Znet
24 December 2009
Robin Hahnel
www.zcommunications.org/zspace/commentaries/4086
Part I
Two Train Wrecks In Copenhagen
Make no mistake about it, formal negotiations in Copenhagen ended in a train wreck that no spin doctor can put a good face on and was a huge setback for the prospects of averting climate change in an equitable way. Bill McKibben summarized it nicely in Mother Jones on the day the conference ended. "The President of the United States did several things today:
(1) He blew up the United Nations. The idea that there is a world community that means something has disappeared tonight.
(2) He formed a league of super-polluters, and would-be super polluters. China, the US, and India don't want anyone controlling their use of coal in any meaningful way. It is a coalition of foxes who will together govern the henhouse."
Whereas Bush spurned international cooperation, Obama showed up and mouthed some pretty words. But one leads by example, and Obama led by very bad example.
Instead of embracing a multilateral solution Obama undermined multilateralism by once again making clear the US will not commit to binding reductions under UN auspices as every other Annex-1 country has agreed to do, and then proceeded to lure major players into private discussions about voluntary arrangements in lieu of a comprehensive international treaty. Instead of acknowledging the principle of "differentiated responsibilities and capabilities" agreed to in Rio de Janeiro in 1992 and implemented in Kyoto in 1997, Obama insisted that the US and China -- whose per capita emissions are one fifth as large as the US and per capita GDP is still less than one tenth as large as the US - be treated on similar terms. With no reason for anyone to believe he can get the Senate to ratify a treaty with binding reductions for the US, with no reason to believe he can secure a meaningful climate bill from the US Congress, with no reason to believe he would use his power to order significant reductions through the EPA if Congress balks, and with only his verbal offer to reduce US emissions by a measly 17% from 2005 levels by 2020, no wonder other country delegations followed Obama's bad lead and retrenched instead of offering to make further sacrifices in Copenhagen. And yes, the Chinese took the bait and helped the US paint them as "co-bad guy" by rejecting on-site inspections -- which were neither under discussion at Copenhagen, nor necessary to verify national emissions. Whether or not the blow Obama dealt to multilateral efforts to combat climate change through binding reductions consistent with "differentiated responsibilities and capabilities" in Copenhagen will prove fatal, remains to be seen.
By January 31, 2010 MDCs, classified as "Annex-1 countries," are supposed to report how much they are willing to reduce their emissions, and a year from now there will be another meeting in Mexico City where at this moment it is anybody's guess what will or will not be agreed to. In Rio de Janeiro in 1992 countries agreed climate change was a serious international problem, but left every country to decide on a voluntary basis what it was willing to do. In Kyoto in 1997 countries admitted that voluntary reductions had proven almost completely ineffective. Economic theory proved correct in this regard: Because of the "free rider incentive problem" theory predicts it is only in the self-interest of a country to reduce its own emissions by the amount needed if the country can be assured that other countries will do likewise. Kyoto acknowledged this truth, provided the necessary guarantee to all Annex-1 countries, and in exchange every Annex-1 country except the US eventually ratified the treaty and committed to binding reductions. Kyoto also implemented the principle of "differentiated responsibilities and capabilities" agreed to in Rio by requiring binding emission reductions from Annex-1 countries while permitting LDCs, classified as "non-Annex-1" countries, to continue to address their own emissions on a voluntary basis for the time being. In other words, the Kyoto Protocol took us two huge steps forward:
(1) It recognized the necessity of mutual commitment to binding targets in order to achieve necessary levels of global reduction.
(2) It distributed the costs of averting climate change differently based on different responsibilities (cumulative emissions per capita) and different capabilities (GDP per capita.)
Twelve years later in Copenhagen both of these steps forward have been placed in serious jeopardy.
However, the train wreck in formal negotiations between country delegations overshadowed another train wreck that has been coming for some time. The divide between some on the Left who support putting a price on carbon emissions through a cap and trade treaty, and others on the Left who deny that putting a price on carbon is a necessary and important step forward, and denounce carbon markets as a "pretend solution" that diverts attention from "real solutions" was more visible than ever in Copenhagen. While the Left needn't agree on everything, when we contradict one another to the extent that Amy Goodman can't figure out what message to bring home from Copenhagen for her Democracy Now audience, the Left also has a problem.
Has the Left missed the boat on climate change? What an outrageous insinuation! Has not the Left been a lonely voice of wisdom insisting that climate change, as well as other forms of environmental deterioration, cannot be avoided if we fail to replace the economics of competition and greed -- a.k.a. capitalism - with the economics of equitable cooperation - a.k.a. true eco-socialism? Are not we the ones who point out that capitalism is an economic way of life that has no future because it will soon destroy the biosphere? Are not we the ones who have explained why even a better regulated and more egalitarian capitalism would still mistreat the environment because:
(1) Capitalist economies pollute too much because markets over produce goods whose production and/or consumption generate negative "externalities" like pollution.
