TED Case Studies


Sulfur Treaty


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          CASE NUMBER:          65 
          CASE MNEMONIC:      SULFUR 
          CASE NAME:          Sulfur Treaty

A.        IDENTIFICATION

1.        The Issue

     In 1985, twenty-one countries (all European except Canada)
signed the "Protocol to the 1979 Convention on Long-Range
Transboundary Air Pollution on the Reduction of Sulphur
Emissions or Their Transboundary Fluxes by at Least 30 Per
Cent."  It aims to reduce annual sulphur emissions -- the main
cause of acid rain -- by at least 30 per cent in the year 1993. 
Since then, a new treaty is currently in the process of
negotiation.  The most important issue on the negotiating table
is the inclusion of East European countries and the most
effective method for inclusion.  Should Western European
sponsors of the original treaty assist its neighbors in
acquiring expensive power scrubbers, provided by Western
business?  The balance between domestic business interests,
Germany's $40 billion pollution-control industry, and
international environmental interests are crucial factors
guiding the negotiations.

2.        Description

     An increase in the level of man-made air pollutants over
Europe and North America, and the ensuing rise in the intensity
of acid deposition, can be traced back to the period of the
Industrial Revolution.  In the last ten years, however, concern
about environmental damage attributable to air pollutants has
increased dramatically.  Many European countries are
experiencing forest declines where damaged tree stands
constitutes more than 15 to 20 percent of exploitable closed
forests growing stock whose volumes exceed annual felling by 5
to 10 times.  In all, more than 16 million acres of forest in
nine European countries have been damaged by acid rain.  The
German situation was most severe and led to a search into the
underlying causes of "Waldsterben" (forest death) and in
finding viable solutions.  

     In the beginning of 1985, West Germans were shocked to
learn that approximately one-half of their coveted tree
population was showing signs of damage.  The problems are
characterized by a yellowing of the needle tips, premature
defoliation and dieback.  The data, issued by the Federal
Ministry of Food, Agriculture and Forestry in Bonn, classified
8 percent of the country's forested area in 1982 as being
damaged; one year later in 1983, the figure skyrocketed to 34
percent.  Blame for the majority of the damage was attributed
to acid rain.  

     Many historic buildings, including The Acropolis, the
Tower of London and Cologne Cathedral are also victims of acid
rain: "it is beyond doubt, that acid rain, mainly due to sulfur
dioxide emissions, is damaging British buildings, and slowly
but surely dissolving away our historic heritage."  Lakes and
waterways are also being damaged by acid rain.  Approximately
18,000 lakes in Sweden were acidified by 1982, and Norway's
fish populations have declined in 2,600 lakes and in many
rivers.  No European nation seems to have been left unaffected
by this chemical problem, as Switzerland, Denmark, France,
Austria, Greece and Holland all are reporting damage.  

     Acid rain is not restricted to the domestic territory of
the polluting region.  In the United Kingdom, about 80 percent
of the sulfur deposition originates from home emissions. 
Norwegian domestic sources, however, contribute only 10 percent
of the domestic total sulfur deposition there.  Foreign sources
add 40 percent, and 50 percent of the sources are of an
undetermined origin.  This undecided deposition represents
the background sulfur found in precipitation from air masses
that have not passed over sulfur emission sources within a few
days.  "Acidification is a trans-world problem...the sources
and environmental consequences of acid deposition often are
separated by thousands of miles".   

     It was the finding of transborder pollution flows that
prompted an international response in the form of the UN
Convention on Long-Range Transboundary Air Pollution.  Adopted
in Geneva on November 13, 1979 and signed by 34 countries, the
convention was set to limit and, as far as possible, gradually
reduce and prevent air pollution, including long-range
transboundary air pollution.  While the 1979 Convention was
viewed as little more than a declarative document without
teeth, this all changed in the 1980s when policy makers began
to realize that virtually all European countries were affected
by the problem.  The Convention became effective in March, 1983
when it had been ratified by a sufficient number of signatories
extending from Canada and the United States to the Soviet
Union.  

