Winners and sinners on global warming

THE AUDITORIUM in the Kyoto Conference Center was filled with sleeping delegates after two nights of nonstop negotiation. But Stu Eizenstat, head of the US delegation to the 1997 global warming conference, was wide awake with his arm in the air. Exuding energy, Eizenstat turned on his microphone and delivered a simple message -- the "final compromise" just circulated for approval was unacceptable to the United States because it deleted all reference to "emissions trading."

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The conference chairman let silence fill the room, then said simply, "May I please see the US delegation in my office?"

Moments later, as we huddled in a small office, the chairman told US representatives we were the only delegation insisting on a controversial provision and implored us to accept an agreement without reference to emissions trading. Eizenstat refused. The chairman agreed to include the provision, returned to the auditorium, and soon afterward announced that the conference had adopted a new agreement. He proposed a name -- the "Kyoto Protocol."

More than seven years later, the agreement forged during those long nights of negotiation will finally take effect. On Feb. 16, the Kyoto Protocol -- revered in much of the world, reviled by many in the United States -- becomes legally binding on 131 countries that have accepted its terms. The most immediate impacts will be in the 35 industrialized countries, including Canada, Japan, and all members of the European Union, that have agreed to limit heat-trapping gases during the period 2008 to 2012.

The event is rich in irony. The United States will not be a party to the Kyoto Protocol. Indeed, the Bush administration's rejection of the agreement has become a symbol of its foreign policy for much of the world. Yet the Kyoto Protocol's most enduring legacy may be a uniquely American idea -- that "emissions trading" can help control heat-trapping gases at low cost.

Today the European Union -- an opponent of emissions trading during the Kyoto talks -- is embracing an ambitious "cap and trade" program to help fight global warming. Meanwhile in the United States -- birthplace of emissions trading and its strongest advocate in the Kyoto process -- efforts to establish a national trading program for heat-trapping gases have stalled, with no progress in site.

What is emissions trading? It is an alternative to traditional regulation, in which market forces are used to help lower the cost of meeting an environmental goal. In a typical emissions trading program, companies are first given permits to release a pollutant and then given a choice -- either use the permits or sell them. Companies that cut pollution cheaply make money by selling permits to companies where cutting pollution is more expensive. The result: An environmental goal is achieved at lower overall cost than under traditional approaches in which all companies must meet the same limits.   Continued...