(2) Capitalist economies fail to protect the environment sufficiently because markets under supply "public goods" like environmental restoration.
(3) Capitalist economies extract natural resources too fast because rates of profit for private owners are higher than the rate at which society should "discount" future compared to present benefits from using natural resources. (4) Markets for labor and consumer goods create "perverse incentives" which lure people to take too much of their productivity gains as individual consumption and too little as more environmentally friendly collective consumption and leisure time. And finally,
(5) markets fail to generate information necessary to know how high corrective environmental taxes and subsidies should be, while spawning powerful political lobbies with interests in underestimating the size of necessary correctives. (See Robin Hahnel, "The Case Against Markets," Journal of Economic Issues (41, 4), December 2007: 1139-1159.)
However, for all our wisdom about how the defining features of capitalism bear primary responsibility for turning humans into lemmings, I believe too many on the Left have made themselves irrelevant to responses to climate change in the here and now by failing to understand the importance of putting a significant price on carbon emissions, and by dismissing cap and trade policies out of hand because, in the words of the Durban Declaration of October 2004, they "commodify... the earth's carbon-cycling capacity into property to be bought and sold in a global market."
Unfortunately, as long as the albatross of global capitalism remains around our necks our best chance to avert climate change is through an international cap and trade treaty that puts a significant price on carbon emissions, and our best chance to do this equitably is to preserve the Kyoto framework and fix the carbon market that is one of its central features.
It is one thing to point out the ultimate absurdity of putting prices on different parts of a natural environment which is, in fact, a single interconnected ecosystem that all life, including human life, depends on. It is another thing when we live in a world driven by market forces to denounce those who work to increase the price of carbon emissions from its present price of zero to as close to its true social cost as is politically possible. Similarly, it is one thing to insist that nature should belong to no one and everyone but it is another thing to sit on the sidelines while giant corporations seize valuable property rights to store carbon in the upper atmosphere in the greatest wealth give-away in history, while ordinary citizens receive none because one does not believe the atmosphere should be commoditized. Further it is one thing to point out that it would be better to plan how to use and preserve the natural environment in a democratic, equitable, and effective way rather than leave those decisions to be made very poorly by market forces but it is another thing to ignore the fact that we socialists failed to replace capitalism with socialism in the twentieth century, which means that decisions about how to use the environment are actually made, and will continue to be made for some time, by market forces where a key price, the price of carbon emission, is completely out of whack. Finally, it is one thing to say: "I don't want things decided by market forces and private property rights," but it is quite another to say: "Even though things are being decided by market forces and property rights I don't care what those prices are or who gets new property rights."
Prospects for human and other species do ultimately hinge on whether global capitalism is replaced by a completely different economic system -- a system with no elites to prey on their fellow humans and the natural environment, where the associated producers and consumers democratically plan and coordinate their own economic activities based on reasonably accurate information about the consequences of different alternatives. And the sooner this happens the safer and better off both humans and the environment will be. But when dealing with climate change it is irresponsible not to be realistic about time frames. Being realistic about time frames does not mean we must abandon our conviction that humans are capable of correcting our errors and forging new economic institutions to help us develop more democratic, equitable, and environmentally sustainable habits. Similarly being realistic about time frames does not mean we must cease or postpone our efforts to replace a dysfunctional system that commodifies everything but knows the value of nothing with an economic system that facilitates equitable cooperation and environmental stewardship. But being realistic about time frames does mean recognizing that the global economy will continue for some time to be dominated by giant corporations guided by the profit criterion and market forces -- while nature proceeds on its own schedule.
As a self-proclaimed "market abolitionist" I understand why carbon trading is a bitter pill to swallow for all who abhor the commodification of everything, including the natural environment. But we socialists need to look to ourselves. Had we done our work well the human species would have abandoned capitalism and the false illusion that commodification is the solution to all economic problems long before we had damaged the environment to the point where we are perilously close to triggering cataclysmic climate change. Had participatory, democratic socialism replaced capitalism during the twentieth century -- as it should have - we would be in a position to respond to the threat of climate change very differently: Once scientists made us aware of the consequences of inaction we would have had well-tested institutions and procedures at our disposal for making efficient and equitable choices about where and how to reduce carbon emissions, and how to distribute the costs of reductions fairly between and within countries without resort to commodification. But the last time I checked, participatory eco-socialism had yet to replace global capitalism, and pretending it has does not yield effective policy responses in the world we live in.
After denouncing cap and trade as a "pretend" solution, Climate Justice Action issued the following "non-negotiable demands" in advance of the Copenhagen meetings this month: (1) Leave fossil fuels in the ground. (2) Reassert peoples' and community control over production. (3) Relocalize food production. (4) Massively reduce overconsumption, particularly in the North. (5) Respect indigenous and forest peoples' rights. (6) Recognize the ecological and climate debt owed to the peoples of the South and make reparation. And Climate Justice Action went on to urge people to hope for a "Seattling" of Copenhagen.