     The second major step in implementing the Convention, and
the underlying focus of the issue at hand, is the "Protocol on
the Reduction of Sulphur Emissions or Their Transboundary
Fluxes by At Least Thirty Percent."  Adopted in Helsinki on
July 8,  1985, it immediately obtained 21 signatories,
including Canada.  Conspicuously absent was the signature of
the United States.  Sixteen countries ratified the Protocol and
it entered into force on September 2, 1987.  Article 2 of the
convention states žthe parties shall reduce their national
annual sulphur emissions or their transboundary fluxes by at
least 30 per cent as soon as possible and at the latest by
1993, using 1980 levels as the basis for calculation of
reductions.  Article 4 of the Protocol states "each party
shall provide annually to the Executive Body its levels of
national annual sulphur emissions, and the basis upon which
they have been contacted."  By 1986, ten parties to the
convention had reached the target ahead of schedule. 

     In September, 1993, the original parties to the convention
began negotiating a successor treaty.  The largest issue is the
role of Eastern European countries, which are currently one of
the largest polluted regions in the world.  For example, 90
percent of the water in Poland is too polluted to drink, while
much of the water in Poland's biggest River is too polluted
even for external use.  

     The new treaty hopes to base targets assessments of
acidity and the capacity for absorption.  This approach has
gained the attention of some of the countries involved in the
proceedings, mainly Germany.  During the original eight-year
period of the 1985 Protocol, countries such as the United
Kingdom cut sulphur-dioxide output by shutting down coal mines
and switching to alternative fuel methods.  Germany, on the
other hand, relied mainly on the installation of large and very
expensive flue-gas desulfurization to handle the coal, which
its subsidized coal mines continue to produce.

     German negotiators, in the hopes of acquiring
environmental contracts, advocate using the best available
technology.  Eastern European countries, in the search for
solutions to their massive environmental problems, may find it
unwise to spend their limited resources on power station
scrubbers, since the majority of the sulfur comes not from the
chimneys of power stations, but instead from home chimneys. 
Expensive power scrubbers, supplied by West European
contractors, would not address the problem.  

     Experts claim the answer for East Europe is to copy the
Western Europe of the 1950s, not of the 1980s: to introduce
smokeless zones, and to make available smokeless fuels,
including gas for central heating.  This solution, however,
will not bring contracts to Western Europe's suppliers of
pollution-control equipment.  In Germany, the environmental
technology industry comprises over four-thousand firms with an
overall work force of 680,000.   

     Action to reduce air pollution is now broadening to
include not only sulfur dioxides, but also other culprits of
environmental damage, such as nitrogen oxides, ozone and other
pollutants.  The original 1979 Convention is gradually becoming
more than an acid rain treaty.  It provides a legal and
institutional framework for multilateral cooperation on the
entire range of transboundary air quality issues in Western
Europe, North America, and in the current deliberation, Eastern
Europe.

3.        Related Cases

     MONTREAL case
     ECCARBON case
     JAPANAIR case
     KORRPOLL case
     CLEAN case
     VENEZ case

     Keyword Clusters         

     (1): Domain                   = EUROPE
     (2): Status                   = INPROGress
     (3): Environmental Problem    = Pollution Air [POLA]

4.        Draft Author:  Renata Hron

B.        LEGAL Clusters

5.        Discourse and Status:  AGReement and INPROGress

     The new treaty, still under negotiation, seeks to include
Eastern European countries in sophisticated pollution control
to reduce factors involved in the production and dissemination
of acid rain.

6.        Forum and Scope:  UN and REGION

7.        Decision Breadth: 17

     The number of parties involved include the twenty-one
countries who originally signed the 1985 Protocol on the
Reduction of Sulphur Emissions plus seven additional East
European countries.

8.        Legal Standing:  TREATY

     The treaty is a document of the United Nations Economic
Commission for Europe, and is found in a number of
international law books, such as Carter and Trimbles
International Law. 

C.        GEOGRAPHIC Clusters

9.        Geographic Locations

     a.   Geographic Domain : EUROPE
     b.   Geographic Site   : EUROPE
     c.   Geographic Impact : EUROPE

10.       Sub-National Factors:  NO

11.       Type of Habitat:  TEMPerate

D.        TRADE Clusters

12.       Type of Measure:  Regulatory Standard [REGSTD]

     The type of measure involved is a regulatory standard, in
which each signatory country agrees to reduce sulphur emissions
by a flat 30 percent based on 1980 rates in a limited time
period.

