The emperor's new clothes: redressing the Kyoto Protocol

Abstract

US President Bush repudiated the Kyoto Protocol because, in his view, it is 'fatally flawed in fundamental ways'. This paper evaluates seven proposals to redress the protocol according to their potential to deal with three key issues that have reinforced US intransigence: hot air, cost uncertainty and developing country participation. It argues that negotiations on intensity targets hold the most promise. Because intensity targets limit hot air, but do not limit economic growth, and a high variance of carbon intensity exists among countries with similar GDP per capita, intensity targets based on best practice levels might be agreeable to developing countries and the US. If a protocol specifying such targets were implemented, less warming would be associated with larger world GDP than would otherwise be the case, and countries' carbon intensity and emissions per capita would tend to converge to best practice levels at every stage of development.

Absolute versus Intensity Limits for CO2 Emission Control: Performance under Uncertainty

“…On the other side of this debate, Baumert (1999), Lutter (2000), Kim and Baumert (2002), Strachan (2007), and Kolstad (2005) all find merit in the concept of intensity-based caps because of the reduction in uncertainty in the economic outcome gained by indexing the cap to GDP and, crucially, the effect on the willingness of countries to participate in international agreements. Baumert (1999), Lutter (2000), and Lisowski (2002) also see intensity limits as a means to avoid the ''hot air'' resulting from overly generous absolute caps that might be needed to reassure acceding countries that the emissions limit would not place undue costs on them in the event of greater than expected economic growth. Along these lines, Jotzo and Pezzey (2007) provide a theoretical analysis and simulations of binding absolute and intensity caps in which parties are assumed to posses varying degrees of risk aversion to unexpectedly high-cost outcomes with particular attention given to developing country participation.…”