In Part 2 of this series I argue that while the International Monetary Fund should be "nixed" not "fixed," and the World Trade Organization should be "ended not amended," the United Nations and Kyoto Protocol are fundamentally different and should be fixed, amended, and strengthened rather than trashed. I also argue that while the Climate Justice Action demands are laudable goals in and of themselves, they do not comprise an effective program for averting climate change.
In Part 3 of the series I propose that the Left reaffirm support for key pillars of the Kyoto Protocol and call for specific changes I outline that would make an international cap and trade treaty effective, equitable, and worthy of our support as we continue to agitate for system change in the long run.
Part II25 December 2009
www.zmag.org/zspace/commentaries/4087
Turn Back From The Road To Nowhere
The October 2004 Durban Declaration states:
"As representatives of people's movements and independent organizations, we reject the claim that carbon trading will halt the climate crisis. History has seen attempts to commodify land, food, labor, forests, water, genes and ideas. Carbon trading follows in the footsteps of this history and turns the earth's carbon-cycling capacity into property to be bought or sold in a global market. Through this process of creating a new commodity -- carbon -- the Earth's ability and capacity to support a climate conducive to life and human societies is now passing into the same corporate hands that are destroying the climate.... We denounce the further delays in ending fossil fuel extraction that are being caused by corporate, government and United Nations' attempts to construct a `carbon market'."
In their communiqués for Copenhagen last week Climate Justice Action not only denounced cap and trade and carbon markets as "pretend" solutions that divert attention from their "real" solutions I analyze below, they urged people to hope for a "Seattling" of Copenhagen on December 16.
I was in Seattle and fully supported shutting down the World Trade Organization Ministerial Meetings that took place there in 1999 because the policies the WTO was created to compel countries to accept - some of which, like TRIPS and MAI, have nothing to do with trade at all - are antithetical to economic development, economic justice, and environmental protection. I helped organize protests to shut down the IMF meetings in Washington DC in April 2000 because the IMF has been even more responsible for spreading neoliberal economic misery -- twisting LDC arms to permit capital liberalization and then lowering the boom when financial crises ensue by requiring draconian conditionalities in exchange for bailout loans that serve the interests of wealthy international investors at the expense of the basic economic needs of LDC populations. At least for the foreseeable future the programs, policies, and governing structures of both organizations are beyond repair, and a majority of the world's inhabitants and the environment are better off the more we disrupt the IMF and WTO and reduce their power to do evil. However, the United Nations and the Conference of Parties to the Kyoto Protocol (COP) are not the IMF or the WTO.
Of course Leftists have justifiable criticisms of some UN governing structures, the Security Council chief among them, but as far as I know it is nationalistic, right wing American Firsters, not Leftists, who call for trashing the UN. Leftists have traditionally supported the UN, particularly against US exceptionalism, and called for reforms that would make the UN more democratic, strong, and effective. Moreover, unlike capital liberalization, trade liberalization, privatization, structural adjustment programs, TRIPS, MAI, and bailouts for international investors but austerity programs for stricken country populations, the UN sponsored Kyoto Protocol establishes a constructive framework for addressing climate change in an equitable way. The United Nations Framework Convention on Climate Change (UNFCCC) sets the worthy target of reducing global emissions by whatever proves necessary to prevent average global temperatures from rising by more than 2 degrees centigrade, and embraces the principle of "common but differentiated responsibilities and capabilities" as our guide for how to reach it.
This is not to say that people should not protest at COP meetings. Nor am I questioning the tactics protesters use. Not nearly enough is being done and the clock is ticking. The more people who demonstrate, and the more committed, serious, and militant protesters are, the more likely we are to push our agendas forward. We should protest obstructionist behavior on the part of some government delegations attending these meetings. We should protest the lack of progress in securing a binding commitment from the US delegation and President. We should protest failure to secure deeper reductions from other LDC governments. We should protest attempts by any delegations to renege on the promise to address climate change fairly. If this is what Climate Justice Action means by "Seattling" Copenhagen, I have no objection. But anyone who thinks shutting down COP meetings in Copenhagen, or preventing the meetings from taking place in Mexico City next year, or derailing the Kyoto process in general will improve the chances of averting climate change in an effective and equitable way is dead wrong.
We should continue to explain at every opportunity how and why capitalism is the major cause of climate change. Not technology per se, not population growth per se, not human greed per se, but the central pillars of capitalism are the underlying cause of climate change. Private ownership of the means of production and market forces make those who fight to protect the natural environment swim upstream against the current because they reward those who adopt environmentally destructive technologies and life styles and penalize those who attempt to develop new, sustainable habits. But we must distinguish between the true message that capitalism is the root source of the problem from the false message that pursuit of effective and fair policies to combat climate change is pointless as long as capitalism persists. Evaluating the predictable effects of alternative policy interventions in a market system to identify the most fair and efficient among them is not the same as endorsing the market system or claiming that the market system is capable of yielding fair and efficient outcomes.