13.       Direct vs. Indirect Impacts:  DIRECT

     The trade issue involves the best method of achieving
these goals in Eastern Europe -- either via expensive power
scrubbers or via introducing smokeless zones and transforming
fuel reliance.  Both options are a solution to a solution and
as such, have an direct impact since much of the newer
technology will need to be imported.  Germany stands ready to
do so.

14.       Relation of Measure to Environmental Impact

     a.  Directly Related     : YES  MANY 
     b.  Indirectly Related   : YES  Pollution Control 
     c.  Not Related          : NO
     d.  Process Related      : YES  Pollution Air [POLA]

15.   Trade Product Identification:  Pollution Control Devices
                                             [PCD]

     The product type hinges on the decisions of the Western
negotiating team on how to best assist Eastern Europe in its
transition to safe, effective, pollution control.  The would
include power scrubbers, which are used to assist in the
filtration of sulfur emissions, and equipment which will assist
in the transition from a coal-reliant country to one reliant on
natural gas.

     Annual worldwide sales of environmental technology are
estimated at $200 billion.  In Germany, sales of
pollution-control equipment are expected to reach $40 billion
in 1993, with above average growth forecast for the remainder
of the decade.   With exports of DM 35 billion (as of now, $1 =
DM 1.65) and a 21 percent market share, Germans firms are world
leaders of air pollution control equipment.  U.S. companies
follow with a 16 percent market share.   

     Statistics regarding natural gas production are relevant
in the case at hand.  The former Soviet Union was the largest
producer of natural gas, producing 34 percent of the world's
supply in 1991.  Romania also can be found on the list of top
fifteen, producing 1 percent of the world supply during the
same time period.  In addition, almost half of the world's
natural gas reserves can be found in developing countries.  For
example, Poland has 130 billion cubic meters (BCM) of natural
gas reserves and only consumes 13 BCMs per year.

16.  Economic Data

     Germany will initially feel the greatest impact
economically from either an Option A or Option B decision as
she is the leader in the field of pollution-control equipment. 
Annual worldwide sales in the industry are estimated at $200
billion, while Germany's exports of over $20 billion account
for 21 percent of total market share.  Domestically, the German
environmental technology industry includes over four-thousand
small firms with an overall work force of 680,000. 

17.       Impact of Measure on Trade Competitiveness: LOW

18.       Industry Sector:  MANUFacturing

19.       Exporter and Importer:  GERMany and MANY

     Germany is the country most likely to export this new
environmental equipment to countries of East Europe such as
Poland, Hungary, and the Czech Republic.

E.        ENVIRONMENT Clusters

20.       Environmental Problem Type:  Pollution Air [POLA]

21.       Name, Type, and Diversity of Species 

          Name:          Many
          Type:          Many
          Diversity:     NA

     The number of species involved in this case is seemingly
endless.  The 1985 Protocol was mainly concerned with the
effects of acid rain on forests.  However, since the problem is
found in the soil of affected regions, one would expect all
wildlife to somehow feel the repercussions of the acidic soil
and lack of necessary nutrients.  At immediate recognizable
risk are the coniferous trees of European forests which are
more sensitive to long-lasting exposure to low pollutant
concentrations of sulfur dioxide.  In Sweden the spruce tree
suffers from needle loss, while in Germany several different
species of trees are damaged.  The silver fir first showed
apparent symptoms of decline n the mid-1970s, followed by the
Norway spruce in 1980 in southern Germany and elsewhere in
1982.  While more severely damaged, silver fir stands are
concentrated in relatively small areas, making this type the
less important of the two species.  Regardless of importance,
the development of forest damage must be considered a
long-lasting chronic process; the resilience of the plant
diminishes when reacting to environmental changes.  

     The "fundamental social, ethical, cultural and economic
values of these resources have been recognized in religion, art
and literature from the earliest days of recorded history. 
How does one assess a value to a biological resource -- a
seemingly intangible object?  The three main approaches are:
     (1) assessing the value of naturežs products that are
     consumed directly, without passing through a market
     (consumption use value),
     (2) assessing the value of products that are
     commercially harvested (productive use value), and
     (3) assessing indirect values of ecosystem functions,
     along with the intangible values of keeping options
     open for the future and simply knowing that certain
     species exist and have an option (existence value). 

