesses that is specified under the Kyoto Protocol is emissions trading. Emissions trading in part was developed to reduce the economic costs of the treaty. Emissions trading encourages countries to cut emissions below assigned levels so they can "sell" the difference. Trading allows companies who do not meet carbon dioxide emissions quotas to buy excess emissions certificates from those who do. A company can receive credit against its company's emissions limits by buying emissions rights from companies that have reduced emissions below their own limits. Or a company could receive credit for helping developing nations reduce their own emissions, such as by financing emissions reducing technology. Either way, trading can reduce the economic impact of emissions controls for developed countries (Fialka, 1998: A8). Trading entitles major energy consumers such as the United States, or countries such as Japan, where its expensive to cut emissions, to "buy" the right to pollute from others (Boukhari, 1998: 12). The United States is hoping to meet three quarters of its Kyoto requirements by buying permits from other countries (ibid.).
Emissions trading is something that also represents the influence of big business and domestic politics on treaty negotiations. The Clinton Administration delegates to the Kyoto summit, under presure from lobbying efforts and Congress, had to fight to allow emissions trading into the original agreement, as it was opposed by the European Union and Brazil (Paemen, 1998:28). This was seen as a major victory for the U.S. delegates. There are reasons why some countries oppose emissions trading. There is some fear that emissions trading will not decrease overall carbon dioxide emissions. There is also fear that trading will become a substitute to the alternative of countries and companies pursuing new technological advances in emissions reductions. On the other hand, some believe that trading can promote technological leadership and the development of international technology pools in efforts to attain more permits (ibid.).
Two more opponents to ratification of the Kyoto Protocol are the National Association of Manufacturers and the U.S. Chamber of Commerce. The two organizations have funded the Global Climate Information Project, and its thirteen million dollar media campaign opposing Kyoto (Judis, 1999: 17).
But there is an outpouring of money associated with the Protocol
on both sides of the fence. It is interesting to note that
some large businesses, who will be restricted by the Protocol's
standards and possible financially hurt should it be implemented, support
the treaty. Some of these supporters include General Motors, British
Petroleum, Monsanto, and United Technologies. General Motors was
previously a member of the Global Climate Coalition until the GCC adopted
their current position on the Kyoto Protocol. General Motors
realizes the growing importance for the need to do something about climate
change. It appears they are willing to take responsibility for their
part of the problem, even if it is at a financial cost to the company.
However, the portrayal of the company as an environmental crusader and
absorbing the costs of emissions reduction may be just as financially valuable
as opposing the standards and not implementing and reductions measures.
Public image can mean everything. John Williams, leader of General
Motors' climate issues team explained, "Our main direction is to be constructive
on this issue" (qt. in Fialka, 1998: A2).
There is much disagreement just over what ratification of Kyoto
really means, as numerous studies have been conducted by groups paid by
both pro and against parties to the Protocol. 
What
the exact numbers are concerning job loss, changing energy prices, the
amount of emissions that will actually be eliminated, and at what rate
emissions actually speed the deterioration of the environment, are in dispute.
The
Energy
Information Administration, part of the U.S. Department of Energy,
authored a report entitled "Impacts
of the Kyoto Protocol on U.S. Energy Markets and Economic Activity."
The EIA estimates higher energy prices, which in turn will reduce consumer
energy consumption and will change the amount and kind of resources used.
The EIA concludes that the cost of the Protocol to the American economy
will depend on the amount of permits that can be purchased internationally,
and on the number of projects to reduce emissions and develop sinks that
absorb greenhouse gases both in developing countries and on the domestic
front (Energy Information Administration, 1998).
In other words, at this time the effects, depending on various circumstances,
are immeasurable. The EIA examined six cases with different reductions
in carbon emissions, adding and subtracting different factors from each
case, and arriving at different conclusions ranging from best case to worse
case scenarios. A different study by DOE concluded that a national
investment in energy efficiency technologies can reduce U.S. emissions
whereby energy savings will equal costs. In essence, emissions reduction
achieved through technology improvements will not necessarily increase
the nation's energy bill (Global Climate Coalition,
1999).
