Russia resurrects the Kyoto Protocol and the prospect of either mandatory CO2 emissions cuts for U.S. utilities, or the start of a global trade war.
Peter Fontaine co-chairs the Energy, Environmental & Public Utility Practice Group of the Cozen O'Connor law firm. He was formerly a Clean Air Act enforcement lawyer with the U.S. Environmental Protection Agency in Washington, D.C.
In June 2001, the Bush administration withdrew an earlier campaign pledge to support the Kyoto Protocol, claiming that the treaty was fatally flawed in not requiring China and India to reduce carbon dioxide (CO2) emissions and that the science underpinning the treaty was not yet definitive enough to justify the costs of compliance.1
The underlying assumption of the administration's decision not to ratify the Kyoto Protocol and to oppose any regulatory efforts to curb U.S. greenhouse gas emissions2 is that the costs to the American economy can be avoided even as some of America's largest trading partners incur the pain of greenhouse gas emissions controls. Regardless of whether one agrees with Bush administration policy on Kyoto, the underlying assumption that America can avoid the costs of Kyoto is flawed. Even if America remains on the sidelines, it is not likely to avoid the costs associated with the global effort to reduce CO2 emissions, because it is not in the self-interest of America's trading partners, namely the European Union, to allow the United States to enjoy the competitive advantage of avoided costs of CO2 emissions controls.