Resolution. This was not, as is sometimes said, a rejection of the treaty by the Senate, as it was passed months prior to the Kyoto conference. Rather, it was a strong shot across the bow—a declaration that the United States would not accept a treaty that did “serious harm” to the U.S. economy or that exempted developing countries, which, it was feared, would put U.S. industry at a competitive disadvantage. “We could see that China would eventually overtake the United States in greenhouse gases,” Hagel later recalled, and thus should not be exempted from binding targets. The Senate adopted the Byrd-Hagel Resolution by a 95-to-0 vote. That was pretty categoric.25
But at Kyoto there was no give, and no reason that the developing countries would give. The closest thing to a compromise was the establishment of the “Clean Development Mechanism,” under which companies from developed countries could invest in “clean energy” projects in developing countries. But the inability to get the developing countries—whose emissions were on a fastgrowth track—into a binding system would doom the Kyoto Protocol as far as the U.S. Senate was concerned. And the United States could not accede to the treaty without Senate ratification.
“COST, COST, AND COST”
The third big question at Kyoto was how to implement reductions. The Europeans wanted mandates and direct intervention. They called it policies and measures, but they meant command-and-control. The United States was committed to a trading system along the lines of acid rain (although creating a trading system for about one thousand coal-fired units in the United States was much less daunting than doing the same for the world’s consumption of fossil fuels). To this, the Europeans were adamantly opposed. They were inherently more suspicious of markets. They thought emissions trading might be an academic experiment foisted off by some professors. Or even a trick. And for many of them, the notion of selling pollution credits seemed akin to immorality, just as it had to some environmental groups during the 1990 Clean Air fight. And so the Europeans denounced the very idea of selling emission rights—what they dismissed as “hot air.”
Bolstered by the success of the SO2 program, policymakers in the Clinton administration became convinced that this was the only way to go. As Eizenstat put it, “There were three issues—cost, cost, and cost.” And the cost of mitigating climate change without a market system would be far too expensive for any economy to bear.26
But the trading issue was proving intractable. The deadline for the conference’s conclusion was getting very close, and still there was no agreement. Everyone was exhausted, and time was just about up. In fact, it was now overtime. The ventilation system had been turned off, the translators had left, and the delegates could already hear the banging of carpenters beginning to prepare the next conference.
The chairman asked Eizenstat and his antagonist, the chief European negotiator, Britain’s deputy prime minister John Prescott, to go with him into an adjacent green room. The conference at this point was down to the issue of emissions trading. Prescott adamantly held to the European position, insisting that trading be no more than “supplementary,” a secondary tool. Eizenstat said that the United States would not budge, and it was not bluffing.
“It’s very simple, John,” he said. “We’re not going to sign, we are not going to do it. All of this time over 15 days will be wasted. Do you really want to go back to Europe with no agreement?”
“Or,” he added, “we can have an historic agreement.”
Prescott recognized that Eizenstat would not budge, and reluctantly agreed to the central role of trading. With that, the Kyoto Protocol was effectively done and negotiated, the carpenters could continue, and the follow-on conference could move into the hall.27
And that it is how, in the little green room on the last day in Kyoto, “markets” became embedded in climate change. Ronald Coase’s theorem, and John Dales’s refining of it into a “market for pollution rights,” had become international policy. And, if one were looking for confirmation of Keynes’s theory about the impact of “scribblers” on people who had never heard of them, then Kyoto—including the deal made in the green room—was a prime example.
HOW REALISTIC?
The agreement at Kyoto, Bert Bolin later wrote, marked “the first steps toward actually creating a political regime for preventing a human-induced climate change.” But there was a problem with it. As Bolin added, “At the time of its adoption it was already politically unrealistic.”28
The Kyoto Protocol would be a treaty, which