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Argument: Kyoto is too difficult to implement; won't cut emissions
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Leslie Evans. "Kyoto Protocol Said to Harm Effort to Stop Global Warming--But There Is Something Better". UCLA International Institute. May 25, 2007 - 2. The Kyoto Protocol is extremely difficult to implement. "It is costly and involves moral hazards." There are three implementation mechanisms: (A) Trade in permits to emit greenhouse gases. (B) Joint implementation mechanism. (C) Clean development mechanism.
The trading system has allocated permits to some 42 governments among those endorsing the Protocol. "The total value of the permits allocated comes to more than US$2 trillion. If you are not meeting your target, you can go on the market and buy units from governments that have met their targets. The allocation was decided on in the early 1990s, based on the expected industrialization rates of the particular countries. This was very difficult to predict, the future economic growth of particular countries."
Predicting economic growth rates is often a guessing game. But countries that grow faster than predicted and outrun their allocation can be charged hundreds of millions of dollars for the overrun, while countries that suffer recessions can make hundreds of millions selling their unused permits. In neither case is anything really being done to control any emissions. Contrary to the predictions of the UN plan, "the Russian economy imploded, so that Russia has a very large number of permits to sell. The Japanese government wants to buy them. This will pump hundreds of millions of dollars into the Russian state, which can have a very corrupting influence. But it achieves no actual reduction of any real greenhouse gas. If your economy grows faster than expected, you are punished and have to buy additional permits. If you economy grows slower, you are rewarded, and can make lots of money."
Given the tremendous monetary stakes, it is not possible to negotiate last-minute adjustments in this system to take account of divergences from inaccurate predictions. This system "creates problems at both ends, in the inability to predict the future accurately, and in the inability to get accurate measures of performance at the end of the period for which the permits are issued. There are about 8 greenhouse gases. Only the most prevalent one, carbon dioxide, can be measured with any accuracy. And this ill-defined system is compounded when, as in the European Union and Japan, they are also creating internal markets for these permits. That entails that each individual firm needs to know how much greenhouse gas they are emitting, and how much they are reducing that amount."
At each stage of this trading system there are opportunities for "endless conflicts among governments." There are also very large administrative costs. "In the internal markets there is a very significant cost involved in calculating the emissions of each firm and its reductions. The government must monitor how much each firm is polluting, estimating its prospective growth, and then measure its amount of reduction at a future date."
Joint implementation mechanism: means that a single country can meet its goal by financing a project in some other country. "Say Britain finances a project in Brazil," Verweij suggested. "Say it helps a Brazilian energy company to switch from coal to natural gas, then Britain get credits toward its Kyoto goal. The problem is 'baseline establishment.'"
Credit, worth a lot of real money, is awarded by the permit system, provided your contribution does not parallel something the other country would have done anyway. "The problem is how you are going to know what the Brazilian energy company would have done if Britain had not given them the money. Every time there is an effort to set baselines, all the participating experts disagree on everything. You are also inviting moral hazard. You are telling energy companies not to cut pollution now, but wait until the World Bank or Japan comes around and let them pay to get credits toward their Kyoto requirements."
Thus far, although not yet enforced, the Kyoto provisions apply only to developed countries. How well will this system work, Verweij asked, when it is extended into the undeveloped countries of the planet? "It is argued that poor countries are poor because there is no rule of law and there are corrupt governments. Who is going to monitor this process in which large amounts of money or credits worth money change hands?"