I have argued for more than twenty years that there is no role for markets in a desirable economy, that a truly democratic, fair, and sustainable non-market "participatory economy" is perfectly possible, and that we need to prioritize organizing systems of equitable and sustainable cooperation within capitalism right now rather than postpone these projects until after the capitalist system has been overthrown. And I continue to press these points at every opportunity. But most people do not yet live in a post-market economy, and those who ignore this unfortunate fact of life do so at the peril of curtailing climate change before it is too late. To be taken seriously Leftists must stop mindless trashing of carbon trading and belittling the importance of reducing the social costs of averting climate change. As I explain in Part 3, trading lowers the cost of reducing emissions which makes it easier to win political support for even lower caps; and trading can generate sizable flows of income from North to South. Yes, important changes in a post-Kyoto treaty are necessary to make a cap and trade treaty effective and equitable, and we must demand the kinds of changes I discuss in Part 3.
What are we to make of Climate Justice Action's demands in Copenhagen?
(1) Leave fossil fuels in the ground.
Averting climate change means converting from fossil fuels to renewables by definition. So demanding to leave fossil fuels in the ground does no more than state the obvious. But it is hardly an answer to the question: What policy will best achieve the objective of keeping fossil fuels in the ground?
Since urgency and dedication are a major part of what is required for success, "Keep the Oil in the Soil and the Coal in the Hole" campaigns which mobilize citizens to engage in mass protests and civil disobedience at mines and oil wells - but preferably at company headquarters if demonstrators want to display class consciousness -- are an important, positive catalyst. But heroic protest and civil disobedience are only one part of an effective program to keep fossil fuels in the ground. Unless governments are compelled to cap emissions by an international treaty, and unless governments implement domestic policies that reduce the demand for fossil fuels, demonstrators engaging in civil disobedience will be rounded up and arrested by armed police and military personnel to little avail. So just as it is counterproductive for mainstream environmental NGOs to criticize heroic demonstrators whose personal sacrifices do advance the cause, it is also counterproductive for those who "put their lives on the line" to criticize others who work tirelessly to secure an international treaty that is stronger and fairer, and domestic policies that reduce the demand for fossil fuels.
(2) Reassert peoples' and community control over production.
If this is not a demand that participatory eco-socialism be adopted, I don't know what it means. While the environment will remain at risk until the world is practicing participatory eco-socialism, and we should explain why at every opportunity, participatory socialism will only come about when we have built a majoritarian movement that wants it, led by a large minority who have already learned how to practice it effectively. Going to international meetings right now to "demand" this concession from leaders of capitalist governments assembled to address climate change only reveals how far we are from winning something that by its nature must be taken, not given.
(3) Relocalize food production.
Yes, of course this must be done, but how? What policies will best achieve this objective? Yes, of course relocalizing food production is called for, but if complete self-sufficiency in food is not the goal, how much relocalization is appropriate? Moreover, even if the optimal relocalization of food production were achieved, absent an international treaty to cap global emissions sufficiently and fairly, climate change would not be averted, nor would major global inequities be eliminated.
(4) Massively reduce overconsumption, particularly in the North.
Who could object to reducing overconsumption? And who would deny there is more overconsumption in the global north than the global south? But again, this only restates the obvious and provides no clue as to how best to accomplish this necessary goal.
(5) Respect indigenous and forest peoples' rights.
This is necessary because it is an egregious violation of human rights to fail to do so. And it is important to point out that a side benefit of securing indigenous rights is that native lands will invariably be better protected when they are more firmly under indigenous control. Moreover, demanding respect for indigenous rights at UN gatherings charged with averting climate change in equitable ways, attended by representatives of governments who violate indigenous rights, is quite appropriate. But expropriation has gone on too long and been too extensive for restoration of native lands to suffice as a cure for climate change absent other policies.
(6) Recognize the ecological and climate debt owed to the peoples of the South and make reparation.
This demand is just and UN sponsored meetings to avert climate change are the appropriate place to make it. However, that does not mean that insisting on the word "reparation" is a good choice. There is no need to "demand" that the UNFCCC recognize the principle of "common but differentiated responsibilities and capabilities" because it already does. Moreover, the UNFCCC has defined "differentiated responsibilities" to mean that the global South bears much less "responsibility" for causing climate change because its cumulative emissions per capita are miniscule compared to cumulative emissions per capita in the North; and the UNFCCC has defined "differentiated capabilities" to mean that income and wealth per capita in the South are much less than in the North. As a matter of fact the UNFCCC has even stipulated that achieving economic development and overcoming poverty must take priority in the South, and whatever role the South plays in averting climate change should not interfere with its ability to achieve its primary objective of economic development. In other words, we can either "demand" that the UNFCCC live up to its word and not abandon its own principles of fairness, or we can "demand" that the UNFCCC commit to a concept it has never agreed to discuss, as far as I am aware. It is also far from obvious that the concept of "reparations" is superior on moral or ideological grounds. Is petitioning for debts owed better than insisting on one's right to be treated fairly?
