Much of the outcome of the Bali climate change conference is becoming clear – regardless of the theatrics, scaremongering and grandstanding – both in terms of the process (the Bali roadmap) over the next two years preceding the ratification of a new treaty prior to 2012 and the broad content.
There will a closing of the gap over emission reduction targets between those already industrialised countries (including the US) and countries such as China and India which have experienced rapid economic growth and energy consumption in the past two decades. Quality air and ambient temperatures are global public goods: comparing past energy use by country is a futile exercise – what counts is future carbon consumption. Most of the existing political problems in the current discussions stem from a green economic nationalism; yet the growth of emerging economies is due in large part from increased openness, trade and technological transfers – precisely the elements that will contribute most to emission reductions. Countries such as China, India and Brazil do recognise that they need to commit domestic investment in emission cuts in parallel to international efforts to correct global climate market failures.
Many other “developing” or poor countries claim that accepting emissions constraints will hinder economic growth. But these countries have a dismal record on introducing even the most basic governance reforms that are a prerequisite for economic growth and progress. Climate change will necessitate more openness and transparency than many of their leaders would like: but without stepping up their own reform programmes additional financial and technical assistance transfers to help them adapt to the consequences of climate change are unlikely to have much impact.
But too much of the climate debate to date has focused on nations rather than being based on specific industries and the key multinational corporations and banks that dominate world trade – with much manufacturing shifted to the emerging economies. Capping industries – like electricity generation, chemicals, cement, aviation, shipping and cars – rather than countries may be a fairer way forward. The basic approach is to penalise those that damage the environment and reward those who improve it. Voluntary approaches can only go so far: there is a need for regulatory frameworks at national level and within bodies such as the EU and WTO. There is some evidence than regulation provides a greater incentive effect than subsidies for research.
Governments are already introducing measures to reduce carbon consumption and energy demand: using a variety of tax credits and grants for energy-saving improvements for housing (double glazing, loft insulation, mini-wind turbines and geothermal heating, etc.): these measures likely to be progressively backed up by legislation to ensure that all new housing and offices are carbon-neutral. Similarly, we can expect a move from voluntary labelling on ‘green’ household white goods & appliances to stricter regulations on life-cycle carbon footprints. Let the major brands compete for market share on environmental criteria, as this in turn will drive down costs. Of course we can also expect a fuss, horse-trading and compromise – the stuff of politics:
Like so many other issues on which politics and economic interact, problems will arise when individual industries with much to lose invest millions of dollars arguing that they desperately need exceptions and assistance. Many will convincingly make the case that a carbon price will harm their business. Our reaction should be, so what? Every exception that’s made, every piece of government transition-assistance that’s provided, increases the cost of fighting warming to the average consumer. That’s what we ought to be focused on minimising. Public acceptance of effective carbon-fighting policies depends on it.
It will be fascinating to see the reaction when the first political party stands at an election promising to substitute income with carbon taxes, or readjust value-added taxation (sales tax) with a carbon component. Although the scale of the social transformation that will probably be required to counter climate change is unprecedented, it is surprising how quickly changes do occur. Look at some recent examples: smoking bans, car seat belts, the fall in domestic violence (wife-beating in plain English) and the concomitant new role for women in workplaces, the exposure of institutionalised racism. In each case pressure groups have fought their corner courageously, and having won public support the measure has been backed by legislation.
In the case of the UK the new climate bill when enacted (see my earlier post) will commit governments to show how they are delivering on climate change (i.e. public investment spending, review processes). Politics works in a selective and sequential manner, different countries will face choices and degrees of popular demand according to their culture. Governments are likely to be progressively tied to introducing national commitments within the emerging global framework. The mantra that the US is one of the biggest stumbling blocks to the climate change programme (the highest energy consumer and biggest carbon emitter) overlooks that domestic popular demand and leadership is changing rapidly: the US is set to become the leading reformer and with its record on innovation and reserve of financial clout may well soon make the European tribes look rather foolish.
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