U.S. Criticized for Not Signing Kyoto Protocol – Business Could Suffer

Renewable energy companies in the United States could suffer if that country does nothing to reduce greenhouse gas emissions.

ARLINGTON, Virginia 2002-02-21 [SolarAccess.com] “U.S. firms that specialize in emission reduction technologies (eg: renewables or energy efficiency) could be disadvantaged if the United States does not take domestic measures to reduce emissions, since this would reduce home market opportunities,” says the Pew Center on Global Climate Change in an analysis of the U.S. decision to not sign the Kyoto Protocol. “The extent of this loss will depend on the level of emission reduction measures undertaken by the United States,” says author Daniel Bodansky, a professor at the University of Washington and former Climate Change Coordinator at the U.S. Department of State. “In addition, these firms may find it more difficult to take advantage of business opportunities created by Kyoto if individual parties attempt to limit access to the Kyoto mechanisms by entities of non-parties.” Recent international meetings in Bonn and Marrakech have adopted “generally sound rules” regarding the Kyoto mechanisms, explains the document, but the implications for U.S. business will depend more on domestic policies than on the Kyoto rules which merely establish a general framework for national implementation. The analysis assumes a scenario in which the United States does not take significant domestic action to control emissions. U.S. firms could be affected in several ways if the rest of the world abides by the Kyoto protocol without them, including regulation of GHG emissions by U.S. subsidiaries in participating countries, thereby subjecting U.S. multinationals to reduction targets but denying advantage of low-cost reduction opportunities since Kyoto does not recognize emission reductions achieved by non-parties. “Kyoto could have several competitiveness implications,” despite any advantage that U.S. companies would tend to gain in relation to foreign competitors in energy-intensive industries. The U.S. refusal to join Kyoto could disadvantage domestic firms with technologies to reduce GHG emissions by limiting their opportunities to develop experience and relations under the Kyoto system. “In addition, the U.S. refusal to join Kyoto could lead to negative public attitudes towards U.S. companies and even consumer boycotts, as well as to trade measures by Kyoto parties against non-parties,” it warns. The U.S. would not be able to shape the detailed rules, which “could become important should the United States decide to join the Kyoto system in the future.” “Kyoto will benefit individual companies that provide technologies to reduce emissions – for example, companies that produce wind turbines, solar panels, nuclear power plants, or more energy-efficient products,” it concludes. The European Parliament has already recommended that the World Trade Organization prevent non-parties from gaining unfair competitive advantages, “so the threat of trade measures against the United States is more than merely hypothetical.” Unless U.S. companies accept Kyoto-like targets, “they may also have difficulty raising capital from socially-responsible investment firms, and their products may not be able to receive certification as ‘green’ products,” it warns. The document outlines a number of options for the United States to adopt a domestic climate change policy involving significant emission reductions, including a domestic cap-and-trade system. The Pew Center on Global Climate Change is a non-partisan organization that provides information for the discussion of global climate change. It was established in 1998 by the Pew Charitable Trusts, and is managed by Eileen Claussen, former U.S. Assistant Secretary of State. It has 37 corporate members, including many from the Fortune 500 list.
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