Australian
Monday 8/12/2008 Page: 8
THE UN Climate Change Conference in Poznan, Poland, focuses attention on the importance and difficulty of achieving international agreement to reduce greenhouse gas emissions. No country acting alone not even the biggest emitters of greenhouse gases, the US and China can cause the risks of dangerous climate change to fall substantially by its actions alone. A co-operative effort involving all substantial economies is required.
Each country acting alone in its narrow national interest will calculate that it will be better off if it does as little as possible to reduce emissions, whatever other countries are doing, so long as it does not believe that its inaction will influence materially the actions of others. In this, climate change is more difficult than other international policy issues.
It is more difficult than trade liberalisation, in which, despite the charades of trade negotiators, each country would be better off liberalising its trade whether or not other countries were doing so. It is more difficult than arms control negotiations, in which there is at least a fiscal gain from doing more, whatever others are doing. With climate change mitigation, one country acting alone accepts costs without substantial benefits.
So an international agreement on allocating the burden of the global mitigation effort is necessary. Each country could draw confidence from an effective international agreement that its commitments would be accompanied by commensurate efforts by others, and so would generate benefits in the form of reduced risks of dangerous climate change.
Without such an international agreement, the outcomes eventually will be judged by people in all countries as being inadequate, reducing emissions too little to achieve an optimal balance between the costs and benefits of emissions reductions. An international agreement will have to be widely seen as being fair or at least as generating more benefits than costs from participation by the governments of all the leading economies.
What would the contents of an international agreement cover? A successful global effort to reduce greenhouse gases would establish a common price on emissions in all countries, at a level that induces the required reduction in the emissions intensity of economic activity. It could do this through agreement on applying a common rate of tax on emissions in all countries. Alternatively, and more directly, it could allocate entitlements to emit greenhouse gases across countries through an emissions trading scheme: international trade in emissions entitlements would tend to equalise the carbon price across countries.
The international community in Poznan, and subsequently in Copenhagen in December next year, is seeking agreement of the latter variety. The agreement should embody commitments by all leading economies that add up to global emissions reductions and eventually to greenhouse gas concentrations in the atmosphere, striking a good balance between the costs and benefits of reducing greenhouse gas emissions.
Unless there is a coalescing of international support around clear principles through the first half of 2009, there is no prospect that a good agreement will be reached in December at Copenhagen. This analysis and discussion must be undertaken long before meetings at which political agreements are sought, as the issues are complex and not amenable to resolution in tit-for-tat exchanges under the international political spotlight.
Too little analysis and discussion have been devoted to the principles on which a global agreement can be based. In the absence of clear and widely supported principles, each country will develop reasons it should carry less than its proportionate share of the burden of mitigation. The canvas on which the negotiations proceed will become cluttered and unifying themes will be lost in complexity.
If you hear negotiators from the respective countries arguing that Australia needs high per capita entitlements because it is big and lightly populated, or Canada because it is cold, or Japan because it has few opportunities for geo-sequestration of emissions from fossil fuel combustion, or China because it is the workshop of the world, you will know that the world has lost the battle to avoid dangerous climate change.
The approach to allocating emissions entitlements at Kyoto, which is by default being taken into the discussions at Poznan, will not serve. Variable percentage reductions in emissions against a base line for developed countries, and no emissions reductions yet for developing countries, will neither allow agreement nor solve the problem since most of the growth in emissions during the next two decades and beyond will be in the developing countries.
In the absence of early constraints that hold developing country emissions well below business as usual, no degree of constraint from developed countries will avoid high risks of dangerous climate change. It cannot be the basis of agreement because its allocation of the burden is not based on principles that have any prospect of being widely seen as being fair.
My work on The Garnaut Climate Change Review (Cambridge University Press, 2008) has led me to the view that any allocation of emissions entitlements with a prospect of being accepted by most developing countries must be based on convergence towards low levels of per capita entitlements at some time in the future. There will need to be headroom for rapidly growing developing countries.
Through a transition period, the commitments of lower-income developing countries would be one-sided, with compliance encouraged through incentives rather than penalties. The agreement over emissions entitlements would need to include developed country commitments to public support for research, development and commercialisation of low-emissions technologies.
The agreement could embody firm commitments by developed countries to cover additional development assistance for complying developing countries to adapt to the climate change that will inevitably be faced in the period ahead. It could be supported by a proposal for World Trade Organisation rules to constrain individual countries' measures to restrict trade with countries that are not reasonably complying with the requirements of an international mitigation effort. At the centre of the agreement would be an understanding on the allocation across countries of a diminishing total of annual emissions entitlements. These would be allocated on the basis that emissions would converge towards equal per capita entitlements at some time in the future.
The difference between the basis of allocation of emissions entitlements proposed here, and the Kyoto approach of fixed but differentiated reductions, is large. Within principles designed to reduce global emissions through convergence over time towards equal per capita entitlements, a reduction of 10 per cent from 2000 levels by 2020 in Australia would represent a full proportion contribution of a global to hold concentrations of carbon dioxide equivalents to 550 parts per million. It would represent a larger per capita reduction than was required of the US or the European Union. It would represent a larger per capita reduction for Australia than the EU's implementation of its proposed unconditional commitment to reduce emissions by 20 per cent from 1990 levels.
By contrast, the same Australian reduction in emissions could compare and be compared unfavorably with commitments that the EU made, if seen within the old and ultimately unproductive framework of comparing percentage reductions in total national emissions from some baseline. Of course, Australia cannot accept aspects of a principled approach to emissions entitlements on matters that suit it, and abandon the principles where the implications are less favourable from a narrow national perspective.
Acceptance of the principle that emissions should converge over time towards the same low per capita level in all countries requires Australia to accept ambitious commitments to low long-term per capita entitlements. It would be helpful to emergence of a satisfactory international agreement if Australia were to announce that it accepts this outcome in the context of an effective international agreement.
In the end, convergence towards equal per capita entitlements is the basis of allocation that has the best chance of allowing an international agreement that strikes the right balance between the costs of mitigation, and the costs of climate change.
Ross Garnaut is the author of The Garnaut Climate Change Review.
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