Written for publication in June 2001.

Climate change has much in common as an issue with nuclear disarmament and trade liberalisation. All three issues go to the heart of the prospects for human well being; all combine ferocious technical complexity with the capacity to arouse deep political passions: all require global solutions and in all three cases fact and reason are deeply buried in a cloak of prejudice and myth.

For those who belong to the declining band of people who simply do not believe the growing scientific evidence or to the wholly cynical who cannot envisage governments acting responsibly in the face of a problem of this significance, climate change presents no problem – you place your bet on business as usual and hope for the best. For the rest of us, the real world is one in which economies will be carbon constrained and the challenge is to get into that world with little loss, and preferably some gain, in shareholder value.

The Kyoto Protocol is the door to that world. It may not be the best of doors and there is little doubt that if we were starting from what we know today we would do things differently. But that is rather like saying that if we had known in 1950 what we knew in 1990 about nuclear disarmament we could have avoided the whole tedious, expensive and dangerous progression from Partial Test Ban Treaty, to SALT, to START I & II, to Anti-Ballistic Missile Treaty to Comprehensive Test Ban Treaty.  The search for an alternative door into a carbon constrained future will simply divert effort and attention from the task of improving the one we already have.

The European governments have already made it clear that they believe the Kyoto Protocol to be the only game in town. With the Japanese and Russians, they can bring the Protocol into force without US ratification. Since there are already more than 60 international treaties which the US has signed but not ratified this will hardly be setting any precedents. For Russia, an in-force Protocol would open the prospect of bundling carbon credits with natural gas exports to offer effectively carbon free gas at a nice premium to European markets. For the Japanese, meeting its own Kyoto targets by purchasing credits would be far cheaper if US business were not competing for the available emissions credits as non-members cannot participate in the Protocol’s flexibility mechanisms.

Underneath much handwringing about the importance of US involvement, Europe, Japan and Russia will be able to quietly lower the risk of competitiveness loss to their industries and help their businesses adapt to living with carbon constraints confident that in the longer run as the scientific uncertainties decrease and the early effects of climate change become apparent, the US will eventually join-in with whatever framework they have agreed.

There are essentially three broad policy avenues forward from this point: to return to some system of non-binding emissions reduction goals; to harmonise policies and measures globally or to fix the Kyoto Protocol as well as possible. The first option has already been rejected by the whole of the rest of the world and there is little reason to expect that they will reverse this position in the face of the clearer science and growing public anxiety. Harmonised policies and measures were proposed early on in the process and rejected as too difficult and inflexible, not the least by the US. Which leaves fixing what we have got.

This may be easier than at first appears. The Bush Administration’s retrenchment on climate change has had the effect of introducing a strong dose of reality into the negotiations. Much that was previously immovable is now back in play. There are four key elements to taking this route: agree more realistic, but still binding, medium term targets; retain the flexibility mechanisms without artificial constraints; set a clear long term environmental objective for the process; obtain agreement from the developing countries to participate fully in the second commitment period.

No-one could suggest that this is the best of all possible solutions, but as we have learnt from our experience with the other global issues of this scale, the best is often the enemy of the good enough for the time being.