Many opponents of the protocol emphasize the potential loss of thousands of U.S. jobs because they expect companies to relocate to developing countries to take advantage of the lack of emissions standards. Research published in a British journal, Energy Policy, estimated there would be 23,000 jobs lost in the U.S. aluminum industry and anywhere from 7,500 to 75,000 jobs lost in the chemical manufacturing sector (Anonymous, 1999: 32). A study by WEFA, the Wharton Economic Forecasting Associates, estimates U.S. job loss in trade related industries totaling 751,000 between 2001 and 2020 (Srodes, 1998: 14). They also estimate that U.S. aluminum smelters and paper producers will be forced out of business, petroleum refinery output would be reduced by 20 percent, and 30 percent of the chemical, steel and cement industries would be forced to move elsewhere (ibid.)
The above concern is basically the same concern of opponents of greater globalization and freer trade. During NAFTA negotiations, the United States harbored some of the same protests: jobs lost to the developing countries, certain industries being hurt, and the question of whether environmental standards will truly be improved. There is no doubt that globalization of markets hurts labor-intensive industries in developed countries, simultaneously having positive aspects for developing countries. In sum, the Kyoto Protocol may not be directly to blame for some of the negative impacts on the U.S. economy that some are claiming it will have. The negative impacts may merely be the result of the ever-changing world economy.
The Senate will not ratify the Protocol until it is amended to include the participation of developing countries in emissions reduction. Amendments mean putting in provisions to the international agreement that 175 countries did not agree to, the ever-present problem of U.S. foreign economic policy and its relation to treaty negotiations.
While it is too early to tell if S. 547
will pass, the bill seems like it would satisfy many of the participants
in the debate over the ratification of the Kyoto Protocol.
I spoke with Dan Dellich, the Committee Aid on Environment and Public Works,
which is chaired by John Chafee. Dellich believes that at this time
Chafee, although concerned about the environment, would oppose ratification
of the Protocol. The current problems with the agreement such
as the lack of enforcement provisions and developing country participation,
are too significant to be overlooked. Dellich asserts that the bill
is indirectly related to the Protocol, and Chafee sees it
neither as a substitution or as a stepping stone towards Kyoto's
ratification. The passing of S. 547 is expected to be difficult
because it is the first legislation of its kind, it will take a a lot of
effort to explain it to people, and "...because there is a lot of money
involved and a lot of politics involved" with it (Dellich,
1999). That statement reaffirms the power of domestic parties stemming
from their concerns with both domestic and international legislation.
II. Legal Clusters III. Geographic Clustersb. Geographic Site: North America
c. Geographic Impact: United States
IV. Trade Clustersb. Indirectly Related to Product: Yes, Many
c. Not Related to Product: No
d. Related to Process: Yes, Global Warming
Ramifications of Kyoto Protocol:
| Price Increase | |
| Natural Gas | 46% |
| Electricity | 23% |
| Heating Oil | 45% |
Energy consumption will be reduced
by 30%.
V. Environment ClustersType: NA
Diversity: NA
VI. Other FactorsBoukhari, Sophie. "Pollution on the Cheap." The Unesco Courier. Oct 1998: 12-13.
Chafee, John. "Credit
For Voluntary Reductions Act." S. 547. 106th Congress.
Washington: 4 March 1999.
(http://thomas.loc.gov)
Dellich, Dan. Committee Aid to Senate Committee on Environment and Public Works. Telephone Interview. Mar 22, 1999.
Energy Information Administration. "Higher Energy Prices, Cuts in Fuel Use May Be Needed to Comply with the Kyoto Protocol." Oct 9, 1998. (http://www.eia.doe.gov).
Fairbanks, Shalen. "Global Warming." The Amicus Journal. Spring 1999: 15.
Fialka, John J. "Global-Warming Treat's Opposition Is Strained." The Wall Street Journal. Oct 30, 1998: A2.
Global Climate Coalition. "Climate Economics." Mar 1999. (www.globalclimate.org/economic.htm).
Judis, John B. "Global Warming and the Big Shill." The American Prospect. Jan/Feb 1999: 16-19
Paemen, Hugo. "Cautious Optimism After Kyoto." Europe. Feb, 1998: 28-29.
Srodes, James. "Global Warming, Trade Chilling." World Trade. Apr, 1998: 14-15.
UNFCCC (United Nations Framework Convention on Climate Change). "84 Signatories to the Kyoto Protocol." Mar 16, 1999. www.unfccc.de
UNFCCC (United Nations Framework Convention on Climate Change). "Understanding CLimate Change: A Beginner's Guide to the UN Framework Convention." 1999. www.unfccc.de
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