Last December in Kyoto, Japan, the nations of the world reached agreement on an historic step to control greenhouse gas emissions which cause global warming. In order to secure an effective agreement that is environmentally strong and economically sound, President Clinton and Vice President Gore established three major objectives.

Our first objective -- realistic targets and timetables among developed countries -- had to be a credible step in reducing the dangerous buildup of greenhouse gases, yet measured enough to safeguard U.S. prosperity at home and competitiveness abroad. In the end, we secured the key elements of the president's proposal on targets and timetables. The agreement and related decisions include:

• The U.S. concept of a multi-year time frame for emissions reductions rather than a fixed, single-year target. The multi-year time frame will allow the United States, other nations, and our industries greater flexibility in meeting our targets. Averaging over five years, instead of requiring countries to meet a specific target each year, can lower costs, especially given an uncertain future. The averaging can smooth out the effects of short-term events such as fluctuations in the business cycle and energy demand, or hard winters and hot summers that would increase energy use and emissions.

• The U.S. specific time frame of 2008-2012, rather than earlier periods preferred by the European Union (E.U.) and others, gives us more time to phase in change gradually and deploy new technologies cost-effectively, and thereby to cushion the effects on our businesses and workers.

• Differentiated targets for the key industrial powers ranging from 6 percent to 8 percent below baseline levels (1990 and 1995) of greenhouse gas emissions, with the United States agreeing to a 7 percent reduction. When changes in the accounting rules for certain gases and offsets for activities that absorb carbon dioxide are factored in, the level of effort required of the United States is quite close to the president's original proposal to return emissions to 1990 levels by 2008-2012, representing at most a 3 percent real reduction below that proposal, and perhaps less.

• An innovative proposal shaped in part by the United States, allowing certain activities, such as planting trees, which absorb carbon dioxide -- called "sinks" -- to be offset against emissions targets. This will promote cost-effective solutions to climate change and encourage good forestry practices. This will be of special benefit to the United States, a major forestry nation.

• As proposed by the United States, the Kyoto Protocol covers all six significant greenhouse gases even though the E.U. and Japan proposed and fought until the last moment to cover only three. This was an important environmental victory -- also supported by many in our own industry -- because gases that other countries wanted to omit and leave uncovered, including substitutes for the now banned chlorofluorocarbons that endanger the ozone layer, are among the fastest growing and longest lasting greenhouse gases.

Our second broad presidential objective was to make sure that countries can use flexible market mechanisms to reach their targets rather than the mandatory "policies and measures," such as carbon taxes, favored by the European Union and many other developed countries.

The Kyoto Protocol enshrines a centerpiece of this U.S. market-based approach -- the opportunity for companies and countries to trade emissions permits. In this way, companies or countries can purchase less expensive emissions permits from companies or countries that have more permits than they need (because they have met their targets with room to spare). This is not only economically sensible, but environmentally sound.

By finding the least expensive way to reduce emissions, we will be providing a strong incentive for achieving the maximum level of emissions reductions at the least cost. The United States has had a very positive experience with permit trading in the acid rain program, reducing costs by 50 percent from what was expected, yet fully serving our environmental goals.

We went even further by achieving a conceptual understanding with several countries, including Australia, Canada, Japan, New Zealand, Russia, and Ukraine, to trade emissions rights with each other. This "umbrella group" could further reduce compliance costs.

MEANINGFUL PARTICIPATION OF DEVELOPING COUNTRIES

Our third objective was to secure meaningful participation of key developing countries, a concern that the Senate obviously shares, as evidenced by last summer's Byrd-Hagel Resolution. Global warming is, after all, a global problem that requires a global solution -- not only from the developed world but also from key developing countries.

Per capita emission rates are low in the developing world and will remain so for some time, and over 70 percent of today's atmospheric concentrations of greenhouse gases attributable to human activities are the result of emissions by the industrialized world.

At the same time, it is also true that by around 2015 China will be the largest overall emitter of greenhouse gases, and by 2025 the developing world will emit more greenhouse gases in total than the developed world. So from an environmental perspective, this problem cannot be solved unless developing countries get on board.

Some developing countries believe -- wrongly -- that the developed world is asking them to limit their capacity to industrialize, reduce poverty, and raise their standard of living.

We have made clear that we support an approach under which developing countries would continue to grow -- but in a more environmentally sound and economically sustainable way, by taking advantage of technologies not available to countries that industrialized at an earlier time.

