EconoMonitor

An Answer for the Roadblock to an International Climate Change Agreement

On her visit to India two days ago, Secretary of State Hillary Clinton was publicly rebuffed when she raised the problem of global climate change.    The Indian environment minister declared “we are simply not in the position to take legally binding emissions targets.”

No single country can address this problem on its own.  Hence the international negotiations that will take place in Copenhagen in December to try to find a successor treaty to the Kyoto Protocol.   But the international effort has run into a seemingly insurmountable roadblock.     On the one hand, the US Congress is clear: it will not impose quantitative limits on US emissions of greenhouse gases if China, India, and other developing countries don’t impose quantitative limits on theirs.   Indeed, that is why the Senate was unwilling to ratify the Kyoto Protocol ten years ago. The logic seems completely reasonable:  why should US firms bear the economic cost of cutting emissions if carbon-intensive activities would just migrate to countries without caps and global emissions continue their rapid rise?   On the other hand, the leaders of India and China are just as clear:   they are unalterably opposed to cutting emissions until after the United States and other rich countries go first.   And why should they?   The industrialized countries created the problem of global warming, in the process of getting rich;  the poor countries should not be denied their turn at economic development.  As the Indians point out, Americans emit more than ten times as much carbon dioxide per person.

A total impasse.  Or is it?   I see one — and only one – practical solution to this apparent Catch-22:   The United States agrees to binding emission cuts — something like those in the Waxman-Markey bill that passed the House of Representatives on June 26;  simultaneously, China, India, and other developing countries agree to a path that immediately imposes on them binding emission targets — but targets that in their early years simply follow the so-called Business-as-Usual (BAU) path.    BAU is defined as the rate of increase in emissions that these countries would experience in the absence of an international agreement, as determined by experts’ projections.

The idea of developing countries committing only to BAU targets would provoke outrage from both environmentalists and US business interests, because it does not obligate these countries to cut emissions.  But both of those groups should realize that this commitment would be far more important than it sounds. It would preclude the carbon leakage which, absent such an agreement, would undermine the environmental goal.  It would mitigate the competitiveness concerns of carbon-intensive industries in the rich countries.

This approach recognizes the reality that it would be irrational for China and India to agree to substantial cuts in the short term.   Indeed these countries, for their parts, will probably react with outrage at being asked to take on binding targets of any kind at the same time as the United States.   But they should also come to realize that they would actually gain in strictly economic terms from such an agreement, by acquiring the ability to sell emission permits at the world market price.

Of course an environmental solution also requires that China and the others subsequently make cuts below the Business as Usual path in future years, and eventually make cuts in absolute terms.   This can be done in such a way that the developing countries are not asked to make cuts that are different in nature than those made by the Europe, the United States, and others who have gone before them, taking due account of differences in income.  But no country – rich or poor – will make sacrifices in any given period that impose huge economic costs on it.   It is time to stop making sweeping proposals that assume otherwise, and to pursue instead the narrow thread of the politically possible.


Originally published at Jeff Frankel’s Weblog and reproduced here with the author’s permission.

3 Responses to “An Answer for the Roadblock to an International Climate Change Agreement”

bobiscoldJuly 22nd, 2009 at 6:39 pm

what a crock. Poverty is caused by too little Free Enterprise, not too much; too little liberty, not too much; too little ability to pursue self interest, not too much; too little energy development, not too much. No more welfare for the poverty pimp dictators and criminal classes in Africa. Even if Climate Change exists, no one will survive it sitting on their butts waiting for the government to save them. Governments cannot even deliver the mail. It is a shame everyone in the world is not willing to roll over and be ruled by communists. I think the fight against ALGORE’s religion has just begun. The free people of the US have proven we can crush religious extreamists at will. There will soon be room in Gitmo for the global warming alarmists.

GuestJuly 27th, 2009 at 12:52 am

government does a hell of a good job delivering my mail. can’t find a private carrier to do delivery to somebody’s house across the country in a couple of days for 42 cents, or whatever it is now. so cheap i can’t even be bothered to track the cost precisely.rightwingers; the triumph of theory over reality.

BobiscoldJuly 27th, 2009 at 6:35 pm

Ahhh never challenge a lefty Mullah’s 4th Century beliefs about society and freedom. I bet you think the earth would not be getting warmer if the USSR had survived. You can turn yourself over to the bearucrats to take care of your every need. You need to live in a grass hut under the hand of a dictator for awhile. Ahhhh the screwed up products of a public education.

Most Read | Featured | Popular

Blogger Spotlight

Dan Steinbock

Dr Dan Steinbock is a recognized expert of the multipolar world. He focuses on international business, international relations, investment and risk among the major advanced economies (G7) and large emerging economies (BRICS and beyond). In addition to his advisory activities (www.differencegroup.net), he is affiliated with major US universities as well as international think-tanks, such as India China and America Institute (USA), Shanghai Institutes for International Studies (China) and EU Center (Singapore).

Economics Blog Aggregator

Our favorite economics blogs aggregated.