A constructive scheme unravelled?

The Collapse of the Kyoto Protocol and the Struggle to Slow Global Warming

Council on Foreign Relations/Princeton University Press: 2001. 169 pp. $19.95, £12.95
Credit: DAVID NEWTON

The Collapse of the Kyoto Protocol is a serious, detailed, but ultimately paradoxical book. Apart from the introductory chapter — which contains some misleading caricatures about the Kyoto Protocol, the international agreement that set targets for greenhouse-gas emissions — it is written with an authority and detail that few can muster. It is also an absolutely independent assessment, beholden to no one. Yet the core conclusion reveals a fundamental inconsistency in the analysis.

David Victor gives short shrift to many of the sacred cows of US opposition to the protocol. Whereas most US criticisms centre on the lack of quantified commitments for developing countries, Victor argues the opposite, that the commitments should have focused only on the rich countries of the OECD. It would then have avoided the institutional difficulties raised particularly by including Russia and Ukraine. Most US economists argue that Kyoto's targets are too close, but Victor says they should have been closer, to minimize the uncertainties. Kyoto's targets cover many different gases; whereas opponents want the effort to focus more on gases other than carbon dioxide, Victor says the targets should have been restricted to carbon dioxide only, because it is hard to monitor the others properly.

The core of Victor's analysis is thus an institutional critique, particularly with respect to emissions trading — the option for countries to trade their emissions allowances. Trading, he rightly asserts, is an inevitable consequence of adopting emissions targets. Yet he believes that bringing money into emissions control will create incentives to cheat the system that will exacerbate the already difficult problems of monitoring and enforcement. He also claims that, although Kyoto's flexibilities would allow the United States to meet its commitment through investing in emission reduction projects or systems abroad, the foreign institutions concerned may not be able to guarantee that this will really reduce emissions elsewhere.

Victor's book is built on years of experience and commentary on the climate-change regime. He has always been a critic of the targets-and-trading approach, and sees the collapse of the recent talks in The Hague as vindicating his stance. But his final chapter marks an important evolution in his thinking. Previously, he argued for a soft-law approach based on national reporting and review — a climate equivalent of the OECD's economic review process. Here he acknowledges that something stronger is needed. The answer? A mix of targets-and-trading with a tax system that sets a limit on the market price of emission permits.

Putting a cap on permit prices and restricting the system to carbon dioxide in the OECD countries, he argues, would overcome the institutional difficulties he has identified. But one senses an air of desperation. By the end of the book Victor has argued himself into supporting many of the Kyoto Protocol's fundamental principles. The problems he identifies are not unmanageable, and the changes he seeks are relatively minor compared with the prospect of negotiating an entirely new system. But as a long-standing critic, he cannot bear to recognize that. He would rather tear down the house and start again according to his own specifications.

Despite all its important insights, its ultimate negativity — and political naiveté — makes this a depressing book. For example, the difficulty of monitoring methane emissions does not preclude keeping the Kyoto basket of gases for national targets, while domestic policies target carbon dioxide and other gases separately. Monitoring need not involve unacceptably intrusive international inspection; a reasonable degree of democracy and transparency could minimize the scope for abuse. Victor complains that no one compared the benefits of including methane against the costs of (imperfect) monitoring, but he makes no attempt to compare such costs with his own alternative of abandoning the protocol along with the whole idea of cost-effectiveness across the different gases.

Victor's analytical strength and peculiar negativity are nowhere more striking than in his treatment of liability. He knows that emissions trading can do much to solve the thorny problem of compliance, provided that the validity of acquired emission allowances is made dependent on the selling country complying with its commitments ('buyer liability'). The alternative of seller liability “invites disaster . . . it will fail because it is a fiction in international law”. With buyer liability, however, selling countries would not get a good price unless they could convince the countries interested in buying that they have both the systems and the intent to comply. Indeed, the case Victor presents for such buyer liability is unanswerable and unsurpassed in the whole of the literature. Yet he then meekly notes that the “international debate” (actually the US position) at The Hague conference supported seller liability. He could have castigated the previous US administration for its cowardice and lack of imagination on the issue, and argued passionately that the rescheduling of the suspended Hague talks offers the world a chance to get this cornerstone of international emissions trading on the right footing. Instead, he simply concludes that the protocol is hopeless, but that if the world starts again with his own scheme, it will get the liability rules right.

There are too many such inconsistencies between Victor's critique of trading in the protocol and his endorsement of trading according to his scheme. This is coupled with the casual assumption that the Kyoto deal can be completely rewritten. Victor vastly underestimates Kyoto's achievement in obtaining agreement and the centrality of the strong US target in return for extensive flexibilities. Indeed, despite its analytical depth, the book is marred — and perhaps the negativity explained — by viewing everything through a US lens. This results in scepticism about US implementation and cynicism about the rest of the world. For example, it is grossly misleading to assert that “no major government has a viable plan for compliance”. Ten years in advance of the Kyoto target period (2008–12), the United Kingdom is on track, and, like many other European governments, if its current plans prove inadequate, they will be strengthened and/or supplemented by using Kyoto's mechanisms to achieve compliance.

There are other peculiar inconsistencies. At the core of his attack on emissions trading is the assertion that negotiating allocations is the equivalent of agreeing on how to distribute money, and is hence impossible, or too weak. Yet Kyoto did reach agreement — Victor's claim that all this was an accident born of governmental ignorance is arrogant and does not hold water. And his complaint about Kyoto is that the targets are too strong. Indeed, in the United Nations, the European Union, and even in individual governments, negotiations regularly distribute budgets. All that is needed is the common understanding that there is a collective interest in agreeing, and that simply printing more money only leads to inflation.Victor has not factored in the politics of pressure in the hothouse of negotiating allocations. It is the achievement of having agreed in Kyoto that Victor wants to unravel.

Ultimately, Victor's book reminds me of Tolkien's Lord Denethor in The Lord of the Rings, who was given a crystal ball to see events around the world — but only negative ones. Overwhelmed with despair, he led his family to the pyre, decrying the ignorant fools who fought on. He burnt to death just as his allies were mustering for their final victory. David Victor's analysis is that of a fine mind overwhelmed by the problems he sees and led to a destructive conclusion.

Nevertheless, the book should be read by all policy-makers attempting to find international solutions to the climate problem. It identifies the important questions to be answered, and the big problems to be solved. There are answers, and ironically, some may be easier to find while the present US administration is withdrawn from the Kyoto negotiations. Do not follow Victor onto the pyre.

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  1. He is author of The Kyoto Protocol: A Guide and Assessment (RIIA/Earthscan, London; Brookings, Washington).

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    Grubb, M. A constructive scheme unravelled?. Nature 410, 750–751 (2001). https://doi.org/10.1038/35071158

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