The Effect of the Kyoto Protocol on Carbon Emissions

Since 1997, CO2 emissions have continued to rise in many countries despite their emission caps under the Kyoto Protocol (Kyoto). Failure to meet promised targets, however, does not imply that Kyoto has been pointless. Whether Kyoto has made a difference relative to the counterfactual of No Kyoto is an empirical question that requires an instrumental variables strategy. We argue that countries' ratification of the statutes governing the International Criminal Court is a valid instrument for ratification of Kyoto commitments. In our panel fixed effects estimations, the instrument easily passes weak identification and overidentification tests. It can be plausibly excluded from our second-stage equations and does not cause CO2 emissions. Our estimates suggest that Kyoto ratification has a quantitatively large (about 10 percent) and robust, though only moderately statistically significant, negative effect on CO2 emissions. We also show that higher fuel prices and a different energy mix in Kyoto countries support this result.