The Kyoto Protocol – Business Ethics Case (Final) Assignment

The Kyoto Protocol – Business Ethics Case (Final) Assignment Words: 2868

Index ??? Introduction page 3 ??? Provisions and rationales of the Kyoto Protocol pages 4-5 ??? Effectiveness of the Kyoto Protocol pages 5-6 ??? The impact of the Kyoto Protocol on Spain pages 7-8 ??? Conclusion page 9 ??? Bibliography page 10 . Introduction The Kyoto Protocol is an international agreement framed into the United Nations Framework Convention on Climate Change (UNFCCC). It was raised the 11th of December of 1997 in the city of Kyoto to develop a package of measures to reduce anthropogenic greenhouse gases. The main objective of this treaty is to protect the planet from the effects of climate change and reduce the gas emissions which provoke the phenomenon known as global warming.

Thus, taking into account the direct human responsibility in this environmental problem, this treaty tries to engage developed and developing countries all around the world to take action against climate change. In relation to this, the Kyoto Protocol establishes legally binding commitments for the reduction of four greenhouse gases (carbon dioxide, methane, nitrous oxide, sulphur hexafluoride), and two groups of gases (hydrofluorocarbons and perfluorocarbons) that the countries which signed and ratified the protocol has to fulfill between 2008 and 2012.

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Greenhouse gas emissions have to be reduced by approximately 5. 2% within this period taking into consideration the gas emissions of 1990. However, this 5. 2% reduction over the greenhouse gas emissions of 1990 is a global percentage, and that way, each country has its own emissions percentages which have to decrease. This fact, as we will analyze later, is very important because the Kyoto Protocol assign different responsibilities in the fight against global warming, emphasizing the role of developed industrialized economies as key players in the causes as well as the solution of the problem. . Provisions and rationales of the Kyoto Protocol Regarding the different roles assigned to developed and developing countries, we can observe significance differences in the attributed responsibilities to protect the future of planet Earth for present and future generations. Thus, if we see the conditions of the agreement in detail we can appreciate that commitments and sacrifices are greater for ones than for other ones.

In the case of developed countries (Annex I), these have the commitment of reducing greenhouse gas emissions as well as providing new and additional financial services, including transfer of technology and know-how, to facilitate developing countries the fulfillment of the obligations raised in the treaty (the last one is only applied for Annex II countries, that is to say, Annex I countries minus the economies in transition). In the case of developing countries, these do not have any specific commitment to limit their anthropogenic greenhouse gas emissions.

They only have to “develop, periodically update, publish and make available to the Conference of Parties, their national inventories of GHG emissions by sources and removals by sinks”[1] as well as the rest of Annex I countries. Moreover, they are allowed to trade their gas emissions and also benefit from the help of developed countries to meet their sustainable development objectives. If we want to assess this “common but differentiated responsibility”, we have to evaluate the rationales behind these principles which served as the basis to reach a common agreement in terms of environmental protection.

Thus, the United Nations Framework Convention on Climate Change agreed to set these differentiated provisions because they considered that developed countries have been the largest contributors in terms of greenhouse gas emissions regarding historic and current statistics. In other words, developed countries assumed that they should do bigger efforts and accept greater reductions to tackle climate change because they have been the main responsible element in comparison to developing countries as their levels of emissions were much more higher in the pre-treaty industrialization period.

That way, as “the imminent problems of greenhouse warming have been created by the Annex B (developed) countries the burdens of adjustment should be put on them”[2]. On the other hand, per capita gas emissions in developing countries are lower in comparison to those ones in developed countries, so these should relatively support less limits as well. In addition to this, the Kyoto Protocol also takes into account the growth needs of developing countries for their current and future development.

