Howard’s End: Kyoto Protocol Loophole

The Kyoto Protocol on global warming is supposed to curb carbon pollution but imposes no emissions limits on countries such as China and India. It is not surprising, then, that international oil giant Shell has just finalised a contract to build a $4 billion petrochemical plant in southern China. John Howard writes.

Shell Oil announced yesterday that it will enter a joint petrochemical venture with China to build what is being described as the biggest venture yet between a foreign company and Chinese partners.

The complex in Guangdong Province near Hong Kong is expected to be completed by 2005 and will produce more than two million tonnes of petrochemical products annually, about two-thirds of what China currently imports.

The Daya Bay complex will generate $1.7 billion in product sales mainly to customers in Guangdong and Chinese coastal areas.

Shell Chemicals will have a 50 percent stake in the company, with the other half owned jointly by China's National Offshore Oil Corp., and the province of Guangdong.

Coupled with China's forthcoming entry into the free-trade WTO and its no carbon emissions limits under Kyoto, the new petrochemical deal was a logical choice for Shell.

The American Senate has already voted 95-0 not to ratify the Kyoto Protocol because it will make energy products and use more expensive in Western countries while failing to impose limits on developing countries like China and India.

Members of the US Senate expressed concern in debates that the Kyoto Protocol would be helping other countries become the chief atmospheric polluters when multinational companies, in an attempt to increase profits, moved to them to escape the rules.

It would do nothing to help reduce global warming and would simply transfer the problem, they said.

The New Zealand government plans to ratify the Kyoto Protocol in 2002.

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