Hot air and high ground in greenhouse debate
By Nicholas Gruen, CEO of Lateral Economics.
The campaign to address global greenhouse emissions relies to an unusual extent on moralising. Praising goodies and blaming baddies is the first step towards bringing sovereign nations towards some collective agreement.
The United States is a genuine pariah on greenhouse – a rogue state no less! It may cite flaws in the protocol as its reason for withdrawing from Kyoto – and the fact that it has done so may actually help us tackle the flaws. But there needs to be a degree of generosity amongst nations as we grope towards a global response. Here, as with foreign aid, the US is both the most capable of generosity, and the least generous of nations.
Beyond a rejection of the cynicism of the Americans however, moralism also has its drawbacks. For any solution negotiated between countries to be workable, it must not only reflect generosity in tackling the problem it must also be effective. And it must balance the interests of the various parties, each vigorously defending their own interests – each prepared to compromise.
Another pariah we are told is Australia – whilst the goodies are the Europeans and the developing countries.
Don’t believe it! Sure, Australians should be more prepared to lower the greenhouse intensity of their consumption. But despite some countries’ eagerness for environmental gestures, none are doing much more than the marginal efforts Australia has made. There’s a good reason. Solitary action is quixotic. No-one can make much difference on their own, so we must all move together.
The obvious way to do that is for countries to collectively negotiate individual targets or taxes for emissions and be free to deliver on their agreement however they choose. This is after all consistent with the great European principle of subsidiarity (leaving decisions to be made as close to the people as possible), and with the sovereignty of nations.
But the Europeans and their negotiating allies the developing countries know better. They want greenhouse abatement to teach us the evil of our ways. It is hard to see how we will ever tackle greenhouse without doing so comprehensively – using all options. Central to the effort will be emissions trading, focusing carbon abatement where it is most cost effective, and investing in sinks that suck carbon from the atmosphere. And providing it is properly handled, sinks investment – less land clearing, more forests and native revegitation – can generate massive environmental benefits – for land restoration and biodiversity quite apart from its greenhouse contribution.
But these options are routinely stigmatised as ‘loopholes’ – because in their effectiveness they allow us to deal with the problem at minimum inconvenience.
Ever since Rio the Europeans have sought to constrain emissions trading. Without trading, large sums would be spent on small improvements to the emissions efficiency of the most efficient, whilst opportunities to make major contributions at minimal cost would be foregone.
And there’s a nice dose of hypocrisy thrown in. The Europeans antipathy on trading has always co-existed alongside EU members unencumbered access to trade between themselves. Their right to be treated as one country has always been presumed.
Then there’s ‘hot air’ – the surplus permits Eastern European countries acquired when their allocation was based on 1990 emissions, whilst their emissions had plummeted after the Berlin Wall fell. The Europeans argued that Japan and Australia should be constrained from purchasing Russian ‘hot air’. But guess who had stitched up access to East German ‘hot air’ from the start? The Europeans!
When the Europeans are finally forced to climb down from some of these outrageous positions, this is painted by the Europeans – and indeed an almost unified media – as environmental cynicism and strongarm tactics by the other developed countries. Without it Kyoto would have collapsed under its own inefficiency and unfairness.
The final roadblock to any real progress remains the intransigence of the developing countries. Yet developing world emissions will overtake those of the developed world within a decade! We must involve them and we already have a model of how to do so – the way we brought the Russians on board.
Providing Russia with the right to sell its ‘hot air’ to other countries will enable it to be generously compensated for taking on commitments. In effect other countries received lower entitlements at Kyoto to ‘bribe’ Russia into the tent. Given the West’s indifference to the massive distress in the poorest countries, one can sympathise with their holding us over a barrel on greenhouse.
But we should bribe them into the system by reducing permit allocations to ourselves and transferring the surplus to them as ‘hot air’ – for sale back to us! It sounds convoluted, but then the developing countries get their compensation, and everyone has an incentive to economise on emissions – to make more ‘hot air’ to sell to emitter countries. The alternative – ‘its your problem, you fix it’ – squanders the developing countries’ negotiating coin on futile North-South finger wagging.
Lets hope people everywhere embrace some level of sacrifice to tackle the most difficult environmental problem we have ever faced. But sacrifice will melt away if it is manifestly incapable of addressing the problem or is obviously unfair.
A fair and effective bargain will only arise from the balanced interplay of generosity of purpose, the efficacy of the means used and some compromise between negotiators – each vigorously defending their own interests. However comforting to our sentiments, a crusade for the first of these requirements without regard to the latter two is a road to nowhere.
September, 2002