Stick with Kyoto fees and marketable permits is of secondary economic importance. Over 2,500 economists have signed a letter stating, “In order for the world to achieve its climatic objectives at minimum cost, a cooperative approach among nations is required-such as an international emissions trading agreement." That is precisely the logic behind, and the promise of, the Kyoto agreement. KYOTO'S VIRTUES Kyoto is still the best basis for action, for three reasons. First, the protocol adopted differentiated targets, recognizing that each country must address climate change based on its own national energy profile and circumstances a particularly crucial point for developing countries. Second, Kyoto lets countries pursue their own paths to lower emissions. In one country, that might be an energy tax. In the United States, President Clinton has called for a domestic trading system (to begin by 2008) of the kind that has worked so well, both environmentally and economically, in reducing acid rain. Third, Kyoto embraces market-based international mechanisms. As noted above, emissions trading is central to achieving Kyoto's goals at modest cost. In addition, the Clean Development Mechanism-which will allow companies in the industrialized world to invest in "clean technology" projects in developing countries and share the credits from reduced emissions has the potential both to lower costs for U.S. companies and to encourage the transfer of environmentally friendlier technology to developing nations. Cooper argues that the Kyoto approach cannot work without the participation of developing countries, who will not join in because they will agree neither to an allo cation of emission rights nor to constraints on their economic growth. He is half right. Kyoto cannot succeed, either environmentally or politically, unless key developing countries participate. Climate change is a global problem and requires a global solution. Indeed, the president has stated clearly that he will not submit the treaty for ratification without participation by key developing countries. But Cooper is overly pessimistic about the chances that developing countries will join in. Despite the difficulties at Kyoto, several key developing countries did indicate an interest in participating. A comprehensive diplomatic strategy will engage still more. To be sure, winning over developing nations will not be easy, but Kyoto contains several incentives for them. Efforts to mitigate climate change will help address their more immediate pollution problems. Furthermore, developing countries are the most vulnerable to the dangers of global warming and the least able to protect themselves. Perhaps most important in the short run, the worldwide effort to address global warming can help developing countries economically as well as environmentally. Whenever developing countries take on Kyoto commitments, they will be able to participate in the international emissions trading system, reducing costs and perhaps even generating revenue. Kyoto can help developing nations grow sustainably, without constraints, and by a different energy path than that of countries that industrialized earlier. Sustainable economic growth must be environmentally sound. Global warming is not a problem we will solve in this decade or this generation. The innovative Kyoto framework should be built on, not discarded.2 Kyoto's Unfinished Business Henry D. Jacoby, Ronald G. Prinn, TAKING THE LONG VIEW ON GLOBAL WARMING EVEN WELL-INFORMED observers disagree about what the Kyoto Protocol on Climate Change will accomplish. Some gaze at its text and see a battle won. They cheer the fact that the generally richer nations participating in the protocol agreed to cut their collective emissions of the greenhouse gases that cause global warming to about five percent less than 1990 levels by early in the next century. These optimists also applaud features of the Kyoto accord designed to hold down the costs of achieving these reductions. In computing their emissions, nations can include changes in the six major greenhouse gases emitted because of human activity, not just carbon dioxide, the most important of the six. In addition, countries can factor in reduced carbon dioxide levels from changes in land use and new forestry techniques that take the gas out of the atmosphere. Groups of participating nations may comply jointly and reallocate commitments among themselves, as the European Union (EU) plans to do within a European "bubble," and there HENRY D. JACOBY is the William F. Pounds Professor of Manage- Kyoto's Unfinished Business is agreement in principle to some form of emissions trading. Joint implementation, under which agents in one country can get credit for reductions they achieve in another, is to be permitted between participating nations, and a new Clean Development Mechanism will provide access to these opportunities in nonparticipating countries, mainly in the developing world. Finally, emissions targets are not rigidly tied to a single year, but to averages over a five-year "commitment period" from 2008 to 2012. Pessimists, on the other hand, see Kyoto as a costly defeat. They note that there is no solid proof that human-induced climate change will occur or that its adverse effects would be serious were it to happen. At the same time, the expense of reducing greenhouse gas emissions to meet the Kyoto targets will be substantial, and pessimists believe that the effort will make participating countries less competitive. In the darkest interpretation, the Kyoto agreement is a pact among rich nations that will cripple their economies for decades to come, made simply because today's political leaders needed to burnish their environmental credentials. Neither of these schools of thought is correct. Still a third group, whose views are much closer