Carbon trading not enough

Poor countries will give primacy to their development, despite knowing it would raise net emissions

By expressive their exasperation at not being able to convince the public and political leaders about how close the earth has come to climate catastrophe, the environment scientists who gathered at Copenhagen last week for a global meet on climate change were signalling having reached a cul-de-sac. Whatever little was happening on emission reductions through the carbon trading mechanism has been halted by the collapse of the carbon market, in the wake of the global economic recession. At the same time, no headway has been made in crafting a global climate treaty, due by the end of 2009, to eventually take the place of the Kyoto protocol on climate change that expires in 2012.

The chances of a breakthrough, however bleak, have been further dimmed by the US and European Union mooting a carbon tax (in the form of import tariffs) on goods imported from countries that do not take on mandatory emission cuts (which in practice amounts to targeting China and India). Though this will certainly result in disputes at the World Trade Organisation (WTO), the charge being a violation of the agreed rules, the risk is of retaliatory action and a fouling of the atmosphere for any kind of talks. It goes without saying that this will kill all chances of furthering the Kyoto and Doha agendas. If that is what the rich countries want, the economic downturn has already resulted in a greater spread of beggar-thy-neighbour attitudes than most people have realised.

Meanwhile, scientists say that the rise in global sea levels would be twice as fast as previously reckoned, and extreme weather events would become still more frequent. The world map would change due to the vanishing of several major glaciers and rivers, and vast stretches of land, including whole countries, could go under the sea. India sees the Siachen glacier shrinking, and a threat to its major snow-fed rivers of the northern plains. The argument that the developing countries (which are concentrated in the tropics) would be the worst hit by climate change is only partly true, but carries sufficient bite for countries like India, which therefore have to start taking unilateral action out of self-interest—in the same manner that trade and tariff reform did not wait for global trade negotiations to fructify. What puts the developing countries at a disadvantage is also their lower capacity to withstand shocks.

Whatever carbon trading may have achieved till now, recent trends have shown that it is not going to be effective in times of recession. With companies cutting back on production and squeezing costs, the demand for certified emissions reductions (tradable carbon credits) has slumped, resulting in carbon prices dropping from more than 30 euros a tonne last year to about a fourth of that level now. It has become more economical to use fossil fuels than any alternative, clean but costly, fuels as sources of energy. In the current economic situation, carbon trading needs to be supplemented with a direct attack on emission control. This will have to be spearheaded by the rich countries, which can bear the cost of generation and dissemination of clean technologies. Poor countries will continue to give primacy to their development needs, even though they know that this entails an increase in net emissions, not a reduction.