BRIAN FALLOW reports that the international deal to cut greenhouse gases could be salvaged without US participation, but the outlook is not good.
Ministers gather in Bonn next week in a bid to salvage the Kyoto Protocol, which is the closest the world has yet come to an international agreement to tackle global warming.
The prospects do not look good.
Since the last meeting, in The Hague last November, broke up in acrimony there have been two major developments.
* The consensus view of the world's climate scientists, expressed by the UN's Intergovernmental Panel on Climate Change, has become more alarming.
They have revised upwards their projection range for man-made global warming this century if we continue as we are.
The low end of the range would represent about three times as much warming as occurred in the 20th century; the high end would be as much warming as has occurred since the last Ice Age.
These projections and their environmental consequences are not certain, but they are certainly not trivial.
* The United States has pronounced the Kyoto Protocol "fatally flawed," inimical to US economic interests, and unfair because it does not include large developing countries, notably China and India.
The United States can be seen as an extreme example of the global dilemma.
For economic reasons it needs to increase energy production. President George W. Bush's energy plan calls for at least another 1300 power stations.
But that cannot be done without a huge increase in the emission of carbon dioxide, the main greenhouse gas responsible for global warming.
Breaking the link between energy production and carbon dioxide production is a technological challenge. A raft of alternative technologies exist in various stages of development, but they are unlikely to be commercially viable so long as energy prices do not reflect environmental costs.
The status quo allows energy consumers to avoid paying for the environmental consequences of their actions, the costs being instead diffused over the whole planet and pushed into the future.
To put the same point more emotively, we are the recipients of a sort of subsidy flowing from poor countries to rich ones and from future generations to the present.
Moves such as the Kyoto Protocol, in the direction of bringing this free ride to an end, are therefore regarded without joy.
But the UN panel's economic modelling yields the unsurprising result that the longer action to curb greenhouse gas emissions is delayed, the greater the cost will be.
The New Zealand Government has said it wants to ratify the protocol next year, but the agreement is not yet in a fit state for anyone to ratify.
Climate change minister Pete Hodgson yesterday rebutted reports that the Government is backing away from the protocol.
"What came out of Kyoto in 1997 was a framework agreement. Important details on matters, including international carbon trading mechanisms, recognition of carbon sinks and compliance, are yet to be settled.
"New Zealand wants rules on these matters that are easy to understand and hard to break," he said.
But the fact remains that the chances of an agreement that includes the US, the world's largest emitter of greenhouse gases, lie somewhere between remote and nil.
Kyoto's central proposition, that greenhouse emissions have to be curbed, cannot be reconciled with the US energy plan, which is all about increasing supply.
In effect, it has relegated itself to the sidelines.
This is unfortunate from New Zealand's point of view because the US has been the principal champion of international mechanisms to ensure that curbing emissions is achieved at the lowest possible cost.
These include international trading in rights to emit greenhouse gases - something like quota in the fishing industry.
The ability to use emissions trading to mitigate the cost of complying with Kyoto obligations is especially important to New Zealand, which does not have much low-hanging fruit, in the form of old and inefficient coal-burning plants that could be closed, freeing quota at little economic cost.
The Europeans seek to limit the extent to which countries (or those outside the European Union at any rate) can use such mechanisms to discharge their obligations.
As the protocol stands, New Zealand would be a net seller of carbon quota into the international market. This is because article 3.3 of the protocol allows credits to be claimed for the carbon soaked up by plantation forests, provided they were planted since 1990 on land not previously forested.
About a third of New Zealand's plantation forest estate qualifies.
Without the US as a buyer in that market it would be a lot less liquid and efficient, and prices are liable to be lower, intensifying European and environmentalist concerns that trading is an easy way to avoid Kyoto obligations.
For a trading regime to begin, there must be internationally recognised property rights to trade, and that requires the protocol to come into force.
For the protocol to be binding under international law it must be ratified by countries emitting at least 55 per cent of developed-world carbon dioxide in 1990.
The US accounts for 36.1 per cent, Canada (which has said it cannot afford to ratify if the US does not) 3.3 per cent and Australia (which sees no point in an agreement excluding the US) 2.1 per cent.
But it is still arithmetically possible to reach the 55 per cent threshold. The European Union accounts for 24.2 per cent, Eastern and Central European countries seeking to join the EU 7.4 per cent, and Russia ( a potential big winner under the Kyoto rules) 17.4 per cent.
This leaves Kyoto's proponents 6 per cent short. New Zealand's 0.2 per cent would not be much help.
It all depends on Japan, which accounted for 8.5 per cent of 1990 emissions.
Japan is understandably reluctant to undertake obligations that the US will not, but is unlikely to relish being seen as administering the coup de grace to the protocol.
Prime Minister Junichiro Koizumi was said to have told President Bush that Japan would not ratify Kyoto until the US does, but to have softened that stance when talking to European leaders.
Dutch Environment Minister Jan Pronk, who will chair the Bonn meeting, has come up with a proposal designed to induce Japan (and any other country like it) to ratify without the US.
But there are doubts that it will be acceptable to the Europeans, or even to the Japanese.
Mr Pronk has also suggested pushing back the "first commitment period" (the period by which greenhouse gas emissions must be reduced to, on average, 5 per cent below 1990 levels) by two years, to 2010-2015.
Such a suggestion, says Garry Law of the Environmental Defence Society, hints at desperation.
"The UN climate secretariat, which normally eschews controversy, has said that a protocol without the US might have some value but that would not extend beyond five years," he says.
The New Zealand delegation in Bonn will include representatives of farming and forestry and of the Greenhouse Policy Coalition, which represents major industrial emitters.
Opponents of New Zealand ratifying the protocol point to the risks of burdening the economy with costs ahead of competitors.
Smokestack industries such as aluminium, steel, wood pulp and cement would want to negotiate their own deals with the Government to ensure that any measures taken to implement the protocol (such as a carbon tax) were not commercially lethal to them.
Farmers are worried about a carbon tax because more than half of New Zealand's emissions come from sheep, cattle and agricultural soils.
And while some parts of the forestry industry would gain from the protocol, others fear competition from "Kyoto forests" planted elsewhere.
Officials have been beavering away designing policy instruments on the assumption that New Zealand will ratify the protocol next year.
"That must be becoming increasingly unlikely," Mr Law says.
"But some time in the next decade we will be party to an agreement which binds us to do what we undertook to do when we signed the climate convention [at Rio de Janiero in 1992].
"Without a start now, the shock of that may be very great indeed."
Intergovernmental Panel on Climate Change (IPCC)
United Nations Environment Program
World Meteorological Organisation
Framework Convention on Climate Change
Executive summary: Climate change impacts on NZ
IPCC Summary: Climate Change 2001
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