MIT Sloan Management Review

Business Ethics and Public Policy, International Business

The Lessons of Kyoto

By Richard Schmalensee

April 15, 2004

The longer the United States, other industrialized nations and the developing world head down different policy tracks on global warming, the harder it will be to achieve the coordination necessary for effective action.

Before September 11, the Bush administration was often criticized for going it alone in foreign relations, notably in its decisions to abrogate the Anti-Ballistic Missile (ABM) Treaty and to reject the 1997 Kyoto Protocol on global warming. Since September 11, while the United States has built a broad coalition against terrorism and is talking seriously to Russia about the ABM treaty, it is still quite alone in its stance on climate.

Indeed, U.S. business also seems to be isolated on this issue. Before Kyoto, the U.S. Senate, in response to lobbying by both business and labor, had voted 95 to 0 to oppose any climate change treaty that lacked meaningful participation by developing nations. Nevertheless, the Clinton administration then signed on to a Kyoto deal that committed industrialized nations to cut greenhouse gas emissions and involved essentially no participation by developing countries.Kyoto required the United States to reduce emissions of carbon dioxide (CO2) by about 30% relative to business as usual by 2010, implying deeper cuts in the consumption of fossil fuels, the main relevant source of CO2 emissions, than most other industrialized countries were required to make.

Not surprisingly, the protocol draft was opposed by many U.S. interests concerned about economic costs and unfair international competition, and it had no chance of Senate ratification. When the new Bush administration rejected the Kyoto Protocol, I —... To read the complete article, login or sign-up using the form below.

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