The Kyoto climate control protocol
Last December, U.S. representatives participated in the United Nations global climate change talks in Kyoto, Japan. The resulting treaty, the "Kyoto climate change protocol," establishes legally binding commitments to reduce emissions of six greenhouse gases from 6% to 8% below 1990 levels by 2008-2012. The commitments apply only to developed nations. The treaty has to be ratified by the U.S. Senate before it becomes binding on this country.
The paper and forest products industry believes the Kyoto protocol is fundamentally flawed and should not be ratified in its current state. The protocol would significantly reduce the industry's international competitiveness. It fails to recognize the investment cycle of our industry and the significant energy efficiency initiatives we've already undertaken. It also does not take into account the unique role that the forests of the U.S. play in offsetting greenhouse gas emissions.
First, the Kyoto protocol fails to include developing countries as meaningful participants in managing greenhouse gas emissions. This failure will worsen a difficult competitive balance. For example, in market pulp production, developing countries such as Brazil, Chile, and Indonesia already enjoy substantial cost advantages. These advantages have only increased with recent currency devaluations.
Ratifying the Kyoto protocol would further weaken the position of U.S. producers by imposing burdens on their manufacturing costs that others would not bear. Even worse, since developing countries are forecast to become the largest source of greenhouse gas emissions, our competitive position will have been sacrificed without an offsetting environmental benefit.
Second, the protocol's artificial timetables present a particular burden to the pulp and paper segment of the forest products industry, which has one of the lengthiest capital investment cycles among basic industries-about 30 years. Without appropriate recognition of this cycle, the potential for destroying the value of prior capital investment is enormous.
In addition, the artificial compliance schedule penalizes an industry which is already energy-efficient. For instance, in the last 25 years, the paper and forest products industry has increased the use of biomass fuels from 40% of total energy use to 56%, reduced oil consumption by 68%, and reduced consumption of fossil fuels and purchased energy by over 9%. We've achieved these improvements while increasing production 67%.
Working with the Dept. of Energy, industry projects under development could further reduce emissions of carbon dioxide. However, even if these projects prove viable, they would require substantial capital and a significant amount of time-20 years or more-to install and to become economical.
Third, the forest products industry believes that the protocol's treatment of carbon sequestration is simply wrong. The prevailing interpretation of the protocol is that it would exclude forests existing prior to 1990, and reforestation of those previously existing forestlands, from being considered carbon sinks. In other words, the massive amount of carbon sequestration taking place in the vast majority of our nation's existing forests, both public and private, could not be used to offset greenhouse gas emissions. The so-called "Kyoto forest," or one that would receive credit for carbon storage under the protocol, would consist only of trees planted after 1990 on land not previously in forest cover. Clearly, this is neither scientifically correct nor in the national interest.
The industry is also concerned about the domestic policy question of who receives credit for a carbon sink. Apparently, the Administration is considering denying carbon sequestration credits to private companies or individuals for the carbon sinks their land investment has created and, instead, would place the credit into some sort of national account. The American Forest & Paper Assn. would strongly oppose such an initiative. It is not only contrary to our country's tradition of private property, but would remove incentives to increase sequestration on privately held lands.
Finally, I think that consideration of the Kyoto protocol requires that the Executive Branch and Congress more closely review the overall burden placed on U.S. businesses by conflicting environmental objectives. For example, the new Cluster Rules regulating water and air emissions in the pulp and paper industry will increase the industry's production of carbon dioxide by an estimated 2.538 million mtpy. If the objective of the Kyoto protocol is to reduce carbon dioxide emissions, then environmental policy makers clearly will have to make some choices when our national goals conflict with one another.
Much more thought must be given to developing an effective way of addressing climate control without needlessly sacrificing the competitive position of the U.S. forest and paper industry or any of our nation's other vital interests.
The above is based on testimony before the U.S. House of Representatives Government Reform and Oversight Committee in September
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