Air Date: Week of February 18, 2005

The Kyoto Protocol went into effect this week with great fanfare and Vijay Vaitheeswaran, energy and environment correspondent for the Economist magazine, talks to host Steve Curwood about how the signatory nations will meet their goals.

Transcript

CURWOOD: From the Jennifer and Ted Stanley Studios in Somerville, Massachusetts, this is Living on Earth. I'm Steve Curwood.

The Kyoto Protocol to limit the emissions of climate-changing gases from most industrialized nations is now international law. The treaty went into effect on Feb. 16, a major milestone in a process that began in Rio de Janeiro in 1992 with the creation of the UN framework convention on climate change. The United States and more than 150 other nations ratified the climate convention which called for voluntary reductions in carbon dioxide and other climate-changing gases but it quickly became clear that the voluntary approach wasn't working. So, in 1997 the convention met in Kyoto, Japan, and set mandatory limits, starting with industrial countries. But, it would take another eight years to ratify the treaty and put it into force and along the way, the U.S. pulled out of the deal. Still, aside from the U.S., Australia and Monaco, the world's more than 30 industrialized nations now have until 2012 to cut their climate-changing gases to levels below those since 1990.

With us now to explain just how they'll do that, is Vijay Vaitheeswaran, an environment and energy writer with The Economist magazine. He joins us from an energy conference in Houston. Welcome to Living on Earth, Vijay .

VAITHEESWARAN: Hello there.

CURWOOD: What about the businesses in these industrialized countries bound by the Kyoto Protocol. How are they responding to the challenge of Kyoto?

VAITHEESWARAN: The companies in Europe are particularly energized to deal with climate change because now for them it's the law of the land. They don't have a choice. As of January 1st, every company in Europe has a specific number, a target that they've been given, broken down, sector by sector, company by company, power plant by power plant, for how much greenhouse gases they can emit. And that makes it very easy for a manager to focus on it and the old adage at Harvard Business School is, ‘What matters, gets measured.' And, once you begin to think about it, they often find there's a lot of low-hanging fruit. That is, there are a lot of easy cuts they can make just by changing a process here or doing something over there a little more efficiently. And a lot of companies are finding they save money. Companies like BP, the big oil company, found that it was able to make big cuts in emissions savings and they actually saved money that went straight to the bottom line.

CURWOOD: Now of the industrialized countries that are bound by Kyoto, which of them are going to have the hardest time meeting their commitments and why?

VAITHEESWARAN: Of the industrialized countries that are inside Kyoto, what I call Kyoto land, we're really talking about Europe, Canada, Japan. The ones that are really going to have the hardest time, frankly, are the ones that are already very energy efficient. The best example is Japan. Japan has among the highest energy prices in the world. It's among the most energy-efficient economies in the world. It's going to be pretty hard for them to make more cuts and to meet their targets and that's why they are the keenest on flexibility mechanisms. That's the Kyoto buzzword for things like emissions trading and being able to plant a rain forest in Bolivia or trade for projects in Russia that reduce emissions over there and get credits back in Japan, where it might be more expensive to make those same reductions. All these kinds of flexibility mechanisms are, say, what the Scandinavian countries and what Japan will begin to rely on to meet their targets.

CURWOOD: Tell me about the ability to trade emissions so-called in the Kyoto Protocol. How exactly does that work and what kind of market; what kind of money are we talking about here?

VAITHEESWARAN: The emergence of a carbon-trading market is potentially a trillion-dollar market that's in the making. The closest analogy is probably America's acid rain trading market, what's called SO2 or sulfur dioxide. Listeners will remember, of course, when George Bush, the father, was president, the number one environmental issue wasn't global warming; it was acid rain. And, at the time, environmentalists really thought emissions trading, it's somehow immoral, it's trading the right to pollute because basically government tells companies, you can have the right to pollute up to a certain amount of SO2 in the case of acid rain or CO2 in the case of global warming. And, the companies that don't meet that target they either face a very heavy penalty or they can buy emissions credits from other companies who find it cheaper to make those cuts. History shows that actually works. Emissions markets work very well. We solved our acid rain problem, pretty much, at much lower cost, much greater efficiency than was previously thought. And, so, that's really what emissions-trading markets are. It's an American innovation that, frankly, America is now left out of in the case of global warming.

CURWOOD: Now, much has been made in the United States that developing countries aren't involved in the binding limits under the Kyoto Protocol. But, in the original United Nations framework convention, the original agreement that resulted in Kyoto, the U.S. agreed with the rest of the industrialized world that since developed nations had gained their wealth in part by using carbon-intensive techniques, that the developing world should get a break on the first round and that industrialized nations should reduce their emissions first. Now that the U.S. has changed its mind, how does the rest of the world feel about us reneging on this?

VAITHEESWARAN: The rest of the world is very unhappy about America's seeming demand that countries like China, India and other developing countries start making cuts now. The way they see it, and frankly I agree with them, is that there's a moral case for the rich countries to act first. We got rich while burning fossil fuels willy nilly and we enjoyed the benefits of prosperity of industrialization whereas there are still two billion people in the world living in absolute poverty without access to modern electricity or any of the conveniences that we take for granted. Nonetheless, if you're to look at it from the perspective of real politique. How do we actually break the impasse?

I think what's going to happen, for the next round of the Kyoto treaty, that is, after 2012 when the first commitment period ends, we're likely to see participation from some of the big developing countries and not the really poor sub-Saharan economies, but let's say the China, the Indias, the Brazils, the South Africas having some kind of token participation.

CURWOOD: Tell me, why do you think the United States isn't a part of the Kyoto Protocol at this point?

VAITHEESWARAN: I think, they were both, the Bush administration and the Clinton administration, misplayed their hand, in my view. Bush, of course, famously stomped out of the Kyoto treaty and the Europeans were very upset about this and the popular history says he's to blame; that's why we left Kyoto because he hates the environment. There may be truth in that, but, in fact, if you look at the history of the 1990s, even though Al Gore, our greenest vice-president ever, brought us into signing the Kyoto treaty, the Clinton administration didn't do anything to help us tackle greenhouse gases while they were in office.

So, by the end of the miracle economy of the ‘90s, when our economy was growing tremendously fast, what you found was by the time Bush came around, we would have had to have cut our emissions by a third. I mean, a whopping amount, a huge and painful amount, much more than Europe, if Bush had accepted the Kyoto treaty. So, in a sense, I think Bush was ideologically opposed to it, but there were some practical reasons relating to inaction from the Clinton team, as well.

CURWOOD: Vijay Vaitheeswaran is the energy and environment correspondent for The Economist. Thanks for taking this time with me today, Vijay.

VAITHEESWARAN: My pleasure.