Entropy and Sustainability (08) The Kyoto Protocol
How long can our civilization flourish? Will our civilization remain thousands of years hence? During the Cold War the greatest threat to humans was nuclear annihilation, but today it is the environmental problem. Many people are afraid that global warming might collapse our civilization. In 1997, COP3 adopted the Kyoto Protocol to reduce greenhouse gas emissions, but the U.S. and Australia have declined to ratify the agreement. It has turned out a failure. In this page, I analyze the problems of the Kyoto Protocol and propose an alternative feasible framework that reduces greenhouse gasses.
1 : Problems of Unfair Burden Sharing
The Kyoto Protocol assigned mandatory reduction of greenhouse gas emissions to Annex I countries (most of the industrialized nations and some nations in transition from communism), as Article 3 .1 provides.
1. The Parties included in Annex I shall, individually or jointly, ensure that their aggregate anthropogenic carbon dioxide equivalent emissions of the greenhouse gases listed in Annex A do not exceed their assigned amounts, calculated pursuant to their quantified emission limitation and reduction commitments inscribed in Annex B and in accordance with the provisions of this Article, with a view to reducing their overall emissions of such gases by at least 5 per cent below 1990 levels in the commitment period 2008 to 2012.
The target rate ranges between –8% and +10%. There is no universal and fair rule for it. Why is the target of Australia +8%, whose carbon dioxide emission per capita is 16.2 metric tonnes, while that of Switzerland is –8%, whose carbon dioxide emission per capita is only 6.3 metric tones?
Another problem is that developing countries were exempt from the emission reduction target. Succeeding to the Berlin Mandate in 1995, UNFCCC did not introduce any new commitments for the countries that are not included in Annex I, taking into account “their common but differentiated responsibilities” under Article 10.
In 2006, China topped the list of carbon dioxide emitting countries, surpassing the USA. The global carbon dioxide emissions from fossil fuel use increased by about 2.6%, mainly due to a 4.5% increase in global coal consumption, of which China contributed more than two-thirds. The target of advanced countries is to reduce greenhouse gasses by 5.2% below 1990 levels by the period between 2008 and 2012, but, if developing countries continue emitting greenhouse gasses at today’s speed, they will increase by 30% in total.
Developing countries, on the ground of IPCC Assessment Report, insist that advanced countries are to blame for having accumulated carbon dioxide since the Industrial Revolution, but I am doubtful of this accumulation theory. It was mainly the resurged solar activity that caused warming since the Industrial Revolution. That is why there was a high correlation between surface temperature and solar activity till the mid 20th century. The greenhouse gasses have raised surface temperature independent of solar activities since the mid 20th century, that is to say, since modernization spread over the entire world. So, we cannot say developing countries have no responsibilities for global warming.
In this sense, the US was right to request some commitments of developing countries. The Byrd-Hagel Resolution at the Senate in 1997 declared that
the United States should not be a signatory to any protocol to, or other agreement regarding, the United Nations Framework Convention on Climate Change of 1992, at negotiations in Kyoto in December 1997, or thereafter, which would–(A) mandate new commitments to limit or reduce greenhouse gas emissions for the Annex I Parties, unless the protocol or other agreement also mandates new specific scheduled commitments to limit or reduce greenhouse gas emissions for Developing Country Parties within the same compliance period, or (B) would result in serious harm to the economy of the United States[…].
In order for the US to join the framework, the problems of economic damage and the commitment of developing countries must be solved.
2 : Problems of Flexible Mechanisms
Because the marginal cost of reducing greenhouse gasses in advanced countries is higher than that in developing countries, it is economical to reduce the latter instead of reducing the former. So, the Kyoto Protocol introduced three market-based mechanisms that are intended to increase flexibility in meeting emissions targets, namely joint implementation, clean development mechanism and emissions trading.
The joint implementation and the clean development mechanism are the two project-based mechanisms for the First World countries helping to reduce greenhouse gasses in the Second and Third World countries and receiving credits for it. The Article 6.1 of the Kyoto Protocol describes joint implementation as follows.
1. For the purpose of meeting its commitments under Article 3, any Party included in Annex I may transfer to, or acquire from, any other such Party emission reduction units resulting from projects aimed at reducing anthropogenic emissions by sources or enhancing anthropogenic removals by sinks of greenhouse gases in any sector of the economy […]
The Article 12.2 and 12.3 of the Kyoto Protocol defines clean development mechanism as follows.
