After a lot of back and forth, the Kyoto Protocol finally entered into force February 16 this year, more than seven years after the Conference of the Parties in Kyoto. This event has been described as an important victory in climate policy, and at least in Europe there have been few dissenting voices. We believe, however, that there is a need to take a closer look at what has actually been achieved, and what challenges lie ahead.

The fundamental basis of the Kyoto Protocol is national emissions quotas for greenhouse gases, in this first round (2008-2012) exclusively for industrialized countries. These targets, however, do not set absolute limits for each industrialized country. If they see fit, the countries can meet their commitments by buying emissions permits from one another, by getting credit for storing carbon in forests, and/or by acquiring credits from countries without commitments through the project-based Clean Development Mechanism (CDM). If a country has more emissions permits than it needs at the end of a commitment period, they can be banked for use in future periods.

After Australia and the United States withdrew from the agreement, 36 countries now have emissions commitments for the period 2008-2012: Bulgaria, Romania, EU-25, Canada, Russia, Japan, New Zealand, and Ukraine, as well as six small West European states. Together, these countries represent 30% of the global CO2 emissions. The developing countries and USA/Australia are responsible for the remaining 70% of the emissions, emissions that are not restricted through the Kyoto Protocol. Moreover, while emissions in the participating countries are growing only at a slow pace, emissions growth in the developing countries and the United States is strong.

The question is whether the basic form of the Kyoto Protocol can lay the foundation for new agreements with more stringent quota obligations. We are skeptical about this; in fact, the Kyoto Protocol is built around a concept that is very likely to result in agreements with very little environmental impact also in new rounds of negotiation.

Defenders of the protocol point out that we have negotiated an "impressive" regulatory framework for the protocol's various mechanisms, thus laying an important foundation for new agreements. We do not wish to discount the solid craftsmanship that has taken place, and recognize that various parts of the agreement represent true bridges between differing perspectives. But at the same time we must not exaggerate what has actually occurred. The truly difficult controversies are only minimally addressed in the regulatory framework for emissions trading, carbon sequestration in forests, and the CDM. Where they are evident is in the initial allocation of quotas. And here we have not been able to negotiate targets that will lead to a significant overall reduction in emissions. In addition, despite the fact that the protocol can be implemented by the parties without significant cost, it barely squeaked by the ratification process. We are afraid this is not coincidental, but that it should tell us that we are working with a concept that is not suitable for the nature and scope of the climate problem.

The Quota Game

It is becoming widely accepted that the climate problem is serious, and must be faced with a coordinated international effort. Despite this knowledge, we cannot ignore that the United States and Australia withdrew from the agreement. We also know that key developing countries -- led by China and India -- do not seem willing to take on quota obligations in the foreseeable future. Even in Russia, a country that actually stands to earn a lot of money from emissions trading, ratification of the agreement was fraught with controversy.

Before we can make any pronouncements about what it will take to establish new and more stringent agreements within the framework of the Kyoto Protocol, with significant emissions reductions, we must first understand what motivates key actors such as the United States, China, India, and Russia. Is it likely that the United States, China, and India will do a total turn-around and not only accept national quotas, but even more stringent quotas? Is it likely that Russia will join an agreement that will actually cost something when it was reluctant to accept an agreement that would result in a nice profit? We are skeptical, and believe that there are strong indications that new rounds of negotiations will be a repeat of the first round, making it impossible to create real incentives that would generate the necessary technology development. We think the strong focus on national quotas, on which the entire Kyoto Protocol and its comprehensive regulatory framework is built, should be supplemented with completely different types of agreements that are more attractive to major emitters.

Alternatives to the Kyoto Protocol

Neither we nor any one else has the ultimate answer to how the climate problem can be resolved. However, we believe that new concepts for a climate treaty should meet the following requirements:

• Enforcement of the agreement should be advantageous for all parties, as participation in an international agreement is necessarily voluntary.
  
  
• The agreement must have credible verification and sanction mechanisms.
  
• Large regions must participate if the reductions are to be big enough. This means especially that the EU, United States, Japan, and the so-called BRIC countries (Brazil, Russia, India and China) must take part.

What, then, constitutes a good alternative or supplement to the Kyoto Protocol? There is not enough room here to carry out an exhaustive discussion, but we can note that instruments such as harmonized greenhouse gas taxes, direct regulation through the introduction of international technology standards, active work for removing subsidies that lead to increased greenhouse gas emissions, and so on are ideas that should be further developed. We nevertheless believe that main solution will ultimately reside in technology development. Thus agreements that directly stimulate technology development will probably be the most fruitful. Examples include agreements where the parties are committed to devoting a certain amount of research and development work to relevant technologies. Property rights to the technological solutions that are developed can be then shared collectively between the parties in the agreement. A key element is the necessity of increased public funding and investment in technology-oriented research. Here it is not just talk about money, but also getting a necessary number of young and skilled people to educate themselves and work with these types of research questions over time. The framework conditions for research activity must therefore be stable, credible, and -- not least -- long term.

Conclusion

Ever since the climate issue appeared seriously on the political agenda toward the end of the 1980s, focus has been directed at national emissions targets. We fear that this has been a dead end. In any case, we can now state that the Kyoto Protocol will not result in any noteworthy emissions reductions, and it seems unlikely that we will succeed in negotiating a follow-up agreement from 2013.

The time is thus ripe for exploring the possibilities for other types of agreements than the established norm of commitments connected to emissions caps. The key to a solution of the climate problem clearly lies in developing energy technology, including capturing and storing carbon from fossil fuels as well as making nuclear power socially acceptable. Agreements that in one way or another commit member states to stimulating research on and development of these kinds of energy technologies are thus perhaps in the long run both more cost-effective and easier to enforce than the Kyoto Protocol.

We do not have the basis for drawing definitive conclusions about what constitutes the best concept on which to base an agreement. It is also fully possible that the problem should be addressed from several angles at the same time through a set of different agreements. Scott Barrett, a professor at Johns Hopkins University, has, for example, proposed that several international agreements be negotiated in addition to the Kyoto Protocol's focus on quantitative national commitments.

The aim of this article is thus not to argue in favor of tossing the Kyoto Protocol on history's scrap pile. There is nothing wrong with going further with the Kyoto Protocol to see what can eventually come out of this concept. But we believe that there is a need to be more realistic with respect to the limitations and possibilities of the concept. At the same time, we want to point out that alternatives to the agreement concept are currently circulating and they should be taken seriously and become the subject of studies by competent researchers.

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Knut H. Alfsen is senior advisor at the Center for International Climate and Environmental Research (CICERO). Former CICERO employee Bjart Holtsmark is now research fellow in the Unit for Petroleum and Environmental Economics at Statistics Norway