The UNFCCC considers that non-Annex I countries will need to produce higher greenhouse global emissions to achieve their social goals and meet their development needs. Essentially, the Kyoto Protocol tries to integrate developing countries in this commitment of reducing gas emissions, but without establishing a particular reduction target as it does in the case of developed countries. That is why the UNFCCC takes into account their particular and low economic conditions and does not want to impose any welfare burden or break to their development because of the economic costs involved in limiting emissions.

Thus, the UNFCCC does not want to put any obstacle for the growth of developing countries, and it recognizes that these countries need a relatively energy intensive production in its early stages to get a certain level of industrialization and higher development. 3. Effectiveness of the Kyoto Protocol Regarding the effectiveness of this treaty, there is an intense debate involving the real scope and effectiveness of the Kyoto Protocol to tackle the problem of climate change.

That is why there is not an unanimous consensus regarding several key aspects that influence the level of involvement of the different countries. Moreover, conflicting interests arise from the differences in the conditions imposed to one and the other group of countries. First of all, a barrier for the total commitment of countries, organizations, political parties, etc. is the fact that there is not a scientific certainty that directly links the phenomenon of climate change with direct human actions.

Thus, some critical voices and political interests around the world use these arguments to criticize the implementation of the treaty. Certain political parties and experts are very critical with the Kyoto Protocol as well because they stress that it supposes a break in the world economic growth, and more in particular, for the developed countries. They point out that the measures adopted in the agreement slow down the economic growth of developed countries and it implies a transfer of wealth to the developing countries.

However, there also are opponents on the contrary side who criticizes the protocol for being too lenient and not curbing the negative tendencies and consequences on climate change derived from greenhouse gas emissions. Under this international scenario cited above, it is difficult to obtain the necessary forceful and unquestionable response and engagement of the different countries, political parties, institutions, citizens, etc. to adopt the strong measures needed.

However, although these strong pressure groups and interests try to raise doubts about the humans? interference on climate change, there are also emerging some opposite groups which try to put pressure on their governments to take an effective action. After the latest recent natural disasters (the tsunami in the Indian Ocean in 2004, devastating earthquakes and hurricanes in different parts of the world, etc. ) people are becoming concerned about the importance of the reduction in greenhouse gas emissions and the need to act against climate change.

That way, different NGO? s (e. g. Greenpeace), organizations, pressure groups (e. g. Netherlands because of its geographical conditions), etc. are putting more pressure into the rest of countries and trying to raise an international debate to force different countries around the world to be involved and engage in this commitment of reducing emissions. On the other hand, regardless these pro-Kyoto initiatives, while United States remains absent from the agreement its environmental effect will be limited.

Thus, if the first worldwide economy and first greenhouse gas emitter as well does not ratify the Kyoto Protocol this one will not have the effectiveness it is intended to have. The USA government signed the agreement but it did not ratify it (neither Bill Clinton nor George W. Bush). Therefore, its adhesion to the treaty was only symbolic until 2001, year in which G. W. Bush took the USA away from the Protocol. According to the president of the USA, the USA was not withdrawn from the Protocol due to a disagreement with the basic idea of the necessity of reducing gas emissions.

However, they decided to abandon it because they consider that the application of the Kyoto Protocol is unfair and inefficient because it only imposes reduction targets for industrialized countries. Moreover, G. W. Bush also justified the position of its country in relation to the treaty arguing that the USA economy could be seriously damaged due to the fact that these measures compromise their relative competitiveness and potential and actual growth capacity in relation to those developing countries which do not have to support GHG? restrictions (in particular China and India). Nevertheless, the situation seems to be changing currently as new political changes in Washington have taken place with the election of Barack Obama as the new president. This seems to be a glimpse of hope for all those environmentalists who claimed the USA to be involved and take responsibility in the process. As the first economy in the world and first greenhouse gas emitter USA has to be an example for the rest of countries and take action against this worldwide problem.

