The Kyoto Protocol: Balance between the Economy and Environment

Adopted on the 11th of December in 1997, the Kyoto Protocol (192 parties) mandated 37 industrialized countries and the European community to reduce their emissions by an average of 5 percent against 1990 levels over the period of 2008-2012. As the first international treaty to set legally binding targets to limit greenhouse gas emissions, its importance is still studied by researchers despite the Paris Agreement replacing its role from November of 2016. Under the principle of ‘common but differentiated responsibility and respective capabilities,’ the protocol set individual targets agreed by the countries and monitored the countries’ progress. 

In order to help the countries to achieve their emission reduction targets, the protocol established flexible market mechanisms. One of the mechanisms included the Clean Development Mechanism. Through this mechanism, countries that ratified the protocol would be able to implement greenhouse gas reduction projects in countries that were not allocated the amount of greenhouse gas emissions. Thus, more developed countries would be able to meet their target goals, and the developing countries would receive technological and financial support from the more developed countries. It aimed to allow both the more developed and the developing countries to contribute to the sustainable development of their respective countries with no significant damage to the economy. 

But in reality, was it possible for the Kyoto Protocol to reduce greenhouse gas emissions and allow countries to maintain a stable economy? Is there such a thing as a perfect balance between the economy and the environment? 

According to the empirical findings by William D. Nordhaus, who was a Sterling Professor of Economics in Yale University and is an American economist, and Joseph Boyer, although most Annex I parties (industrialized countries that were members of the Organization for Economic Co-operation and Development in 1992 and the economies in transition including the Russian Federation, the Baltic States, and several Central and Eastern European States) are developed countries, economic growth may be curtailed because of the socioeconomic costs, investments, and implementation of corresponding policies for emission reductions. Their findings showed that the economic outputs of those parties are reduced due to the need to reduce energy, thus leading to an increase in production costs.

According to the study on the ‘Environmental and economic effectiveness of the Kyoto Protocol’ published in a peer-reviewed journal PLOS One, although the impacts of the protocol offsetted economic growth, Annex I parties achieved greater CO2 emission reductions than non-Annex I parties between the period of 2005-2008. The results suggested that imposing emission reduction targets has a beneficial impact on reducing CO2 emissions in the long run.

Thus, the protocol played a role in reducing the greenhouse gas emissions but couldn’t prevent the countries from facing certain economic costs.

However, the data on the amount of atmospheric carbon dioxide from 1960 to 2021 from the National Oceanic and Atmospheric Administration indicated that the Kyoto Protocol failed to play a ‘prominent’ role in reducing the CO2 emission. Then, were the economic costs the countries faced worthwhile afterall? 

Dr. Nada Maamoun, in her paper ‘The Kyoto protocol: Empirical evidence of a hidden success,’ concluded that the protocol was successful in preventing a worse-off situation where industrialized countries might have had a higher amount of greenhouse gas emission. Despite the challenges and potential limitations the Kyoto protocol suggested, the United Nations wrote that it ‘remains a historic landmark in the international fight against climate change.’

27 years later, the Paris Agreement calls on all countries to set emission targets. Governments set targets with the goal of preventing the global average temperature from rising more than 2°C above preindustrial levels. At the end of the day, would the Paris Agreement be remembered as an agreement that promoted a stable balance between the economy and the environment?