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What lies beneath: The politics of climate change negotiations

By Aditi Sen

Can a market-based solution work to combat climate change? Should emission rights be allocated by GDP or per-capita?

In July 2005 leaders of the eight most industrialised nations of the world put their heads together to find solutions to the world's most pressing problems. High on the agenda was climate change. At the end of the summit, British Prime Minister Tony Blair proudly declared victory on the issue, though the summit communiqué said nothing about specific targets for reducing greenhouse gas emissions. The statement described climate change as a "serious long-term challenge" and affirmed the scientific evidence that climate change is caused in large part by human activity. It pointed to the need to tackle the problem urgently, and made the usual polite references to continuing a dialogue. Essentially, it was more of the same -- rhetoric.

Despite the fact that climate change is one of the biggest threats facing our planet today, negotiations on the issue have been mired in controversy. While the developed nations have contributed most to greenhouse gas emissions, many have been dragging their feet on assuming any responsibility. The US, which is the world's largest emitter of greenhouse gases, continues to hold out.

Climate change negotiations started more than two decades ago. In 1992, a global framework convention on climate change was signed under the auspices of the United Nations (UNFCC). The framework recognised that industrialised nations needed to take the first step in reducing emissions because not only were they more responsible for the problem, they also had greater capacity and resources to take corrective action since they had already reached a high level of economic development. The Kyoto Protocol was drawn up in 1997 to implement the UNFCC. According to the protocol, industrialised nations that sign up to the treaty are legally bound to reduce worldwide emissions of six greenhouse gases (collectively) by an average of 5.2% below their 1990 levels, by 2008-2012.

However it took seven years for the protocol to finally become international law. For it to come fully into force, the pact had to be ratified by countries accounting for at least 55% of 1990 carbon dioxide emissions. With countries like the US and Australia unwilling to come on board, the key to ratification came when Russia, which accounted for 17% of 1990 emissions, signed up to the agreement on November 5, 2004.

The Kyoto Protocol is officially the first global legally binding contract aimed at reducing greenhouse gas emissions. A hundred and forty-one parties have now ratified the agreement. If any of the participating countries exceed their proposed 2012 target, they will have to make the promised reductions from the 2012 target, and an additional 30% more during the next period. The EU and Japan have already promised to reduce pollution by 8% from their respective 1990 levels.

However, Kyoto still lacks teeth because the United States, the world's largest greenhouse gas polluter, says signing up would ruin the US economy, and that the pact wrongly disregards developing countries. In March 2001, President Bush said he wouldn't be ratifying the Kyoto Protocol because it could significantly damage his country financially. He was also concerned about the pressure on "industrialised" countries to cut back on emissions while developing countries weren't expected to cut theirs back as well. In many ways, the debate over climate change reflects the larger debate about global equity and justice, and the struggle between the rich and the poor. In the Delhi Declaration of 2002, developing countries refused to commit to proposals that bound them to reducing greenhouse gases. Delegates from these countries opposed the plans by blaming the problem of global warming on the practices of wealthier, developed nations. India and China, in particular, argued the case for the developing countries, refusing to commit to any proposals that could limit their industrial development.

So where does that leave us? Emissions in America continue to rise and are now 11% higher than they were in 1990. Most countries that have signed up to Kyoto also admit that meeting their Kyoto targets will be difficult; nations are already falling behind. Spain and Portugal in the EU were 40.5% above 1990 levels in 2002. Canada, one of the first countries to sign up, has increased emissions by 20% since 1990 and has no clear plan to reach its target. Japan is also uncertain about how it will reach its 6% target by 2012.

One of the things that people are excited about as a possible solution and a potential win-win situation for both developed and developing countries is the clean development mechanism (CDM). This is one of the "flexibility mechanisms" authorised in the Kyoto Protocol. The CDM is a form of joint implementation between industrialised nations and developing countries. The mechanism is designed to allow industrialised nations to meet their commitments in a flexible manner, and, at the same time, allows developing countries not bound by the protocol to participate in the process of global greenhouse gases (GHG) mitigation. The CDM is supposed to be a market-based way to combat climate change. Through it, developed countries may invest in bankable projects in developing countries by paying the extra cost of upgrading to cleaner technology. In turn, they get credits for the amount of emissions reduced.

The CDM clearly has some immediate and apparent benefits -- it brings cleaner technologies and provides financing to projects in developing countries. But on closer inspection, the deal is not as attractive as it seems. The system, as currently proposed, risks being no more than a way for wealthy countries to buy their way out of their obligations, without significantly reducing domestic emissions. Some developing nations, most notably India, have argued moreover that North-South trading mechanisms are inherently unfair. The way it is currently designed, the emissions-trading regime is based on an inequitable distribution of atmospheric property rights -- in other words, the right to emit carbon dioxide is not the same for all individuals on this planet. The industrial nations, for instance, decided on 1990 emissions as a baseline for allocating emission rights to ensure continuity of their economies.

But many developing nations contend that these rights should eventually be allocated on a per capita basis, since that is the fairest and most democratic way of sharing an overall global limit to greenhouse gas emissions among the world's people. Northern industrialised countries have always argued for a 'rights-by-income (GDP)' approach, since larger economies, by virtue of their output, would naturally emit more GHGs than smaller economies. Developing countries have challenged this status quo, arguing for a 'rights-per-capita' approach. Each person on the planet, they believe, should have equal atmospheric property rights and therefore equal GHG consumption rights. Another flaw in the carbon-trading regime is that industrial nations are currently permitted to buy as many low-cost reductions in developing nations as they can -- and they can bank those reductions as far into the future as they choose. That means that when poor nations are obliged to begin cutting their own emissions, during a later phase of the protocol, they will be left with only the most expensive options as the cheapest ones will have been bought up by the industrial nations.

So what lies beyond the blame game? While the recent G8 summit does not indicate a breakthrough, it is a small step forward in building a consensus around the issue. It sets the stage for a dialogue on long-term climate change management beyond 2012, which is the last year of the Kyoto Protocol. And, in a surprise move parallel to the summit, the US announced a new pact with five Asia-Pacific countries including India. The pact is a non-binding agreement based largely on technology transfers between the six signatories -- the US, China, India, Australia, Japan and South Korea. The presence of India and China also made it evident that climate negotiations cannot afford to disregard rapidly growing developing countries. With their burgeoning economies, the energy future of these countries will, in many ways, reflect on the energy future of the planet. So despite the cryptic language, the hours of lobbying and high-profile meetings did result in some small measure of success. The real test for future negotiations on climate change will be to recognise that climate change is not merely a "challenge" but a significant threat to long-term development, and that any successful deal would have to be based on the principles of global justice and equity.

In terms of India's position in the negotiations, the country has consistently maintained that it needs the "ecological space to grow," and that it cannot afford to take on mandatory emission cuts at this stage in its development. India's stand is a valid and well-reasoned one, but as is often the case with domestic policymaking in India we adopt the ostrich approach of burying our head in the sand. It is time India looked up and seriously confronted the dangers of climate change at home, moving beyond deal-making and bargaining. India needs to begin exploring options for renewable energy, energy efficiency, and adaptation to climate change and variability. Given the sub-continent's extreme vulnerability to climate change, this is a battle that will ultimately be fought in our own backyards. So we had better gear up for it.

(Aditi Sen works on Community Driven Development & Participation and Civic Engagement. She is with the Social Development Department of the World Bank, Washington.)

InfoChange News & Features, August 2005