Economic, environmental, and technical gains from the Kyoto Protocol: Evidence from cement manufacturing

Abstract

The Kyoto Protocol is an international agreement signed in 1997 to reduce emissions of carbon dioxide and mitigate the consequences of global climate change. Early studies of the effectiveness of the Kyoto Protocol have attributed it to approximately a 7%–10% reduction in global carbon dioxide emissions. Given the carbon intensity of cement manufacturing, we examine the impact of the Kyoto Protocol on cement manufacturing output and carbon dioxide emissions. We are especially concerned about whether the Kyoto Protocol may have led cement manufacturing to move to places without binding emissions targets, thus resulting in carbon leakage. We find that nations with binding emissions targets under the Kyoto Protocol saw a 5% reduction in both cement manufacturing and carbon dioxide emissions from cement manufacturing compared to other nations, suggesting that the Kyoto Protocol may have led to technological innovation in cement manufacturing. Using data on carbon intensities for cement manufacturing, we support this notion and find further evidence that it fostered diffusion of existing, cleaner technologies from relatively more developed nations during the first phase, and technical innovation by these nations during the second phase, resulting in significant reductions in carbon dioxide emissions.