From the outset, the Kyoto Protocol and the UNFCCC have had to contend with perceived tension between effective action to slow climate change, and maintenance of competitiveness. Competitiveness concerns were the explicit prime motivation for the withdrawal of the U.S. from the Kyoto Process. Competitiveness concerns have since plagued Canada, the U.S.'s largest trading partner and the bearer of a relatively difficult emission reduction target. They have also figured large in the climate-related policy debates in the EU, where they effectively scuttled the EC's 1992 proposed Directive on Carbon Tax, and have continued to dog the elaboration and implementation of the EU's Emissions Trading System.
This paper explores the nature of the concerns over competitiveness, trying to dissect them in a meaningful way and assess the need for concern. It aims to serve as background to the discussions to take place at the experts' workshop on Climate Change, Competitiveness and Trade, London, U.K., March 30, 2005, organized by Chatham House and the International Institute for Sustainable Development.