Chill Out on Warming. by Randall Lutter. April 2001.

European anger over President Bush's rejection of the Kyoto agreement to limit greenhouse gas emissions is completely misguided. Bush deserves thanks, not outrage, for burying Kyoto promptly and in a way that highlights the obvious fact that the United States will not accept Kyoto––period. By making this point now, he has avoided years of fruitless negotiations on "implementing" Kyoto and given governments more time to figure out what actually to do about the risk of adverse climate change.

The 1997 Kyoto agreement was dead on arrival in the U.S. because Vice President Gore, in negotiating it, ignored the advice of the Senate, which under the U.S. Constitution must ratify international treaties by a two-thirds majority for them to become law. Before Gore went to Kyoto, the Senate agreed unanimously that the U.S. should not accept new limits to greenhouse gas emissions unless developing countries adopted specific "commitments to limit or reduce greenhouse gas emissions" in the same compliance period. Gore settled on an agreement without such commitments because it was the only agreement he could get.

Out of respect for the Senate, the Clinton administration said it would submit the treaty for ratification only after "key" developing countries agreed to "meaningful participation" in the Kyoto process. Despite intensive efforts to get such participation, after three years it was pretty much empty handed and left office without submitting the treaty. Developing countries have continued to object strenuously to emissions limits like those sought by the Senate. They even rejected limits so lax as to let developing countries make money in international permit markets.

These facts alone mean no U.S. President could have won Senate ratification. Not one Senator has said Kyoto could be ratified.

Without U.S. support, the Kyoto agreement cannot be resurrected. Except for Romania, no country has ratified it.

Bush now faces the hard task of identifying what if any international agreement makes sense given the concerns of the U.S. Senate and, by inference, the American public.

One concern of the Senate, that an international treaty must not result in "serious harm" to the economy of the United States, is relatively easily remedied. A new treaty should have emissions limits much more modest than those set out in Kyoto. It should cap increases in energy prices to reduce the risk of economic harm. And it should allow for international trading of emissions permits.

A second Senate concern, that developing countries must accept emissions limits, is harder to address because it involves perceptions about fundamental issues of fairness. The Senate is concerned that emissions caps in the U.S., if not replicated in developing countries would give such countries an unfair advantage in trade relations and would be ineffective at controlling climate change if developing countries' emissions grow unabated. Developing countries, on the other hand, see even lax emissions limits as barriers to industrialization, and argue a long history of greenhouse gas emissions from already industrialized countries has caused the problem.

Developing countries reject the economist's solution to this problem: allow the developing countries to adopt caps set so they could profitably sell emissions permits in world markets. With the right caps, developing countries could reduce carbon emissions slightly at low cost and then make money selling the resulting permits at a high price on world markets. But developing countries believe that accepting such caps now would lead them to adopt more stringent and costly caps later.

Of course the Senate is also mindful of the risk of harmful climate change. Though recent press accounts treat Americans as pro-pollution and Bush as an oil industry stooge, U.S. commitment to the environment should be beyond dispute. The clarity of the air in U.S. cities is compelling proof.

Bush, having buried Kyoto, now needs to give a statement of principles about how he will address these concerns and the risk of harmful climate change. But his decision has given countries more time to identify sensible controls. By rejecting the doomed Kyoto treaty in the early days of his Administration, he is doing more to protect the climate than his critics realize. His European eco-critics should chill out.

Randall Lutter is a fellow at the AEI-Brookings Joint Center for Regulatory Studies

A version of this article appeared in the Financial Times-Deutschland on April 10, 2001.