The Kyoto Protocol: Too Many Gaps.

FAIRFAX, Va.--(BUSINESS WIRE)--Sept. 24, 1998--Global climate change.

The phrase elicits many reactions: crisis, denial, proven evidence, bad science, drastic solution, immediate action, unanswered questions.

Likewise, the Kyoto Protocol, the solution proposed by those who have accepted global climate change as an irreversible and unquestionable fact see one side. Others warn of drastic economic and social consequences resulting from the Protocol's implementation.

In the enclosed opinion column, Mobil's Brian Baker examines several points made in a recent report issued by The Business Roundtable titled "The Kyoto Protocol: too many gaps." Baker's comments are offered for your consideration.

J. Donald Turk

Opinion Column: The Kyoto Protocol: too many gaps

Brian Baker

Mobil Oil Corp.

Last December, many nations negotiated the Kyoto Protocol, which calls for 38 industrialized countries to reduce their emissions of greenhouse gases. While this agreement certainly isn't front-page news, the Protocol, its rules and implementing mechanisms are generating much discussion among governments.

The Senate has voiced its opposition to the Protocol. While Congress has held several climate change hearings, the Administration has not submitted the treaty to the Senate for ratification. The next chapter opens in Buenos Aires where momentum is building to move the Protocol forward.

From time-to-time, Mobil has discussed the steps it is taking to address the potential climate change issue. We also have expressed our opposition to the Kyoto Protocol itself. We think we have a responsibility to participate in this debate because we as well as the American public have a stake in the outcome. Others in the business community have voiced their concerns.

A new report by The Business Roundtable (BRT) catalogs the problems created by the Kyoto Protocol, noting it "raises many more questions than it answers, and leaves too many gaps unfilled...fails to address the global nature of the issue...(and) we are still unable to assess the full economic ramifications of the Protocol."

The BRT is an association of 200 chief executive officers. This report reflects the thinking of a broad spectrum of business -- from banking and finance, insurance and publishing to heavy industry, telecommunications and chemicals.

Here are highlights from "The Kyoto Protocol: A Gap Analysis."

-- "The Protocol mandates an unprecedented 41 percent reduction of

greenhouse gas emissions by 2008-2012 for the United States from

the business-as-usual path." The U.S. Energy Information Agency

projects that U.S. emissions will be 34 percent above 1990 levels

by 2010.

"Thus, what may superficially seem to be a modest 7 percent

reduction below 1990 levels becomes, in real terms, a legal

obligation for the U.S." Put in perspective, "it is the

equivalent of having to eliminate all current emissions from the

transportation, utility or industry sector."

This will require difficult choices for all Americans.

-- Developing countries are not covered by the Protocol. "Without

full participation by developing countries, the Kyoto Protocol

will not lead to a net reduction of global...emissions."

Developing countries are becoming the largest emitters and could

account for more than half of all emissions by 2015.

-- The Protocol uses "differentiated targets" for countries to meet,

which potentially could put the U.S. at a disadvantage. "The

variable targets weren't necessarily based on criteria such as

countries' growth, energy usage or levels of efficiency...."

The European Union, for example, is much closer to its target

than it might seem because those economies were robust in 1990

and energy efficiency (particularly in East Germany) was poor.

Since then, their economies have weakened and the U.K. has

converted from coal to natural gas.

Moreover, the EU nations will be able to pool their emissions and

report as a single entity for compliance purposes. "As a result,

some countries will be able to continue to increase their

emissions."

-- "The establishment of a 1990 emissions 'baseline'

disproportionately affects the United States." That was a

recession year for our economy. Subsequent economic growth

contributed to an increase in emission levels. Now, America is

being penalized for "...having strong economic growth since 1990,

after the arbitrarily established baseline."

-- And finally, the report notes that Kyoto is silent on the crucial

issues of compliance and enforcement.

While the BRT opposes the Protocol, it pledges to work with the U.S. government and others to ensure a healthy economy and environment. That's a good prescription for all of us.

Brian Baker is president, North American Marketing & Refining, Mobil Oil Corp., Fairfax.