In a world where what is deemed "politically possible" invariably falls so far short of what is necessary, fair, and humanly feasible, there is an important role for the kind of demands Climate Justice Action makes. But it is important to distinguish between demands for what amounts to system change that are not going to happen in the near future, and demands that could be won even without systemic change. And it is important to determine if there are demands that are achievable now that would substantially improve outcomes.
In Part 3 I propose a list of more practical, concrete demands I believe groups like Climate Justice Action should support in addition to their more sweeping demands. By doing so divisions between different organizations who are fighting for equitable solutions to climate change would be greatly reduced, making us all far more effective. However this will require abandoning the practice of bashing carbon trading and acknowledging that carbon trading can be useful in a world driven by market forces provided we win a few changes that are within reach and well worth fighting for.
Part III
www.zcommunications.org/zspace/commentaries/4088
26 December 2009
A Way Forward
What should Leftists do between now and the meetings of the Conference of Parties to the Kyoto Protocol in Mexico next year to get our own train as well as international negotiations back on track? We must begin by affirming how Kyoto put us on the right track, and insist that formal negotiations get back on the track that began in Rio and ran through Kyoto.
(1) Climate change will not be averted unless countries mutually agree to binding reductions in an international treaty. Any illusion that voluntary actions on the part of countries, or even small groups of countries in consort, will secure reductions sufficient to avert climate change is pure fantasy. Theory predicts a voluntary approach will not work and the historical record between Rio and Kyoto confirms it.
(2) Countries bear different responsibilities for causing climate change, countries have different capabilities to bear the costs of averting climate change, and efforts to mitigate climate change should reflect these "differential responsibilities and capabilities." Countries where the majority of citizens have yet to enjoy the benefits of economic development should not be expected to bear the same burdens as more developed countries to prevent climate change. If anything good came out of Copenhagen it is that the less developed countries made very clear they will not agree to any treaty that in effect requires them to give up hope of developing.
But Kyoto was flawed in important ways, and we must demand key changes in a post Kyoto treaty. In short, using Copenhagen as a wakeup call to get Kyoto fixed and back on track is our best chance to combat climate change effectively and fairly in the foreseeable future.
(1) Set a cap on global emissions at whatever level the scientific community tells us is necessary to stabilize carbon concentrations at 350 ppm.
Kyoto set a cap on aggregate emissions in 2012 from Annex-1 signatories at 5.5% below their aggregate emissions in 1990. New scientific evidence indicates that global caps on emissions for 2020 and 2050 must be much lower if we are to stabilize atmospheric CO2 concentrations at a level that reduces the risk of cataclysmic climate change to an acceptable level. But why argue for a global cap based on a 350 parts per million target rather than a global carbon tax?
In theory a carbon tax is the best approach because it does not create a new tradable commodity and market that can careen out of control. However, climate activists were not able to win consideration for a significant international carbon tax during the 1990s, and Annex-1 countries agreed to a cap on aggregate Annex-1 emissions for 2012 that, while insufficient, was a significant step. More importantly, at this juncture it is even more apparent that we can win much larger global reductions through caps than we can win through an international carbon tax. Recently an 80% reduction in global emissions - or more - by 2050 has come under serious consideration. Nobody knows how high a global carbon tax would have to be to achieve reductions this deep, but everybody knows that a tax of that magnitude is completely out of the question. In other words, it has turned out we could win much better deals in the form of caps than through carbon taxes.
At one level this is completely irrational because an 80% reduction in global emissions will put a price on carbon just as high as a carbon tax high enough to yield an 80% reduction. On the other hand it is not so irrational if one stops to consider why many people, and therefore even some of their elected leaders, have come to the conclusion that they support a reduction in emissions on the order of 80% or more. The scientific community, in a truly remarkable display of virtual unanimity, is telling us that unless we reduce emissions by 80% or more by 2050 we run a significant risk of cataclysmic climate change. The scientific community is not qualified to recommend how high we would have to set a carbon tax to reduce the risk of cataclysmic climate change, and makes no attempt to do so. But sensible people are now willing to accept the advice that a unified scientific community can offer about the amount and pace of necessary global reductions to reduce the risk of cataclysmic climate change to an acceptable level. The fact is climate activists were getting nowhere as long as economists and politicians dominated the climate debate, and climate activists only started to move forward when the scientific community seized the microphone. In order to embrace the incredible coup the scientific community has pulled off we need to accept a program based on caps rather than taxes.
