Capping Emissions Is Not Enough: An Interview With the Creator of the Kyoto Protocol Carbon Market

Global climate change is an undeniable fact. Temperatures are rising, glaciers have shrunk and ice in rivers is breaking up. We see the signs of human-caused global warming all around us, from ice loss in the Arctic sea and the migration of polar bears north to increasing hurricane frequency and the extinction of frogs worldwide. Moreover, it is becoming increasingly evident that our failure to deal with global warming will have catastrophic consequences for many regions of the world and for human civilization as we know it.

The international community has been aware of the climate crisis for a few decades now – a morbid realization that has prompted calls to action and important international agreements such as the Kyoto Protocol (originally signed in 1997) for the reduction of greenhouse gas emissions. However, the Kyoto Protocol has experienced mixed success at best, as efforts to tackle climate change effectively demand radical changes in the way modern, industrialized, capitalist economies function.

The architect of the Kyoto Protocol carbon market was Graciela Chichilnisky, an Argentine American economist and mathematician who is a professor of economics and statistics at Columbia University and a visiting professor of economics at Stanford University. Chichilnisky is also the founder and CEO of Global Thermostat, a newly created company that seeks to offer technological solutions to carbon emissions and climate change. Truthout interviewed Chichilnisky on the problem of climate change and the significance of the Kyoto Protocol, and sought her views on the upcoming UN climate change conference in Paris, to be held from November 30 to December 11.

C.J. Polychroniou: Graciela, you designed, created and wrote the Kyoto Protocol carbon market, an international treaty that was signed in 1997 and aims toward climate stability. You were also the lead author for the Intergovernmental Panel on Climate Change, which was awarded the Nobel Prize in 2007. Now, the significance of the Kyoto Protocol is that it accepts the idea of global warming and that the phenomenon has been caused by human activity and remains to date the only international agreement that calls for action to reduce emissions of carbon dioxide. Briefly, how did the idea about the Kyoto Protocol come about and was it hard to get it approved and ratified?

Graciela Chichilnisky: Yes, I was the author of the idea as well as of the mathematical model for the carbon market of the Kyoto Protocol. This is a topic on which I have published a large number of books and articles since the early 1990s. The topic was very unpopular at the time. My idea of a carbon market was based on the fact that carbon concentration in the atmosphere is a global public good: The carbon concentration is the same at each point in time in every nation of the world and every person in the planet, a unique characteristic that makes the carbon market a unique type of market that trades a global public good, and one that is privately produced. This is a unique market in history, and it has unique characteristics.

This point is usually lost; most people think that the carbon market is simply “cap and trade” and forget that the carbon market must treat nations differently depending on their wealth – protecting developing nations from crippling emissions limits, as the Kyoto Protocol does, to act efficiently. In the carbon market – indeed in most global environmental markets – equity and efficiency are linked in a unique way that is not valid for the standard markets that we know – for markets involving private goods, such as equipment, automobiles or food. This fact has profound implications, as the carbon market is already a huge commodity in the global market, trading for hundreds of billions of dollars annually.

When I introduced the idea of the carbon market everyone was against it, particularly those who followed [Nobel Prize-winning economist] Jim Tobin’s idea of a “global tax.” I persisted against all odds, working for the [Organization for Economic Cooperation and Development], giving annual keynote speeches at the World Bank and at various UN organizations, advising and giving presentations at the US [House of Representatives] and Senate, and working with the US Department of the Treasury (yes, with Larry Summers, who was then undersecretary of the US Treasury) as well as the US Department of State.

I worked directly with the lead negotiator of the Kyoto Protocol in Kyoto, and with the French delegation, in preparing the draft for the carbon market that eventually led to the agreement between the US and the EU and the signing of the protocol in Kyoto on December 11, 1997. I have documented this odyssey in a number of books, the latest of which is Saving Kyoto: An Insider’s Guide to How It Works, Why It Matters and What It Means for the Future, and which details how it all happened and the battles I had to fight to get the carbon market accepted against all odds. All environmentalists were against the market approach that I pioneered – many saw it as possible but ethically repugnant like selling your grandmother. It was a hard, uphill battle to get this accepted and incorporated into the Kyoto Protocol.

In addition to acting as lead author of the IPCC, I wrote the words for the carbon market into the Kyoto Protocol that led directly to the signing on December 11, 1997. My rationale is not that markets are perfect. Far from it. My rationale is that first, we need a (negative) price for emitting carbon to change the world economy so that those who emit carbon – mostly the rich nations – compensate those who do not, and thus have the incentives to create new technologies that can forestall global warming, and second, this type of market – the carbon market, a market for a privately produced public good – is the market of the future that is going to change the world economy for the better.

Any interesting stories to relate about the politics behind the scenes in the ratification of the Kyoto Protocol?

Yes, many. The whole process was full of intrigues, and unexpected reversals. Paradoxes, one may say. For example, it may be of interest that the lead negotiator of the Kyoto Protocol – Ambassador Raul Estrada-Oyuela of Argentina and a good friend with whom I worked and published for many years – was completely against the carbon market. He used it to get the Kyoto Protocol signed, as the carbon market was a true “double-sided coin” that looked exactly the opposite to the US than to the developing nations. The US saw in it a market flexibility for limiting their nation’s emissions, buying their way out of the problem, while the developing nations saw that only the carbon market would actually set a global limit on carbon emissions – which is physically needed before the market can start trading. One should remember that carbon taxes do not do that – they do not ensure global emissions limits, not at all. Carbon markets ensure limits to start with.

The original agreement committed industrialized countries to reduce their carbon dioxide emissions to levels below those of 1990. Critics of the Kyoto agreement have argued that there were flaws with the choice of 1990 while future major producers of emissions such as China were not taken into account. Do you consider this type of criticism valid?