2. The purpose of the clean development mechanism shall be to assist Parties not included in Annex I in achieving sustainable development and in contributing to the ultimate objective of the Convention, and to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments under Article 3.
3. Under the clean development mechanism:
(a) Parties not included in Annex I will benefit from project activities resulting in certified emission reductions; and
(b) Parties included in Annex I may use the certified emission reductions accruing from such project activities to contribute to compliance with part of their quantified emission limitation and reduction commitments under Article 3, as determined by the Conference of the Parties serving as the meeting of the Parties to this Protocol.
The emission trading is a non-project-based mechanism that deals with emission credits in a cap and trade market. The Article 17 of the Kyoto Protocol mentions emission trading as follows.
The Conference of the Parties shall define the relevant principles, modalities, rules, and guidelines, in particular for verification, reporting and accountability for emissions trading. The Parties included in Annex B may participate in emissions trading for the purposes of fulfilling their commitments under Article 3. Any such trading shall be supplemental to domestic actions for the purpose of meeting quantified emission limitation and reduction commitments under that Article.
Now, I find two problems in the flexible mechanisms, namely the problem of sinks and the problem of additionality.
Although the mechanisms aim at reducing anthropogenic emissions by sources and enhancing anthropogenic removals by sinks of greenhouse gases, they underestimate the latter.
The Marrakech Accords in 2001 admit the sinks credits from clean development mechanism up to 1 percent of their assigned amount in the first commitment period of 2008-2012. There is still no recognized procedure for validating sink projects of joint implementation.
Moreover, the credits for afforestation or reforestation by means of the flexible mechanisms are only temporary. New credits must be charged, when planted trees are felled or the project ends. This rule sounds absurd because carbon included in trees is not always released into the air as carbon dioxide, as soon as they are felled or die. Wood keeps containing carbon for a long time if it is used as building material. Acidic conditions often prevent plant material from decaying fully, so that the plant material becomes peat and finally coal.
Of course, carbon of wooden building materials and coal are released into the air, if they are burned. But if you can say, “Afforestation does not really sink carbon dioxide, because it will be eventually released into the air”, you must say by the same logic, “Burning fossil fuels does not really emit carbon dioxide, because it will eventually sink into the sea or plants.” Issuing permanent credits to no emissions and temporary credits to sinks is unfair.
Even if you do not release carbon dioxide into the air, you cannot reduce its rate in the air. If you sink carbon dioxide and do not emit it, you can reduce its rate in the air. Taking into consideration this difference, we should issue permanent credits for both sinks and no emissions; that is to say, the credits for sinking and fixing carbon dioxide should be twice as valuable as those for no emissions. Any way I cannot agree with UNFCCC on underestimating sinks.
Another problem with the flexible mechanism is additionality. The Article 6.1 (b) of the Kyoto Protocol provides that the joint implementation should bring about “a reduction in emissions by sources, or an enhancement of removals by sinks, that is additional to any that would otherwise occur” and the Article 12.5 (c) provides that the reduction in emission by a clean development mechanism project should be “additional to any that would occur in the absence of the certified project activity.”
The Article 12.3 (a) says, “Parties not included in Annex I will benefit from project activities resulting in certified emission reductions” but the condition of additionality turn the scale against developing countries obtaining such an extra benefit, because a project becomes less likely to obtain credits, the more benefits other than reduction in greenhouse gasses the project promises.
Japanese government proposes “co-benefits approach” that not only reduces carbon dioxide but also contributes to local benefits so that OECD countries can apply their ODA budget to attain the goal of the Kyoto Protocol.
Ministry of the Environment of Japan gave the following examples of co-benefits approach. The Metro Manila Transport Project by the Japan Bank for International Cooperation (JBIC) helped the Manila capital region to increase the mobility of passengers and raise logistics efficiency, while decreasing transport induced air pollution substances such as SOX (3.0%), NOX (0.6%), SPM (1.7%) and CO2 (4.2%). The Project by the Japan International Cooperation Agency (JICA) & JBIC aimed to prevent pollution at several industrial plants in Guiyang in China. SO2 (80.54% / 163,500 t), PM (66.37% / 57,080 t), as well as CO2 emissions (1,067,400 t) were reduced by the project.