(2) Cap emissions in all countries but give less developed countries much higher caps, including caps in excess of their present emissions for some years into the future, and place more stringent caps on more developed countries by whatever amount is necessary to achieve the global emission cap determined in #1.
Much of the literature criticizing carbon trading consists of exposes of cases where certification and sales have taken place when credits were awarded for reductions that were not legitimate because the emission reductions were not "additional" to what would have occurred in any case, or the reductions credited indirectly permitted emissions to increase elsewhere in the country, a problem referred to as "leakage."
But what many critics fail to understand is that if the seller of a bogus "certified emission reduction" (CER) is located within a country whose national emissions are capped this does not erode overall emission reductions as long as the seller's country is forced to comply with its national obligations under Kyoto. Suppose the CERs for a 100 ton reduction sold by a Canadian power company to a Japanese power company is completely bogus -- a pure hoax. Under Kyoto, Japan can now emit 100 tons more than it would have been permitted to otherwise. The Canadian power company, by assumption, will not emit any less than it would have in any case. However, the country of Canada will now be required to emit 100 tons less than it would have been required to otherwise because a source within Canada sold CERs for 100 tons to a source outside Canada, and therefore those responsible for verifying that Canada has met its Kyoto treaty obligations will add 100 tons to the reductions Canada is required to make. So global reductions will be exactly equal to the global reductions agreed to by Canada and Japan even if the CER is totally bogus, as long as the Canadian government is forced to meet its obligations under Kyoto.
In other words, when sources in countries whose national emissions are capped sell bogus CERs to sources in other countries the effort to avert climate change is not "cheated." But if not the environment, then who has our devious Canadian power company cheated by accepting a handsome payment for doing nothing? When an apple seller cheats by selling a rotten apple it is the apple buyer who is cheated. However, in the case of CERs the Japanese power company got exactly what it wanted - credit for reducing 100 tons which allows it to emit 100 tons more than it could have otherwise. But if neither the environment nor the buyer of the bogus CERs were cheated by the Canadian power company scam, then who was cheated? Could this be one of those so-called crimes without victims? Unfortunately not. The Canadian power company has cheated its fellow Canadians. By selling bogus CERs it has forced Canada to reduce its emissions by 100 more tons than it would have had to otherwise. Somebody else in Canada is going to have to reduce their emissions by 100 more tons than they should have had to. It is other Canadians who are the victims when a source in Canada sells bogus CERs to someone in another country.
Where critics of carbon trading have a valid point is when they argue that if a seller of a bogus CER is located in a country whose national emissions are not capped this diminishes global reductions and the goal of averting climate change is cheated. If the credit is legitimate - i.e. "additional" and without "leakage" -- then the global reduction target is not undermined and there is no problem. But if the credit sold from an uncapped country is not legitimate we have a problem. Moreover, there is every incentive for the seller of the credit to try to cheat, there is no incentive for the buyer of the credit to insist on its legitimacy, there is no incentive for the country where the buyer is located to care if the credit purchased is legitimate, and in the case of a country whose national emissions are not capped, there is no incentive for the government where the seller is located to make sure the credit is legitimate either.
Of course this is why Kyoto gave the power to certify emissions reduction credits to the Executive Board of the Clean Development Mechanism (CDM) and did not rely on host governments of non-Annex-1 countries to monitor the legitimacy of requests for credits by sources in their national territories. But it is not easy to establish a hypothetical base line scenario and determine how much more a project reduced emissions than they would have fallen anyway, much less be sure the project did not indirectly allow for an increase in emissions somewhere else in the country. By capping emissions in all countries we guarantee that even if bogus projects are approved, or even if projects are awarded more CERs than they merit, the global emission target is not undermined in any case. In effect, by capping emissions in all countries we protect the integrity of the overall treaty objective from certification mistakes that are predictable.
Critics will no doubt object that this is not fair. They will say it is not fair to cap emissions of poor countries who are least responsible for causing climate change and least able to bear the costs of curtailing climate change. Critics will argue this effectively prevents poor countries from developing and catching up with the developed economies. These arguments against capping emissions in every country are absolutely correct if the caps are equal for all countries. However, none of these arguments against capping emissions everywhere holds true if countries have different caps set according to their different "responsibilities and capabilities."
Of course equally restrictive caps for all is unfair. But sensible people, and even sensible governments, understand this. The European Union has assigned lower caps to more developed member countries like Germany and France and higher caps to less developed members like Portugal and Ireland. Once it is understood that capping everyone does not mean the same cap for everyone it is apparent that equity can be achieved at the same time that erosion of global emission reductions resulting from failure to cap emissions in all countries is prevented. Moreover, there is no reason we cannot allow poor countries to increase emissions for some time, as long as the increase is capped.