This is not really a criticism. China was not an important emitter in 1997 when the protocol was signed. At that time, the developing nations as a whole, including China, were emitting a fairly small percentage of the global emissions even if they housed 80 percent of the world population. The overwhelming majority of carbon emission, historically and currently, was caused by the rich nations. For this reason, the Kyoto Protocol focused on capping the emissions of the Annex 1 nations, which are still (with few exceptions) the OECD nations.

Now, 18 years later, and after the protocol became international law in 2005, China’s exports led to an enormous and unexpected increase in its economic growth and corresponding use of energy. China’s sustained 8 to 10 percent annual GDP growth in those 18 years was a historic departure from what anybody could have anticipated. This led China to become, somewhat surprisingly, the largest global emitter today, with the US a close second. But we must take into consideration that China has a population of 1.3 billion people, which is over four times larger than the population of the US, which is not far behind China in emissions. The average Chinese [person] is therefore still very frugal in the use of energy and emits very little – a Chinese citizen emits about one-third of what the average US citizen emits today.

The Kyoto Protocol has also been not merely criticized but outright rejected by climate change deniers. While at this point it would be silly even to engage in a debate as to whether global warming is real, is the scientific evidence that global warming is human-made and not natural absolutely irrefutable?

Global climate science is a very new field and nobody would expect it to be precise. But precision is irrelevant here. If your home has a 5 percent chance of going on fire, you buy insurance even if the 5 percent is a small number and it is uncertain that it will happen. The same principle applies here. We cannot take risks of a catastrophic nature that can make the human species or civilization go extinct.

How do you talk to a climate change skeptic or denier?

By using arguments like the one above. I am not sure there is any other way to talk rationally to people who refuse, for whatever reasons, to accept facts and reality.

There is ample evidence that Koch Industries has been funding groups denying climate change since the late 1990s. Do you think this is an example of simple greed or is it also about political ideologies and worldviews since it is mostly Republicans and white men that deny global warming?

Greed is obviously a major factor, but there also appears to be a correlation between conservative views and accepting the fact that climate change is a very new phenomenon. By definition, conservative people focus on what they have grown up with and on the whole ignore change. Denial of global warming fits nicely with the conservative mindset.

In late November of 2014, the US and China reached an allegedly historic climate change agreement as China agreed for the first time to peak its emissions. Isn’t it the case, however, that the US has been so far one of the major obstacles to global cooperation on climate change?

Yes, this is definitely a fact. The US is not part of the Kyoto Protocol nor of its carbon market, as it never ratified the Kyoto Protocol. In this context, it is also important to note that the Kyoto Protocol nations reduced their emissions by 27 percent since 2005, while the non-Kyoto nations all increased substantially their emissions.

Does there exist a technology to tackle greenhouse gas emissions?

Yes, it does exist. There is technology available to capture carbon, which can then be resold to industries for a variety of commercial uses. Carbon capture technology is already at a stage of implementation, although more research and investment are needed. But there are companies already in existence that can tackle carbon emissions. My Global Thermostat company, for example, is an innovative energy company, which takes carbon out of the air.

Indeed, you have recently launched Global Thermostat, a company that “designs and creates renewable energy plants capable of capturing CO2 in conjunction with heavy industrial processes such as metals melting, cement production, and petrochemical refining.” In fact, Global Thermostat was selected “World’s Top Ten Most Innovative Company” in energy by Fast Company magazine. Tell us a bit more about the mission and the aims of your company.

I founded Global Thermostat to commercialize a revolutionary technology that I created and patented with the physicist Peter Eisenberger, which can profitably clean the planet’s atmosphere from the excess carbon dioxide. The company takes carbon dioxide directly from air and sells the carbon dioxide to a $1 trillion market on earth for food and beverages, industrial gases, plastics, clean synthetic fuels, fertilizers, greenhouses, enhanced oil recovery, and even for the production of graphene and carbon nanofibers that are used to produce building materials and to replace steel and other metals. Global Thermostat can take the worse risk that humans face today – according to the Pentagon itself, the worse national security risk facing the US – and transform it into the world’s largest asset!

Do you expect governments to take interest in your endeavors to tackle climate change through Global Thermostat?

Yes, but we don’t expect governments to move fast – even if they should. Our costs in capturing carbon dioxide from air are so low that the company can be profitable without any government subsidies.

A key climate change conference is scheduled to take place in Paris from November 30 to December 11. What are its aims and what do you think will be accomplished upon its conclusion?

The Paris climate change conference (COP21) is indeed key because the existing Kyoto mandatory emission limits expire this coming December (2015), even while the Kyoto Protocol itself continues to be international law and in fact, enters its second period. The aim of the Paris climate conference should be to reach an agreement among nations for mandatory emission caps, but it is doubtful that this goal will be realized.

In preparation for COP21, the nations of the world were asked to each provide their voluntary emission caps. They fell short. Voluntary proposals are insufficient to avert catastrophic climate change. We are rapidly approaching a precipice, since there are irreversible changes – for example, the melting of Greenland and of the polar caps – that occur once we exceed 2 [degree] Celsius increase in temperature and cannot be reversed for centuries since, once emitted, carbon dioxide stays in the atmosphere for hundreds of years. This catastrophic scenario will happen now unless we actually remove existing carbon from the atmosphere. Mandatory emissions [limits] are critical, yet the US continues to be strongly opposed to this approach.

Are you optimistic about humanity’s adeptness to deal with the looming climate catastrophe and to avert an ecological disaster?

I believe it is possible for humans to resolve the climate change issue. We have the resources, the technology and even the institutions needed to do it. In that sense, I am optimistic. But I am not optimistic on the timing since humans are very slow to deal with change. The problem is potentially catastrophic and we are running out of time.