     It is the second category -- productive use -- which is
much more visibly affected by acid destruction of forests,
historical buildings and waterways.  This value is assigned to
products that are commercially harvested for exchange.  The
West German timber industry is clearly concerned with the
estimated $250-million annual loss from forest death. 
Tourism will surely be affected from the decay of buildings and
monuments and fish dying in the rivers and waterways. 

     The third area, categorized as an indirect value, does not
normally appear in national accounting systems, and is much
more difficult to quantify, as it deals primarily with
functions of the eco-system.  It is the destruction of soil
which is primarily affected in this area -- the soil which
supports not only forests, but all other plant-life as well.

22.       Resource Impact and Effect:  MEDium and REGULatory

23.       Urgency and Lifetime:  LONG and 100s of years

     Barring natural disaster, the species involved should
potentially enjoy a life span of hundreds of years.  For
example, fir trees generally take 150 to 250 years alone to
finish growing.

24.       Substitutes:  Alternative Fuel [ALTER]

     A substitute product in the case at hand is essentially
one of the items on the table in negotiations: the introduction
of alternative fuel methods.

VI.       OTHER Factors

25.       Culture:  NO

26.       Trans-Border:  YES

     The problem is due to the trans-border nature of
effluents.

27.       Human Rights:  YES

     The health problems in Europe related to air pollution are
severe that life spans are significantly shorter in some parts,
such as the east, than other parts.

28.       Relevant Literature

"Coming Clean."  The Economist (September 4, 1993): 20-22.
"Commerzbank Viewpoint."  Wall Street Journal (October 22,
     1993): 16.
Dovland, Harald. Monitoring European Transboundary Air
     Pollution.  Environment 29/10 (December, 1987):
     10-15+.
"From Emission to Acidification: An Acid Rain Primer."
     Environment 29/9 (November 1987): 35.
Homer, John.  Natural Gas in Developing Countries: Evaluating
     the Benefits to the Environment. Washington, DC: The
     World Bank, 1993.
International News - Currents Department.  Environmental
     Science and Technology  various issues.
LaBastille, Anne. The International Acid Test.  Sierra 71/3
     (May/June, 1986): 51-55.
McNeely, Jeffrey A. etal.  Conserving the World's Biological 
     Diversity.  Washington, DC: International
     Conservation of Nature and Natural Resources, 1990.
Nelson-Horchler, Joani.  "Will Acid Rain Legislation Get a Free
     Ride?"  Industry Week (April 6, 1987): 20-21.
Nilsson, Sten and Duinker, Peter. "The Extent of Forest Decline
     in Europe."  Environment 29/9 (November 1987): 4-9.
O'Sullivan, Dermot A.  "European Concern About Acid Rain is
     Growing."  Chemical & Engineering News 63/4 (January
     28, 1985): 12-18.
Pallemaerts, Marc.  "The Politics of Acid Rain Control in
     Europe." Environment 38/2 (March 1988): 42-44.
Pinto, Neil and Besant-Jones, John.  Demand and Netback Values
     for Gas in Electricity.  Washington, DC: The World
     Bank, 1989.
Prinz, Bernhard.  "Causes of Forest Damage in Europe."
     Environment 29/9 (November 1987): 11-15+.
Sand, Peter, H.  "Air Pollution in Europe - International
      Policy Responses."  Environment 29/10 (December
     1987): 16-20+.
Taylor, Ronald A.  "Acid Rain Spreads Its Deadly Sting."  U.S.
     News and World Report (October 7, 1985): 58.
United Nations Economic Commission for Europe.  Convention on
     Long-Range Transboundary Air Pollution, 1979.
United Nations Economic Commission for Europe.  Protocol to the
     1979 Convention on Long-Range Transboundary Air
     Pollution on the Reduction of Sulphur Emissions or
     Their Transboundary Fluxes by at Least 30 Per Cent,
     1985. 

                          References



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1/11/97