One excellent proposal for determining equitable caps for developed and developing countries alike is the Greenhouse Development Rights Framework proposed by Paul Baer, Tom Athanasiou, and Sivan Kartha. (The Right to Development in a Climate Constrained World: The Greenhouse Development Rights Framework. Berlin: Heinrich Boll Foundation, Christian Aid, EcoEquity, and the Stockholm Environmental Institute, 2007.) They address the complaint that while more people in lesser developed countries have failed to benefit from economic development than in more developed countries, nonetheless there are some poor people living in more developed countries who also should have a right to benefit from economic development and not have to bear the costs of preventing climate change. Moreover, there are some wealthy people in lesser developed countries who have enjoyed development and can afford to bear part of the cost of preventing climate change. These authors propose a practical way to measure the proportion of each country's residents who have already enjoyed the benefits of economic development, and therefore should be expected to bear some of the costs of preventing climate change, which can then be used to calculate a set of equitable caps for all countries. The principle of differential responsibilities and capabilities was implemented in Kyoto using a discrete variable to divide countries into two groups and requiring mandatory reductions from more developed countries while leaving lesser developed country emissions uncapped. This may well have been the best way to affirm an unwavering commitment to equity at the beginning. But the Greenhouse Development Rights Framework formula arguably implements the same principle better via a continuous variable that has the considerable advantage of permitting us to cap emissions in all countries, guarantee that any bogus trading cannot undermine planned global reductions, and thereby remove any obstacles to maximizing the flow of income from North to South that full trading yields.
Of course the more we allow developing countries to increase emissions before reaching their caps, more stringent caps must be on industrialized countries in order to meet a given level of global reductions. Nobody is suggesting that reaching agreement on differential caps will be easy. But agreeing on differential caps for Annex-1 countries was not easy in Kyoto, yet agreement was reached. In any case, the answer is simple no matter how difficult negotiations may prove: Capping all countries is the only way to guarantee that we will meet our global emissions reduction goal. Capping all countries is the only way to reap the full efficiency gain possible from carbon trading and maximize the flow of payments from North to South without risking undermining the overall reduction target. And by varying the caps for countries with different responsibilities and capabilities sufficiently - including allowing emissions increases for some time in poorer countries - equity can be secured.
(3) Cap national net emissions rather than national emissions.
If the international treaty held governments responsible for national net emissions, governments would have an incentive to discourage activities that emit carbon and also have an incentive to encourage activities that increase carbon sequestration. The international treaty needn't dictate to governments how they go about doing this. Since conservation generally yields fewer net emissions than deforestation followed by replanting, national governments would be foolish not to make sure that conservation was also financially more attractive.
(4) Give national governments the power to certify or refuse to certify emission reduction credits for sale by parties operating in their territories.
As long as emissions from non-Annex-1 countries are not capped there is no choice but to give an international agency the power to review applications for CERs from applicants in those countries because there is no incentive for non-Annex-1 country governments to blow the whistle on bogus proposals for CERs by home country applicants. For this reason Kyoto had no choice but to create an international professional bureaucracy to play the role of sheriff.
However, as hard working, honest, and professionally competent as the clean development mechanism (CDM) Executive Board and the Designated Operational Entities (DOEs) they work with may be, the CDM is still an international bureaucracy subject to the pressures all international bureaucracies respond to. In the end they have nothing at stake but their salaries and reputations. Meanwhile they are subject to political pressures from different sides. On the one hand, international environmental organizations concerned with preserving the integrity of global reductions apply political pressure on the CDM to tighten standards and deny certification to questionable projects. On the other hand, those who wish to sell or buy CERs, any governments who lobby for business interests operating in their territory, and those who favor the income flows from more developed countries to lesser developed countries which CER sales generate apply political pressure on the CDM to approve more projects and increase the volume of CER trading. The result has been suboptimal in two ways. While most projects approved have been legitimate, a troubling number of bogus projects have also been approved which has undermined planned global emissions reductions. Meanwhile those worried about the negative effects of bogus projects have succeeded in limiting application of the CDM mechanism by requiring Annex-1 countries to meet their reduction quotas "predominantly" from internal reductions, and by excluding certain categories of projects deemed too difficult to evaluate and monitor. This has led to a failure to minimize the global cost of achieving reductions and also limited the transfer of income from MCDs to less developed countries.
However, once net emissions are capped in all countries, not only do mistaken awards of CERs no longer undermine the global reduction target, there is also a policeman available with a great deal to lose from mistaken awards, including awards for projects that increase sequestration. It is in the interest of country governments to keep private parties operating within their territories from selling more CERs in the international carbon market than the amount by which a project actually reduces emissions or increases sequestration above and beyond what would have occurred had the project not been undertaken because, as explained above, if country governments whose net emissions are capped fail to prevent this, it will be those governments or their citizens who will suffer the adverse consequences of having to cover the shortfall by reducing net emissions more than they would have had to otherwise.