If they fail in assuming their part of responsibility this implies a negative reinforcement for the rest of countries which as in many other aspects of life follow the steps of the leader. For these reasons, the fact that the new president had publicly committed to revise the position of his country in relation to the treaty could be interpreted as a very positive sign. This change in their initial position can be a turning point to ensure that the objectives set in the Kyoto Protocol are fulfilled and subsequently this treaty becomes effective in its purpose of reducing greenhouse gas emissions and minimize the impact of humans? ctions on climate change. 4. The impact of the Kyoto Protocol on Spain In relation to the impact of the Kyoto Protocol on Spain, it is important to point out that this country is framed inside the European Union’s provisions. That is why, the European Union, as a particularly important agent in the concretion of the Protocol, committed to reduce its total gas emissions by 8% during the period 2008-2012 taking 1990 as the baseline.

Thus, a different target was given to each country inside the European Union regarding their diverse and particular economic and environmental characteristics. The distribution of commitments resulting from these principles for the European Union members was the following: Germany (-21%); Austria (-13%); Belgium (-7,5%), Denmark (-21%), Italy (-6,5%), Luxemburg (-28%), Netherlands (-6%), The UK (-12,5%), Finland (-2,6%), France (-1,9%), Spain (+15%), Greece (+25%), Ireland (+13%), Portugal (+27%) and Sweden (+4%)[3].

Having set that Spain becomes to a higher institution which is the European Union, where there are other countries with different interests or approaches to the Protocol, that the targets are assigned by the EU and Spain cannot take unilateral decisions regarding its position and approach to the treaty. Then, it is also important to stress the performance of Spain and the measures they are adopting to fulfill with the commitments agreed because the non-compliance of their assigned objectives involves some penalties and consequences previously specified in the Protocol.

Thus, although Spain committed to reduce its emissions up to 15% considering the 1990 baseline, it has become the EU member less likely to be capable of reaching its assigned targets. That way, if we look at the evolution in the Spanish gas emissions during the last years (1996: 7%; 1997: 15%; 1998: 18%; 1999: 28%; 2000: 33%; 2001: 33%; 2002: 39%; 2003: 41%; 2004: 47%; 2005: 52%; 2006: 52%; 2007: 48%)[4] we can perceive that Spain is quite far from meeting the original target objectives assigned by the Kyoto Protocol.

Moreover, although the Kyoto Protocol entered into force on February 16, 2005 for those countries which have ratified it, which is the case of Spain, Spain has not started to implement the measures needed to reduce its gas emissions. Furthermore, initial initiatives to achieve its objectives have been quite ineffective due to the lack of significant more onerous measures. For these reasons, we can conclude that it is very likely that Spain will exceed its targets.

However, although there are penalties and consequences due to the non-compliance of the Protocol, there also are major costs regarding economic growth and development associated to the compliance of the treaty. Thus, in the following paragraphs we are going to assess the economic costs of reducing greenhouse gas emissions for Spain. Essentially, we will assess the impact of the Kyoto Protocol on delivered prices to households and industry; energy consumption and general economic indicators.

First of all, regarding delivered prices to households and industry, “implementing limits on carbon dioxide emissions would dramatically increase delivered prices of energy to consumers and businesses. As a consequence, the price of home heating oil would rise by more than 32%; gasoline and diesel prices would be 11% and 14% higher, respectively, than the baseline estimates; and industry would pay nearly 42% more for its natural gas, and electricity prices would be nearly 24% above the baseline estimate”[5].

Regarding the impact on energy consumption, as a consequence of these increases in energy prices consumers will be forced to cut their consumption of energy. Thus, in a longer term, traditional sources of energy will be replaced by alternative ones which a lower price due to the lack of restrictions. Moreover, the industry sector will try to reduce energy consumption implementing some changes in processes; more efficient capital instead of the traditional energy-consuming capital and, “to the extent ossible, production of energy intensive goods would move to non-participating countries”5. In addition to this, other predictable consequences of the treaty are the decline in the use of coal and its substitution by natural gas or renewable energies. Finally, regarding the economic impacts on Spain, the Kyoto Protocol will cause output and employment losses. Moreover, consumers? purchasing power and disposable income will decline due to the higher cost of using energy because of the increase in energy prices which will be translated into high prices for all goods and services.