Though European countries do not support Japan’s proposal, we should reconsider the condition of additionality and the way of ODA to make the reduction in greenhouse gasses feasible and the U.S. and Australia join international cooperation.
3 : An Alternative Solution
The target rate to 1990 baseline is arbitrary and unfair. To do all participants justice, we should levy a Pigovian tax on the emission of greenhouse gasses and share the cost of global warming in proportion to emissions. The Pigovian tax can internalize external diseconomies inside the market in a clear and fair way and effectively reduce the emissions. You can levy a negative tax (subsidy) on sink source of greenhouse gas.
Introducing this Pigovian tax does not cause damage to the national economy as a whole, if the government cuts other taxes, for example, income tax, in compensation for it. Many states levy tax on income because of easiness, but this easy taxation has an undesirable consequence. Taxation functions as a penalty. The income tax encourages deficit-ridden management and results in a waste of resources. In this respect, tax based on business size is better than tax based on income and emissions of greenhouse gasses should be assessed as a kind of business size.
The Pigovian tax can effectively mitigate, not only global warming but also air pollution, water contamination, and other environmental issues. In order to prevent the export of pollution to developing countries and solve the environmental problems globally, developing countries as well as advanced countries should introduce the Pigovian tax.
Developing countries might refuse the new restriction or drop out of the framework, because UNFCCC promised not to introduce any new commitments for developing countries. To stop dropout, it would be effective not to offer the dropouts Official Development Assistance (ODA) and offer participants the assistance that brings about more benefits than mere environmental protection.
The definition of ODA is
Flows of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective, and which are concessional in character with a grant element of at least 25 percent (using a fixed 10 percent rate of discount).
It is the international version of the welfare state. Although the welfare state policy has been abandoned among advanced countries since 1970s, they still keep ODA. Was the previous ODA really beneficial to local inhabitants? The investment in infrastructure, such as dam or road construction, destroyed natural environment and beneficial to the donor country that try to advance into the market of the aided country.
Is the humane assistance in medicine, food and education beneficial to developing countries, then? The more advanced countries aid developing countries in medicine, food and education, the larger the population of the developing countries relying on the aid. The increased population decreases resources and ends up with more poverty. The further endeavor of advanced countries to rescue them from the poverty just forms the vicious cycle. That is why ODA has not improved the quality of life in developing countries.
The only ODA programs that are still necessary are the projects for sustainability. Because the market economy by itself cannot solve the environmental problems, the intervention by the government in it can be justified. We must take into consideration that developing countries prefer co-benefits projects to pure environmental projects. The co-benefits approach does not alter the original objective of ODA, that is to say, “the promotion of the economic development and welfare of developing countries”.
At the previous divisions, I pointed out five problems of the Kyoto Protocol.
- arbitrary and unfair target rate
- no commitment of developing countries
- economical damage
- underestimation of sinks
- difficulties of co-benefits approach
The introduction of emission tax to every participant and the co-benefits approach to ODA can solve all these problems. The Pigovian tax is universal and fair. It estimates sink sources as well as emission reduction of greenhouse gas. Because of co-benefit approach developing countries are willing to join the framework. The advanced countries can limit the economic burdens within the budget of ODA. I am sure the US and Australia can join this framework.
4 : References
- United Nations (1998) The Kyoto Protocol to the United Nations Framework Convention on Climate Change. Article 3.1.
- Netherlands Environmental Assessment Agency (2007) China now no. 1 in CO2 emissions; USA in second position.
- Robert Byrd & Chuck Hagel (1997) Expressing the sense of the Senate regarding the conditions for the United States becoming a signatory to any international agreement on greenhouse gas emissions under the United Nations, the 105th Congress of the US Senate.
- United Nations (1998) The Kyoto Protocol to the United Nations Framework Convention on Climate Change. Article 6.1.
- United Nations (1998) The Kyoto Protocol to the United Nations Framework Convention on Climate Change. Article 12.2 and 12.3.
- Ministry of the Environment & Overseas Environmental Cooperation Center, Japan (2007) Co-benefits Approach – Development Needs-oriented Efforts to Address Climate Change and CDM, p. 3.
- International Monetary Fund (2003) External Debt Statistics: Guide for Compilers and Users, Appendix III, Glossary, IMF, Washington DC.