(5) Concentrate attention on the relatively easy task of measuring national net emissions and the crucial task of establishing effective penalties for non-compliance.
Measuring national annual emissions is relatively easy based on readily available information about production levels and technologies in use. And yes, this means the fuss in Copenhagen over Chinese refusal to allow outsiders to engage in on site inspections was actually quite silly. Verifying national carbon emissions is not at all like verifying compliance with a non-proliferation nuclear weapons treaty where onsite inspections of nuclear energy programs play a critical role. Similarly, global information systems (GIS), international temperature and rainfall readings, and international biological maps now make it relatively easy to measure how much carbon is sequestered in the national territory of a country during a year. On the other hand, measuring how much an individual project decreased net emissions over its lifetime compared to what would have happened had the project not been undertaken is quite difficult because it requires establishing a hypothetical baseline and evaluating net emissions over multiple time periods. Much discussion about measuring and cheating confuses this crucial difference between what is easy to measure and what is difficult to measure.
The international treaty needs only to measure annual, national, net emissions because that is what signatories commit to and must be held responsible for. That task is relatively easy and governments will have a difficult time claiming treaty monitors have made significant errors. What the international treaty organization needs to worry about instead of measurement problems, which for the treaty organization are minimal, is how to secure an agreement among signatories on an effective set of penalties for non-compliance, without which the entire exercise is pointless. Continuing to postpone discussion of how to enforce compliance guarantees that negotiations will not be taken seriously. The fact that most Annex-1 signatories will fail to meet their commitments under Kyoto in 2012 miserably proves that the issue of enforcement can no longer go ignored.
If reduction or sequestration credits are to be traded between private parties operating in different countries as I propose, the amount by which net emissions have been decreased through the efforts of the seller must be measured. Yes, they must be measured, and certified, and the judgments about additionality, leakage, and permanence this requires can be quite difficult. But once net emissions are capped in all countries any errors in these measurements and certifications cannot prevent the treaty from achieving its global, net emission target -- provided national annual net emissions are measured accurately and treaty signatories are induced to live up to their commitments. In other words, if the treaty is fixed as I have outlined above, the fact that it is difficult to determine how many credits a seller should be awarded does not matter in the way critics believe. Mistakes in assigning reduction credits for individual projects merely benefit the seller at the expense of the seller's fellow citizens if the seller is awarded more credits that deserved, or benefit compatriots at the expense of the seller if fewer credits are awarded than deserved.
While lesser developed country governments in particular may well appreciate help and advice in awarding CERs to applicants operating within their territory from a staff of experienced professionals whose salaries are paid by an international treaty organization, national governments should have the right to make decisions that affect only their own citizens, and once national, annual, net emissions are capped, governments will have every incentive to make accurate awards.
(6) Once these five changes in Kyoto are made we can then hold our noses and support full carbon trading for three reasons.
First, no matter how badly the carbon market functions, no matter how much an unregulated financial sector inserts carbon permits into its murky, toxic, financial soup, no matter how impossible it becomes to verify that what has been chopped up and divided, bought and sold, repurchased and resold, and packaged in a myriad different forms and combinations with dozens of other questionable assets are in fact real emission reductions rather than fakes; necessary global emission reductions guaranteed by #1, and a fair distribution of the costs of achieving those reductions guaranteed by #2 will not be undermined or compromised in any case.
Second, full trading of emissions credits will produce a flow of income from North to South that far exceeds current aid flows or any reparation payments that are likely to be agreed to. Many Left critics fail to understand that carbon trading of legitimate CERs not only reduces the cost of compliance for more developed country sources and governments - which is good not bad because it makes it easier to lower their caps even further - it also provides a substantial benefit to lesser developed countries. Lesser developed country sellers of CERs and more developed country buyers of CERs divide the efficiency gain from reducing emissions in the lesser developed country rather than in the more developed country between them. The higher the price paid for CERs the more of the efficiency gain goes to lesser developed countries, the lower the price of CERs the more of the efficiency gain goes to more developed countries. But in either case the CDM generates a flow of income from North to South that would stop if the CDM were shut down, as many on the Left have called for.
And third, emission trading will lower the global cost of achieving emission reductions considerably and thereby make it easier to win political approval from electorates in more developed countries for the deep level of reductions necessary.
In short, this is why the Left should support an international treaty with mandatory caps rather than waste time we don't have trying to change course once again calling for an international carbon tax that would not be nearly high enough. This is why it is counterproductive to forego the benefits that trading emission credits brings in a world driven by market forces. And these are the changes in the Kyoto Protocol that would make it effective, fair, and well worth fighting for as we continue to work to convince more and more people to throw off the capitalist albatross that regrettably still hangs around our necks.
