The Kyoto Protocol to the United Nations Framework Convention on Climate Change, agreed to in December 1997, marks an important turning point in efforts to promote the use of renewable energy worldwide. Since the original Framework Convention was signed at the Earth Summit in Rio de Janeiro in 1992, climate change has spurred many countries to step up their support of renewable energy. Even more ambitious efforts to promote renewables can be expected as a result of the Kyoto pact, which includes legally binding emissions limits for industrial countries and, for the first time, specifically identifies promotion of renewable energy as a key strategy for reducing greenhouse gas emissions.

This report examines the opportunities for renewable energy presented by the Kyoto Protocol and its subsequent implementation at both national and international levels. It suggests ways in which renewable energy business leaders and advocates can use the protocol as a means of accelerating the development of renewable energy policies and markets. We conclude that climate change will be increasingly central to the evolution of renewable energy technologies worldwide, and that it will accelerate the globalization of renewable energy markets that is already under way. Those who advocate or invest in renewable energy can no longer afford to ignore climate change.

The climate policy process is highly complex and fragmented, which means that efforts to monitor developments -- let alone participate in them -- must be carefully designed and judiciously managed. Stakeholders who follow the evolution of future climate policy most closely, and who respond efficiently and adeptly, will be best positioned to take advantage of the market opportunities that open up as the new century begins.

We believe that renewable energy advocates will find that the Kyoto climate conference and its accompanying global media coverage have created a favorable climate for renewable energy development. In the past year, multinational corporations such as British Petroleum, Royal Dutch Shell, and Tomen Corporation have announced major new investments in solar energy and wind power, which is likely to accelerate growth in these industries.

Implementation of the Kyoto Protocol faces many uncertainties in the years ahead, however. Wide disagreements among key governments were papered over in the protocol, and will have to be worked out before the U.S. Senate and other national legislative bodies will ratify it. Meanwhile, a backlash against the protocol has been felt from some U.S. industries and the Senate, forming sharp battlelines with the Clinton administration and its efforts to implement policy reforms in the United States. The protocol is to be further elaborated at the Fourth Conference of the Parties in Buenos Aires in November 1998, but the process of working out detailed issues of verification, enforcement, trading, and future developing-country commitments is likely to continue for several years, and will require careful monitoring.

On the financing front, the Global Environment Facility and the World Bank are working on new climate plans. In addition, a Clean Development Mechanism to channel funds into developing-country projects is authorized in the protocol, and will be set up in the coming years. These efforts could substantially increase financial support for renewable energy projects in developing countries as well as the Eastern bloc.

At the national level, the United States and several European governments have already proposed ambitious post-Kyoto renewable energy initiatives, some of which may go into force well before the protocol is ratified. This paper describes these proposed policies, and examines their political prospects and economic potential.

Much as the scientific uncertainties actually strengthen the case for stronger action on climate change, the uncertain political climate for renewables in the U.S. makes it all the more critical that its proponents be heard. This report identifies concrete ways in which U.S. renewable energy industries and advocates can take advantage of the Kyoto Protocol and influence the ongoing climate policy process by working with various business and nongovernmental organizations. The final section provides detailed recommendations for those who want to become more actively involved in the climate process or to make use of the national and international supports being developed. In addition, an Appendix provides a list of key contacts.

As powerful symbols of worldwide efforts to slow the inexorable buildup of carbon dioxide, renewable energy technologies are well positioned to benefit from the global effort to combat climate change that is now gathering force. Renewable energy promoters -- companies, policymakers, and advocates -- hoping to ride the approaching wave of post-Kyoto policies would do well to "Think B-I-G":

• Be actively involved in implementing and strengthening national programs aimed at accelerating "decarbonization" of the energy system; do not allow "sunset" industries, such as coal and oil, to set the terms of this debate.

• Influence the design of new international policies and institutions under the Framework Convention so as to enhance their effectiveness in promoting renewable energy.

• Get ready for potentially explosive growth of renewable energy markets in several regions in the next few years, including southern Europe, China, and Latin America.

Abstract A Message from the Staff of the Renewable Energy Policy Project Article