Strip away the mind-numbing complexity of this week’s high-level, multinational negotiations over a UN global climate change treaty and you are left with a simple question, no pun intended: Whose ox will get gored?
These talks are supposed to pave the way (oops, another bad pun) for a global climate agreement to succeed the Kyoto protocol, which expires in 2012. The goal—ambitious, by all accounts–is to get the new deal in place by December 2009, when the next big UN conference will convene Copenhagen.
The problem? No country wants to regulate itself in a way that could leave its economy, particularly its polluting industries, at a competitive disadvantage, even in the short term.
So far, the EU and Japan have led the way by regulating their own greenhouse gas emissions and signing onto Kyoto. The U.S. has lagged, to put it kindly, but President-elect Obama supports a federal cap-and-trade bill to dramatically reduce U.S. emissions by 2050. (That’s the cap part of cap-and-trade.) Whether he can pull it off in this dismal economy is anybody’s guess. Putting a price on carbon will raise energy prices, but it will also spur innovation and, potentially, create jobs in the clean energy and energy efficiency sectors.
The thing to remember is that none of this will matter unless India and especially China can be persuaded to come along. See the chart below.
I talked about these issues today with Jennifer Layke of the World Resources Institute, and (briefly) with Manik “Nikki” Roy of the Pew Center on Global Climate. Both expressed hope that Obama can simultaneously move forward with domestic regulation and engage in the global climate talks, in the way that the outgoing Bush folk have not.
“That’s the big challenge,” Layke says. “A new administration will barely have its appointments in place by the time that people need to be reviewing what the U.S. has to say about a global treaty, probably this spring.”
The global treaty doesn’t have to be done by December 2009 but “having the time frame slip when there is so much riding on it is less than ideal,” Layke says.
What no one wants to see is a repetition of Kyoto—where the Clinton administration agreed to the treaty in 1997 but never obtained passage from Congress.
It must be said that all of this – even a U.S. cap-and-trade bill – amounts to pregame show before the real action begins: the development of India and China. Those two countries and the rest of the developing world simply cannot develop energy-intensive, carbon-intensive industries based on the western model, or we’re cooked. China is building one coal plant a week at the moment, I’m told, and that is literally a quite literally disaster in the making.
So how to bring China along? Lots of ideas are on the table, a mix of carrots and sticks. The nice-guy approach includes work the Bush administration has done to encourage technology transfer, as part of Hank Paulson’s strategic economic dialogue with China. (Details about the environmental work are here.) The World Bank, again urged on by the U.S., has created a clean technology fund to incentivize the Chinese and others to reduce their emissions. The EU carbon trading scheme includes a provision known as the Clean Development Mechanism (which I wrote about in this long FORTUNE story) that allows western polluters to pay for projects in poor countries to offset their emissions.
Then there’s the stick. Some people want the U.S. to include what amounts to a border tax on pollution as part of its cap-and-trade law. Its purpose, economists say, would be to prevent what’s called “leakage” of production and jobs to foreign countries like China and India that have not imposed their own GHG regulations. So far, China and India and the rest of the developing world have resisted all global entreaties to impose a cap on their emissions. They argue, quite logically, that they pollute far less that the U.S. and EU, at least on a on a per capita basis. See:
Jennifer Layke says the choice between a carrot-and-stick is a false one. “You’re probably going to need both,” she says. Nikki Roy doesn’t like the idea of border controls. “We’re not going to intimidate China,” he says.
Besides, the U.S. simply lacks the moral authority to lecture the Indians or Chinese or anyone else about climate change. Remember, it’s been 11 years since Kyoto was negotiated and we’ve mostly stayed on the sidelines. It would be like me not cutting my grass for a decade or so and the lecturing my neighbor about lawn care. I’ll ask Paula Dobriansky, who’s leading the U.S. delegation here, about this tomorrow.
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