A deal to be done between rich and poor countries on global warming is going begging
IF ALL goes well, in 2011, a year before the Kyoto protocol expires, a new opera will open at La Scala in Milan. It will be based on “An Inconvenient Truth”, the book and film about global warming by Al Gore, the former vice-president. It is easy to see the drama in the story of the failed American presidential candidate turned green crusader (although not in the thickets of statistics into which he sometimes strays). But whether the opera in Milan will end happily or tragically, the composer has not yet revealed.
Does Mr Gore, armed with a PowerPoint presentation and mounted on a rickety mechanical ladder, put the sceptics and recalcitrants of climate change to rout? Or do the world's politicians ignore his song and allow timidity, suspicion and recrimination to vanquish the greater good?
In real life, the answer to those questions is being debated, amid negotiations over a replacement for the Kyoto treaty. Discussions are under way in Bonn and America's Congress right now (see article). The talks are due to culminate in a summit in Denmark next year. But already, the protagonists are blocking out their positions.
Most developing countries are as one: almost all the greenhouse gases that have accumulated over the past two centuries, and are now heating up the planet, came from the chimneys and exhaust pipes of the rich world. What is more, each person in a rich country adds far more to the build-up than someone from a poorer country does. So, the likes of China and India conclude, the rich world must shoulder its responsibility for fixing the climate.
Meanwhile, in America in particular, a chorus of leery politicians points out that China is now churning out greenhouse gases faster than any other country, even if its cumulative tally remains relatively low. Indonesia, India and Brazil are also prolific polluters. Emissions from developing countries are growing so fast that they are likely to swamp any reductions made by the rich world. So there is no point in America and other rich nations cleaning up their act unless rapidly industrialising countries do too.
The fat lady is visible through the Beijing smog
Inconveniently enough, both these arguments are valid. But so is another important and more encouraging observation. It is easier to affect emissions in poor countries, since such places tend to be less energy efficient, to have adopted fewer measures for cutting pollution and to be installing more new capacity. That suggests there is a deal to be done. If the rich world agrees to pay for most of any reduction in the world's emissions, developing countries will allow the cuts to be made wherever they are cheapest.
That, more or less, is the premise of the Kyoto protocol. Rich countries agreed to cut their emissions, or to pay for equivalent reductions elsewhere under a scheme known as the Clean Development Mechanism (CDM). In some ways, it has been a great success. Eager Western bankers have spent billions of dollars capturing noxious gases, improving energy efficiency and building wind farms in developing countries.
Nonetheless, the scale of the investment remains grossly inadequate. What is more, the scheme gives poor countries a reason to avoid any sort of climate-friendly regulation, including measures they could readily afford. Why spend money, when someone else will pay you to do it? Chinese refrigerant factories, for example, produce a lot of trifluoromethane, which is a potent greenhouse gas, but one that can be easily isolated and destroyed. Yet the government does not regulate the stuff, so that its makers can exploit the CDM to sign lucrative contracts, which the government then taxes heavily.
Again, the outlines of a deal are clear. The rich world should agree to increase the flow of clean investment dramatically, in exchange for a promise from fast-growing developing countries to take some steps of their own to curb emissions. That should not be such a hard sell in China and India. After all, their governments are all too aware of the devastating consequences if global warming were to cause the Himalayan glaciers to melt, or crop yields to fall (see article). Moreover, Chinese and Indian firms, in particular, have become accustomed to the flow of funds from the CDM, and would be unhappy to see it evaporate.
Western countries would benefit too, thanks to the lower cost of cutting emissions abroad. That is why the European Union allows international offsets to be used in its “cap-and-trade” scheme. In this, governments issue a set number of permits to produce greenhouse gases, obliging firms to cut their own emissions or buy spare permits from others. The cap-and-trade scheme that America's Senate began debating this week would also allow firms to fulfil some of their obligations through green investments in other countries.
But the bill in Congress would allow only a small number of offsets, and only from factories that do not compete with American firms—a big hurdle in a globalised world. Worse, to make the bill more palatable to China-bashing politicians, its authors have strengthened provisions that would impose tariffs on energy-intensive imports from countries that are not taking “comparable action” against climate change, meaning all developing countries. That is a recipe for a trade war, which would only compound the economic pain of global warming. Just when a deal is possible, the stage is being set for a tragedy of Wagnerian dimensions.
The Economist
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Tariffs don't seem like a very efficient solution to anything. They just make international trade more difficult and that seems to be universally damaging to all involved. Why not have everyone, all the countries that signed the kyoto protocol and any others that want to get involved, work independently towards lowering emissions and greenhouse gasses in their own countries? Sure, money has to come from the rich countries for the poor countries to be able to do anything, but that doesn't mean the poor countries should be the only ones making an effort.
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