- The Washington Times - Thursday, January 24, 2002

Major U.S. companies see potential opportunities and pitfalls in the Kyoto Protocol even though the Bush administration vowed not to follow the global-warming agreement last year.
With operations all over the world, many U.S.-based multinational corporations are preparing for limits on "greehouse gas" emissions that scientists say warm the earth's atmosphere, even if the world's largest economy is not part of the treaty.
"If you are a big multinational, you'll have operations in Kyoto countries and have to adapt," said Daniel Bodansky, a professor of law at the University of Washington in Seattle, who has studied the issue for the Pew Center on Climate Change.
Negotiators cemented a deal to implement the 1997 Kyoto Protocol during a November meeting in Marrakech, Morocco. The deal commits most industrialized nations to reducing emissions, mainly carbon dioxide, to 5 percent below 1990 levels by 2012.
Calling the treaty "fatally flawed," President Bush pulled the United States out of Kyoto negotiations in May. But the United States did not block European efforts to resuscitate the agreement, which narrowly succeeded in Marrakech.
As a result, American companies will have to grapple with the treaty, which will take effect this year or next as countries in Europe and Asia ratify it.
For example, Dupont, the Wilmington, Del., chemical giant, manufactures products under well-known brand names like Lycra and Kevlar.
Roughly half of Dupont's 85,000 employees work at facilities outside of the United States, many of which are now facing limits on their emissions.
In an attempt to get ahead of the game, Dupont settled on a plan to reduce emissions by 65 percent from 1990 levels by 2010.
"Kyoto poses a real challenge to all the companies that operate internationally," said Tom Jacob, the company's senior adviser for global affairs.
Mr. Jacob pointed out that Dupont, as an American company, may not qualify for some incentives that other countries use to promote reductions in emissions.
But other American companies stand to gain from the treaty.
The pact allows countries to reduce their emissions by using market-based mechanisms. One approach would allow companies to reduce their emissions well below a certain target level and then sell authorization to emit gases to other companies.
This "cap and trade" system is used in the United States for the pollutants that cause acid rain. Businesses that help major corporations establish internal auditing systems for reducing emissions and create trading systems stand to benefit from Kyoto regardless of U.S. participation.
"We are expanding our presence in Europe," said Richard Rosenzweig, managing director with New York-based NatSource, a privately held emissions-trading company. "For companies in Europe, [Kyoto] is not theoretical anymore."
NatSource already has brokered emissions trades in Britain and Denmark, which have programs to reduce emissions.
Companies such as Ford Motor Co., power company Exelon Corp. and International Paper are participating in a project for trading the right to emit gases called the Chicago Climate Exchange.
Despite Mr. Bush's stand, many companies are looking at how to adapt to Kyoto based on the belief that the United States eventually will join some type of climate-change prevention system, and that early compliance is the cheapest option.
"It's harder to change in the future than it is to adapt now," Mr. Bodansky said.

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