On the other hand, “imports would strengthen relative spurred by the competitive price advantage of non-participating Annex B countries, and non-Annex B countries. Finally, real GDP would fall 3. 1% (26 billion Euros) on average during the 2008-12 budget period, and economy’s potential to produce would fall initially with the cut back in energy usage, since energy is a key factor of production”5. 5. Conclusion In conclusion, although there is a growing commitment and pressure to join a global international agreement to preserve planet Earth from human beings? nterference on climate change, there also are huge counter-interests which try to slow down the process. As we have seen through this report in the cases of USA and Spain, the Kyoto Protocol is not convenient in a short economic term for the most powerful developed countries. Thus, until all developed and developing countries find a common solution where all of them feel identified to seriously be engaged with the environmental problem of global warming, the Kyoto Protocol will not have the complete efficiency it is intended to have to tackle climate change. Bibliography http://unfccc. int/essential_background/convention/background/items/1353. php. “The full text of the convention”. The United Nations Framework Convention on Climate Change. Retrieved on 5 November 2006. ? http://unfccc. int/essential_background/convention/background/items/1362. php, “The United Nations Framework Convention on Climate Change” (UNFCCC), Full text of convention, Article 4, commitments “Article 4”, Retrieved on 15 November 2005. ? http://globalchange. mit. edu/files/document/MITJPSPGC_Rpt65. pdf, “Rethinking the Kyoto Emissions Targets”, Mustafa J.

Babiker and Richard S. Eckaus; Global Change, Science Policy MIT; Report no. 65, August 2000 ? http://unfccc. int/files/essential_background/background_publications_htmlpdf/application/pdf/ghg_table_06. pdf. United Nations Framework Convention on Climate Change (UNFCCC); “Changes in GHG emissions from 1990 to 2004 for Annex I Parties”. ? http://www. mma. es/portal/secciones/calidad_contaminacion/atmosfera/emisiones/inventario. htm, Inventario Espanol de Gases de Efecto Invernadero (Spanish Greenhouse gases inventory); Ministerio de Medio Ambiente y Medio Rural y Marino. http://www. iccfglobal. org/pdf/Spainfinal101705. pdf, “Kyoto Protocol and Beyond: The Economic Cost to Spain”, International Council for Capital Formation (ICCF), 2005. ? http://archive. greenpeace. org/climate/politics/reports/riia1. pdf, “Undermining the Kyoto Protocol: Environmental Effectiveness versus Political Expediency? “; Bill Hare, Greenpeace International; Conference on “Implementing the Kyoto Protocol” Royal Institute of International Affairs 14-15 June, Chatham House, London. http://web. mit. edu/newsoffice/2002/aaas5-0227. html, “Effectiveness of Kyoto Protocol on climate in absence of US ratification discussed”, MIT articles and reports, February 27, 2002 ———————– 1 http://unfccc. int/essential_background/convention/background/items/1362. php, “The United Nations Framework Convention on Climate Change” (UNFCCC), Full text of convention, Article 4, commitments “Article 4”, Retrieved on 15 November 2005. 2 http://globalchange. mit. du/files/document/MITJPSPGC_Rpt65. pdf, “Rethinking the Kyoto Emissions Targets”, Mustafa J. Babiker and Richard S. Eckaus; Global Change, Science Policy MIT; Report no. 65, August 2000 [1]http://unfccc. int/files/essential_background/background_publications_htmlpdf/application/pdf/ghg_table_06. pdf. United Nations Framework Convention on Climate Change (UNFCCC); “Changes in GHG emissions from 1990 to 2004 for Annex I Parties”. 4http://www. mma. es/portal/secciones/calidad_contaminacion/atmosfera/emisiones

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