THE good news is that the Kyoto protocol aimed at reducing greenhouse-gas emissions came into effect last week, binding the 34 industrialised countries that have ratified the treaty to cut their emissions by 2012.

Although the agreement cannot do much to change the rate at which the globe is warming, if indeed it is, I call its activation good news for two reasons.

First, the participants have agreed to adopt America’s position that the best way to keep the cost of compliance down is to set up an emissions trading system. Companies are assigned permits to emit a certain amount of greenhouse gas and fined €40 per tonne in the EU if they exceed that cap.

To avoid such a fine, companies exceeding their cap can buy unused permits from firms that have found it efficient to reduce their own emissions and sell their unused “emission credits”.

It is ironic that this provision to allow cost-minimising compliance was introduced at the insistence of the American delegation, over European objections. The Europeans have since warmed to the idea of trading emission credits, while the Americans have cooled on the idea of any treaty at all.

Europeans tend to blame this cooling of concern about global warming on George W Bush — the source of most of the world’s ills, in the opinion of France, Germany and others.

It is true that the president did announce in his direct Texan way that America would not take part. And he repeated last week that Europeans “thought the treaty made sense. I didn’t”. He is only recognising the hard fact that Bill Clinton did not submit the treaty for ratification because not a single senator was prepared to agree to it.

The second reason the coming into force of the protocol is good news is that it is forcing the signatories to re-examine premises and practicality.

The pro-Kyoto nations are finding there is some merit in the American position that compliance with the treaty, at the pace it requires, is simply impossible without doing serious damage to economic growth.

Tony Blair, who plans to make the fight against global warming the centrepiece of his EU presidency, has found it necessary to seek a relaxation of the ambitious targets he once embraced, lest many British industries are placed at a competitive disadvantage.

In Japan, the country that played host in 1997 to the protocol’s drafters, greenhouse-gas emissions rose 8% last year, making it unlikely that it would achieve a 6% reduction from 1990 levels by 2012. And Canada, an enthusiastic backer of Kyoto, also finds itself in difficulty: it agreed to cut emissions to 6% below 1990 levels, only to see them rising at an annual rate of 1.5%.

None of this deters the greenest greens from insisting that the targets be met, irrespective of the economic costs involved and of the fact that without the participation of rapidly industrialising China (already in 2000 responsible for 15% of the world’s emissions), and India, the Kyoto agreement is nothing more than, er, hot air.

Not to mention the effect of American non-participation: the United States accounts for a bit more than 20% of world greenhouse-gas emissions and has 100 coal-burning plants on the drawing boards to meet its growing need for electricity.

While the Europeans are learning the costs of compliance, most serious American policymakers now accept that the scientific certainty they once demanded is unobtainable, and that the probability that carbon-dioxide emissions are warming the earth is high enough to warrant adoption of prudent policies.

They agree that it would be sensible to shape a programme consisting of what Harvard professor Bill Hogan calls “many things we should be doing anyhow”.

This brings us back to Tony Blair. The prime minister may be having a problem meeting his extravagant claim that Britain would reduce its carbon- dioxide emissions by 20% by 2010, and 60% by 2050.

But he nevertheless is well positioned to persuade vice-president Dick Cheney, who is in charge of energy policy, that his support of American policy in Iraq entitles him to a bit of a quid pro quo, to be announced triumphantly during Blair’s EU presidency.

Bush need not sign up to Kyoto. Even those who (foolishly) believe the president will come to Europe laden with olive branches don’t expect that. But he can let the prime minister persuade him to adopt Hogan’s “things we should be doing anyhow”.

Let’s start with the proposal by researchers at Resources for the Future, the widely respected non-partisan Washington think tank. They suggest that America adopt a “cap-and-trade” system like that operating in the EU, but include a safety valve that limits the price emissions permits will be allowed to reach.

The greens who would oppose such a cost limit would be hard-pressed to continue claiming that reducing emissions won’t be costly, while critics who claim that reducing greenhouse gases would be ruinously expensive would be defanged.

The president, who has expressed a desire “to work together” on environmental issues, might also be persuaded to encourage other companies to join the American firms (among them Ford, DuPont and four electric utilities) that have voluntarily agreed to reduce their 2006 greenhouse-gas emissions to 4% below their 1998-2001 average, and will be allowed to sell or bank any surplus emission allowances.

If the Europeans can then be convinced that such an alternative to Kyoto represents an adequate contribution towards their goal of reining in greenhouse-gas emissions, America and the EU could unite and turn to the more difficult task of creating incentives for India, China and other developing countries to adopt emission control programmes that won’t stifle their growth.

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