Kyoto as an Opportunity

The Kyoto Protocol became official on February 16, offering the world a fresh start on an issue marked by international divisiveness for the last 15 years. Attention now turns to the crucial next steps: meeting the Kyoto targets and forging a new agreement to cover the period beyond 2012.

The challenge ahead is two-fold: to bring the world’s climate-altering superpowers — China, India, and the United States, none of which are covered by Kyoto — into the next round of commitments; and to usher in the kind of transformation of the world energy system that is required to prevent a climate catastrophe in the decades ahead. Only if climate change is turned into an economic opportunity as well as an environmental challenge can the needed investments and innovation be mobilized. The premise that nearly sank the Kyoto Protocol is that climate change is primarily about emissions control. While it is true that carbon dioxide is a gas that is “emitted” when fossil fuels are burned, the regulatory paradigm has led climate negotiators into an “I win — You lose” framework plagued by endless delays, commitments that are in some cases unrealistic, and a prospective multi-billion dollar market in “hot air” created by the overly generous emissions allocations that some countries received in Kyoto. The climate problem will not be solved one smokestack at a time. Rather, the challenge is to create a new energy system that will not only protect the climate but will be economically superior to the one in place today. If saving the climate becomes a race for who dominates one of the fastest growing sectors of the 21st century economy, recalcitrance and delay will no longer be viewed by climate negotiators as the keys to “success.” This may sound like a pipe dream to those who are still feeling bruised by the climate wars of recent years, but burgeoning markets for energy efficient technologies such as solar panels, wind turbines, and bio-fuels show what can happen when strong national policies are enacted. The global market for renewable energy technologies topped $25 billion in 2004, and is already reducing greenhouse gas emissions in countries such as Germany and Spain. And in many markets, wind and bioenergy are already less expensive than fossil fuels. The Bush Administration has recognized the need for new technology to address the climate problem, but has focused on long-term government R&D as its policy priority. But most of the needed technology lies in the private sector, which will do the needed research if markets justify it. Government’s role is to help those markets work more efficiently, as some European governments have begun to do. Among the challenges facing policy makers is replacing the antiquated subsidies for fossil fuels with targeted subsidies for new technologies that are scheduled to sunset as they become competitive. And a wide array of market impediments — from tariffs on bio-fuels to antiquated electric utility laws — will need to be reformed. The challenge facing climate negotiators is how to translate the need for a transformation in the energy system into a meaningful, binding international agreement. This will almost certainly require sector-by-sector commitments and greatly increased levels of cooperation and trade in the relevant technologies. The next opportunity for progress comes at the G8 Summit in Scotland this summer, where Summit host Tony Blair has put climate change at the center of the agenda. The first thing for Blair and others to recognize is that five countries and one multinational coalition — the European Union — represent 60 percent of total greenhouse gas emissions and are central to progress. Of the six, the E.U., Japan, Russia, and the United States will be at the G8 Summit, and the other two — China and India — should be invited. Between them, this group of countries has the ability to put the global energy system on a new track, and to drive the technology that will benefit the world as a whole. Ultimately, a global agreement will be needed, but consensus among this smaller group can provide the kind of leadership in both the North and South that will make broader progress possible. The advent of the petroleum age a century ago unleashed an unprecedented economic engine, lifting living standards throughout North America and Europe. The advent of a post-petroleum economy in the next few decades will be no less transforming — but this time on a global basis. Kyoto’s ability to survive the near-fatal attacks of the Bush Administration is testimony to the urgency of the climate problem and the widening consensus that it must be responded to. But only an agreement that turns climate change from a burden into an opportunity will ensure that Kyoto’s promise is fulfilled. About the Authors… Christopher Flavin is president of WorldWatch Institute. Janet L. Sawin is Senior Researcher and Director, Energy and Climate Change Program for WorldWatch Institute.


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