UNFCCC, the Kyoto protocol, and the WTO - brewing conflicts or are they mutually supportive?

• Author: Halvorssen, Anita M.
• Position: United Nations Framework Convention on Climate Change, 1992

1. INTRODUCTION

   On December 10, 2008 Al Gore together with the Intergovernmental Panel on Climate Change (IPCC) (2) received the Nobel Peace Prize. The Norwegian Nobel Committee stated that it awarded the prize to promote peace and security:

   Indications of changes in the earth's future climate must be treated with the utmost seriousness, and with the precautionary principle uppermost in our minds. Extensive climate changes may alter and threaten the living conditions of much of mankind. They may induce large-scale migration and lead to greater competition for the earth's resources. Such changes will place particularly heavy burdens on the world's most vulnerable countries. There may be increased danger of violent conflicts and wars, within and between states. (3) In its fourth report published in February of 2007, the IPCC confirmed that greenhouse gases (GHGs) from human activities have "very likely" (90% probability) caused the increase in temperatures since 1750. (4) The IPCC's synthesis report shows that the level of GHGs has already reached critical levels. (5) The likely impacts of climate change include more frequent severe storms and droughts, sea level rise, ice cap and glacier melt, large-scale species extinctions, spread of disease carriers (of malaria, etc.) to more northernly latitudes, and 200 million environmental "refugees" by 2050. (6)

   Lack of natural resources, violent conflicts, and wars, together with other effects of climate change will have major effects on the global economy. (7) As one scholar described the situation, "[e]ven a 3[degrees]C rise in global average temperature would devastate the global environment, place human survival in grave danger, and risk the collapse of the world economy." (8) The global response to climate change taken in the next 10-20 years could create risks of major disruption to economic and social activity, on par with those associated with World War I (WWI), World War II (WWII) and the Great Depression. (9) Nicholas Stern projected that if action is not taken now, it may cost 5-20% of global GDP each year from now to address climate change. (10) In his report, Stern states: "climate change is a serious global threat, and it demands an urgent global response." (11) Just as other financial institutions are addressing climate change, the World Trade Organization (WTO) needs to be working on how it can address climate change issues related to trade in a comprehensive manner. (12) On the other hand, actions taken under the climate treaties should focus on how such measures can take advantage of trade liberalization (13) and avoid impediments to trade. This paper examines the relationship between the WTO and the UN Framework Convention on Climate Change (UNFCCC) with its Kyoto Protocol and indicates how it needs to change in order to facilitate the urgent action needed to address climate change. This paper then suggests that in the course of the Doha negotiations on trade and environment, the WTO membership should negotiate and adopt an agreement on the trade-related aspects of climate change law to promote emissions trading, address labeling requirements for GHG emissions and other climate-related process and production method (PPM)-based policy measures, and include the terms of the proposed agreement on trade in climate friendly technology. (14) In addition, this paper also recommends the establishment of a Committee on Trade and Climate Change to address all areas where climate issues intersect trade.

   Part II gives an overview of the anthropogenic sources of greenhouse gas (GHG) emissions and how they are related to trade. Part III explains the goal, structure and trade-related articles of the UNFCCC and its Kyoto Protocol, especially Kyoto's flexible market mechanisms. Part IV provides a short overview of the WTO's history, purpose, and dealings with environmental issues. Part V analyzes the points of convergence between the UNFCCC, its Kyoto Protocol and the WTO rules. Finally, Part VI focuses on reforming the WTO rules in order to accommodate trade measures used by the Parties to the UNFCCC and the Kyoto Protocol in their implementation of their treaty commitments.

2. BACKGROUND

   The main reason for the increase in GHG emission beyond the natural variability in climate change is human activity. (15) This activity, usually classified as economic development, has impacted the balance of carbon dioxide (CO2) and other GHGs in the atmosphere since the beginning of the industrial revolution, thus increasing the existing greenhouse effect or thickening the blanket of gases in the atmosphere. (16) The climate change issue can be categorized as a market failure on a global scale.

   At this point, the atmosphere is more like the last garbage dump on the planet and, unfortunately, it is soon to be filled to capacity. Some of the GHGs such as CO2 can last at least a century in the atmosphere, so even if humans stop emitting CO2, there is still too much in the atmosphere. (17) In order to address the problem clearly, one must internalize the externalities; in other words, pay for the use of the atmosphere as the natural resource that absorbs the GHGs.

   One way of doing this is by using a cap-and-trade approach to gradually reduce the CO2 entering the atmosphere; another is by placing a tax on the CO2. Either approach places a cost on CO2. On the global level, the international community adopted the Kyoto Protocol to the UNFCCC, thus choosing the cap and-trade approach, although carbon taxes are used domestically by several states. (18)

3. THE ROAD TO KYOTO

   The UNFCCC was adopted in 1992 (19) and the Kyoto Protocol to the UNFCCC in 1997. (20) The UNFCCC stipulates in Article 2 the objective of the treaty in rather vague terms:

   [S]tabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner. (21) The UNFCCC did not stipulate what the level of "dangerous anthropogenic interference" would be. The IPCC in its Fourth Assessment Report determined the goal should be to stabilize at 440-500ppt within the next 20-40 years in order to avoid worsening the situation. (22) Yet, in 1992 when the UNFCCC was adopted, it did not mandate any emission cuts; it only "urged" Annex I (developed countries) to reduce their GHGs to 1990 levels. (23) The measures used demonstrated that developed states were committed to take the lead in reducing GHG emissions.

   Non-Annex I Parties (developing countries), however, were not given such an "aim" to reduce GHGs. However, all Parties were required to fulfill binding commitments to report on their national inventory of anthropogenic emissions and measures taken to implement the UNFCCC. (24) At the first Conference of the Parties to the UNFCCC (COP-l), the Parties adopted the Berlin Mandate where they stated that more action needed to be taken to address climate change and that the developed countries were to "take the lead." (25) The result of the process started in Berlin was the adoption of the Kyoto Protocol in 1997.

   The Kyoto Protocol was the first global treaty to introduce binding GHG emission reduction...