to the mark, believes that Kyoto mainly postpones much-needed work on what may prove a very serious long-term challenge. To them, Kyotó is a quick political fix for a problem created at the First Conference of Parties to the Climate Convention held in Berlin in 1995. The so-called Berlin mandate instructed negotiators to seek short-term, legally binding targets and timetables for emission control for participating countries only. In the run-up to Kyoto, many leaders publicly committed themselves to this idea. Not surprisingly, avoiding embarrassment on this score became the dominant focus of the negotiations. As a result, this group argues, the Kyoto agreement allows political leaders to declare success, but it does not address the larger climate issues at stake. Even worse, these skeptics fear that by following the Berlin mandate, negotiators at Kyoto may have made it harder, not easier, to meet the long-term challenge. Now the next decade may be spent haggling over these short-term commitments, thereby diverting attention from more important century-scale issues and postponing the involvement of the developing world. The Kyoto agreement might fail to meet Henry D. Jacoby, Ronald G. Prinn, and Richard Schmalensee even its immediate goals if the lack of domestic support in the United States prevents ratification, which in turn would rationalize inaction by other participating nations. The entire international response to climate change could be discredited, thus increasing the difficulty of collective action in the future, no matter how serious the problem turns out to be. To some degree, these widely divergent analyses of the Kyoto achievement reflect differing interpretations of its text, key parts of which are still the subject of strong and sometimes bitter international disagreement. Some of these points will be taken up again at the Fourth Conference of the Parties in November, but others may take years to resolve. What is in dispute is not merely the Kyoto text, of course, but the underlying science and economics of global warming. Above all, for the journey from Kyoto to succeed, policymakers will need to spend more time thinking of the long term. A GLOBAL WARMING PRIMER TO START with the basics, climate change can be driven by an imbalance between the energy the earth receives from the sun, largely as visible light, and the energy it radiates back to space as invisible infrared light. The "greenhouse effect" is caused by the presence in the air of gases and clouds that absorb some of the infrared light flowing upward and radiate it back downward. The warming influence of this re-radiated energy is opposed by substances at the surface and in the atmosphere that reflect sunlight directly back into space. These include snow and desert sand, as well as clouds and aerosols. (Aerosols are tiny, submicroscopic solid or liquid particles suspended in the air, such as smoke and fog.) Water vapor and clouds, which typically remain in the atmosphere for a week or so, are responsible for most of the re-radiated infrared light. Central to the climate change debate, however, are less important but much longer-lasting greenhouse gases, most notably carbon dioxide. Atmospheric concentrations of carbon dioxide and other long-lived greenhouse gases have increased substantially over the past century. As this has happened, the flow of infrared energy to space has been reduced, so that, all else being equal, the earth receives slightly more Kyoto's Unfinished Business energy than it radiates to space. This imbalance tends to raise temperatures at the earth's surface. These aspects of the greenhouse effect are not controversial. It is also generally accepted that emissions of carbon dioxide from the combustion of fossil fuels (primarily coal, oil, and natural gas) are the most significant way humans can increase the greenhouse effect, and that this emitted carbon dioxide remains in the atmosphere for a long time, on the order of a century or so. What is much more uncertain, and the cause of serious scientific debate, is the response of the complex system that determines our climate to changes in the concentrations of greenhouse gases in the atmosphere. Some poorly understood processes in the climate system tend to amplify the warming effect of greenhouse gases, while others, equally poorly understood, tend to counteract or dampen it. Any global warming will likely be delayed because it takes a lot of heat to warm the oceans, but it is not known just how rapidly heat is carried into the ocean depths. To predict climate, scientists must use mathematical models whose complexity taxes the capabilities of even the world's largest computers. These models are based on incomplete knowledge about the key factors that influence climate, including clouds, ocean circulation, the natural cycles of greenhouse gases, natural aerosols like those produced by volcanic gases, and man-made aerosols like smog. Today's climate models cannot reproduce the succession of ice ages and warm periods over the last 250,000 years, let alone the smaller climatic fluctuations observed over the last century. In addition, climate models are driven by forecasts of greenhouse gas emissions, which in turn rest on highly uncertain long-term predictions of population trends, economic growth, and technological advances. BURNING DOWN THE HOUSE? To HELP quantify the uncertainty in climate prediction, we and our MIT colleagues have developed a model of global economic development, climate processes, and ecosystems. We have produced seven forecasts of climate change over the next century, each of which assumes no action to restrict future greenhouse gas emissions and can be defended as possible given current knowledge. These forecasts involve changes in global average surface temperature between 1990 and 2100 as small |