Most politicians, policy-makers, and analysts hailed the Kyoto Protocol as a vital first step toward slowing greenhouse warming. Council Senior Fellow David Victor was not among them. In this clear and cogent book, Victor explains why the Kyoto Protocol is unlikely to enter into force and how its failure will offer the opportunity to establish a more realistic alternative.

Kyoto's fatal flaw, Victor argues, is that it can work only if so-called emissions trading works. The protocol requires industrialized nations to reduce emissions of greenhouse gases to specific targets. Crucially, the protocol also provides emissions trading, whereby nations can offset rapid cuts in their emissions by buying emissions credits from other countries. But starting this trading system would require creating emission permits worth $2 trillion—the largest single creation of assets by voluntary international treaty in world history. Even if it were politically possible to distribute such astronomical sums, the protocol does not provide for adequate monitoring and enforcement of these new property rights. Nor does it offer an achievable plan for allocating new permits, which would be essential if the system were expanded to include developing countries.

The collapse of the Kyoto Protocol—which Victor views as inevitable—will provide the political space to rethink strategy. Better alternatives would focus on policies that control emissions, such as emission taxes. Though economically sensible, however, a pure tax approach is impossible to monitor in practice. Thus, the author proposes a hybrid in which governments set targets for both emission quantities and tax levels. This offers the important advantages of both emission trading and taxes without the debilitating drawbacks of either.

A Council on Foreign Relations Book