The Protocol will be opened for signatures on March 16, 1998 and will enter into force upon ratification by at least 6 of the nations who contributed 55% of the 1990 worldwide emissions levels from developed countries. The negotiating is by no means concluded on this matter. The parties will convene in Bonn in June for preparatory meetings and again in November in Buenos Aires for the fourth session of the Conference. (For United Nations information on the Climate Change Conventions see http://www.un.org/ and search on “Kyoto Protocol” or “climate change.” For U.S. Department of State information see http://www.state.gov/www/policy.html and click on “Global Climate Change.”)

Before the ink was dry on the Protocol, the hue and cry could be heard from all sectors of American industry and the halls of the U.S. Senate – the President had committed his country to “unilateral economic disarmament” (as the Chairman of the Global Climate Coalition summed it up). At issue are the disparate requirements for those 38 nations, which are defined as “developed,” and the 120 nations (including the world’s highest emitters such as China, India, Brazil and Mexico) which are “developing.” Compliance is currently optional for the developing countries.

United Nations

U.S. State Department – Policy

The Senate Response

The Senate has been sending messages to the President concerning the Kyoto global climate change treaty for months. In July the Senate passed S. Res. 98, cosponsored by Sen. Byrd (D-W.Va.) and Sen. Hagel (R-Neb.), which urged the Administration to exercise caution during negotiations and placed conditions upon Senate acceptance of the treaty. The Resolution states that the U.S. will not be a signatory to the treaty unless the “developing nations” participate more fully in greenhouse gas reduction and it can be ascertained that no serious economic harm will result upon adherence to the treaty. Sen. Byrd has since stated that the Kyoto agreement is politically untenable in its current form, but is a “good starting point.” Sen. Hagel (former government relations director for Firestone Tire & Rubber Co.) who led the Senate delegation to Kyoto, has maintained a more adversarial stance and has vowed to ensure its failure.

In general, the Congressional response to the agreement has not been warm (no pun intended). Sen. Murkowski (R-AK), the Chairman of the Senate Committee on Energy and Natural Resources, declared the treaty “dead on arrival.” Rep. Sensenbrenner (R-WI), who led the House delegation to the Kyoto Convention and is the Chairman of the House Committee on Science, believes the treaty will raise the cost of energy and lower the employment rate. The Senate Majority and Minority leaders (Sens. Lott (R-MS) and Daschle (D-SD)) are both concerned about the economic advantage the United States would be ceding to China. Recently, the Majority Whip Tom Delay (R-TX) added a new wrinkle to the climate control treaty controversy by warning the President that his endorsement of the Kyoto agreement would further endanger the renewal of “fast-track.”

Sen. Chafee (R-RI), Chairman of the Senate Committee on Environment and Public Works is more optimistic and believes the treaty has good points, such as its flexibility (with the emissions level requirements), its thorough treatment of the gases and the fact that it will be binding. However, he notes that there are no penalties for noncompliance and the developing countries are not required to participate. He is also convinced that many members are simply skeptical of the science behind the treaty. (For more information from Sen. Chafee, see http://www.senate.gov/~chafee/, click on press information – he has a Kyoto Convention site which is being worked on as well.) The former Senator and retiring Undersecretary of State for the Environment, Tim Wirth, characterized many of his former Senate colleagues as in ” heavy denial” concerning the issue of global warming. Wirth also predicted that the treaty will not be voted on by the Hill for some time and when it finally comes up for a vote, it will be ratified.

Industry Response

American industry is literally boiling over the provisions of the Kyoto Protocol. This is doomsday scenario time. The Global Climate Coalition (the GCC), a coalition of business, labor and farm interests is one of the groups which has pledged to campaign long and hard against the treaty. (To learn more about the GCC and their plan of action, go to http://www.globalclimate.org/). The GCC claims the agreement will force the U.S. to reduce energy consumption by up to 30%, driving up prices on heating oil, electricity and gasoline. It could cost the U.S. economy as much as $150 billion per year and force 3 million workers out of their jobs.

The coal industry is also gearing up to battle the agreement. 1996 and 1997 were record setting years for domestic coal production. In December, the United Mine Workers and the Bituminous Coal Operators Association, which represents the largest unionized coal companies, signed a new 5-year contract. The Kyoto Protocol is the black cloud on the horizon as far as the industry and the union are concerned, since coal has a high carbon content, and is currently the source of 55% of the electricity used in the United States.

The automakers could potentially be hit from both sides of the production process. The Protocol could lead to a revision in the Corporate Average Fuel Economy or CAFE standards for U.S. and imported vehicles, thus setting new emission limits for vehicles in addition to the restraints which will be placed on the manufacturing process. The Big Three (GM, Ford and Chrysler) have all come out against the treaty as it is currently written. (Also see the Web site for the National Association of Manufacturing at http://www.nam.org/ and click on News Updates for their outlook on the Protocol.)

The National Association of Manufactures — Manufacturing Central

U.S. World Wildlife Fund

Some analysts are taking a more pragmatic approach to the potential cost of the agreement to the economy. It has been noted that the impact of a treaty of this magnitude is almost impossible to predict. The 14-year timetable for the agreement allows plenty of time for the development of new technologies and the technological adjustments which are inevitably made over time. It could also be an opportunity for industry to re-examine current practices and embrace changes which could result in new economic opportunities.

The Senate has made it clear to the Administration that when the Kyoto Protocol is transmitted to the Hill, it must contain certain provisions and safeguards which it currently lacks. Upon ratification by two thirds of the Senate, the next hurdle will be the implementing legislation. For the time being, the current legislation aimed at restructuring and deregulating the energy utility industry could gain new status as a vehicle by which some of the goals of the beleaguered Protocol can be attained. Many powerful lobbies have a great deal at stake. This is an issue to watch.