The Kyoto agreement does not meet our requirements for developing-country participation. Nevertheless, a significant down payment was made in the form of a provision advanced by Brazil and backed by the United States and the Alliance of Small Island States. This provision defines a Clean Development Mechanism, which embraces the U.S.-backed concept of "joint implementation with credit." The goal is to build a bridge -- with incentives -- between developed, industrialized countries, and developing nations.

This new mechanism will allow companies in the developed world to invest in projects in countries in the developing world -- such as the construction of high-tech, environmentally sound power plants -- for the benefit of the parties in both worlds. The companies in the developed world will get emissions credits at lower costs than they could achieve at home, while countries in the developing world will share in those credits, and receive the kind of technology that can allow them to grow without ruining their environment.

The Clean Development Mechanism has great potential, but developing countries will need to do more in order to participate meaningfully in the effort to combat global warming. In determining what developing countries ought to do, we should be aware that the circumstances of developing countries vary widely.

Some today are very poor; their greenhouse gas emissions are negligible and are likely to remain so for the foreseeable future. Others, whose greenhouse gas emissions are not substantial, are relatively well off. Some are poor on a per capita basis, but their greenhouse gas emissions today rival or surpass those of the most advanced industrialized nations. Still others have already joined ranks with the industrialized world in the OECD but have not yet fully accepted the added responsibility for protection of the global environment that comes with their new status.

Recognizing our common but differentiated responsibilities and respective capabilities, it will be necessary to develop an approach that provides for a meaningful global response to the threat of global warming, while acknowledging the legitimate aspirations of developing countries to achieve a better life for their peoples.

To succeed, we will need to ensure that those responsible for a significant share of global emissions accept their responsibility to protect the global environment. We will also need to ensure that those who are able to do so contribute according to their capacities and stage of development.

FRAMEWORK FOR ACTION

Where do we go from here? While historic, the Kyoto Protocol is only one step in a long process. It is, in essence, a framework for action, a work in progress, and a number of challenges still lie ahead.

Rules and procedures must be adopted to ensure that emissions trading rights, joint implementation, and the Clean Development Mechanism operate efficiently and smoothly. The Kyoto Protocol establishes emissions trading, but leaves open the specifics of operations. We will work hard to ensure that the rules and procedures adopted enable emissions trading, joint implementation, and the Clean Development Mechanism to work smoothly and efficiently, thereby encouraging the private sector to engage.

We will also work closely with our industries to be sure they are satisfied that the emissions trading system that is developed is as efficient and effective as possible to meet their needs.

Most significant, we must work to secure the meaningful participation of key developing countries. We must be creative in initiating bilateral agreements. We have made a promising start with an agreement we reached with China during last fall's summit. We must also use regional and multilateral fora to achieve our objectives -- such as the Summit of the Americas process, in the Asian Partnership for Economic Cooperation (APEC) process, the president's trip to Africa, and the G-8 Summit in the United Kingdom.

We will put on a full-court diplomatic press to bring developing nations into a meaningful role in helping solve the global climate challenge. We will accept nothing less, nor would we expect the U.S. Senate to do so. As the president has indicated, the United States should not assume binding obligations under the protocol until key developing countries meaningfully participate in meeting the challenge of climate change.

Although the Kyoto Protocol was a historic step forward, more progress is necessary with respect to participation of key developing countries. It would be premature to submit the treaty to the Senate for its advice and consent to ratification at this time.

The administration also plans to continue to work with the international financial institutions to promote market-based energy sector policies in developing countries that will help reduce developing country greenhouse gas emissions. Multilateral development bank policies, including those of the Global Environment Facility, strongly influence international lending and private capital flows for energy, industrial, and transportation investments. Policies that favor market pricing, privatization, clean technologies, and environmentally friendly approaches will make implementing the Kyoto Protocol easier and will speed the growth of markets for new technologies that help reduce emissions in developing countries.

We will work with the international financial institutions themselves -- from the World Bank to the regional development banks -- and with other countries, especially developed countries, to achieve these goals in the coming years.

The Kyoto agreement does not solve the problem of global warming, but it represents an important step in dealing with a problem that we cannot wish away. A premature decision to reject the protocol would deprive us of the opportunity to complete its unfinished business. If we fail to take reasoned action now, our children and grandchildren will pay the price.

Global Issues
USIA Electronic Journal, Vol. 3, No. 1, April 1998