Why an Effective Global Warming Treaty Will Not Be Reached
Commentary By Michael G. Frodl and John M. Manoyan
At the July G8 summit in L’Aquila, Italy, members agreed to work toward an 80 percent cut in greenhouse gas emissions by 2050. Developing nations, however, did not agree to specific reductions. A fair prediction is that neither the United States nor the European Union are going to be able to coax, cajole or coerce China and India into firmly committing to any hard CO2 reduction targets.
Global warming is not opposed in principle by China, but its attitude is more like, “Thanks, but we have more important things to worry about right now.” The Chinese can always be nudged a bit by taking advantage of their desire to be respected as a major power, but that can only go so far. Without formally opposing the findings of the G8 summit, China sent the clearest message possible about its own priorities. President Hu Jintao rushed home early in order to supervise the repression of the uprising in Xinjiang. The Chinese delegation that remained, joined by the Indian representatives, made it clear that their countries could not endorse the targets adopted by the G8 without some serious quid pro quo’s.
Bottom line, the two biggest economies of the developing world have other more pressing priorities.
For the sake of appearances, China and India will continue to show their commitment to cleaner energy and reducing CO2 with token displays for visiting dignitaries. Their official position will continue to be that they will work towards reducing CO2, but they will not commit to any large absolute reductions. In fact, both China and India are still trying to argue the unfairness of being targeted on totals while their per capita numbers are even below those of many poor and underdeveloped nations.
The last thing China or India need to see is the cost of their energy go up. They prefer instead to keep using cheaper, carbon-rich energy. China and India also are opposed to their exports being targeted by the United States because of their refusing to participate in some “Kyoto II” scheme.
Trade lawyers are expecting the “mother of all World Trade Organization battles” if the current cap-and-trade legislation in Congress is not stripped of “carbon tariff” language that would make products more expensive if imported from countries that don’t regulate carbon.
What are the inducements that India and China are demanding for themselves and the rest of the developing world? There are at least two. First is money — at least enough to offset the increased cost of energy for their economies. Given that China recently became the biggest single source of CO2 pumped into the atmosphere, this could be an unprecedented wealth transfer from the West to China alone. Then throw in India and the rest of the developing world. That simply isn’t going to be agreed to by the United States and the European Union.
The other inducement is no less worrisome in implications for the U.S. economy and national security: the subsidized transfer of technology to the developing world so as to allow it to fight global warming. Those who have been investing in new energy technologies or cleaning up the old energies are in for a rude awakening. It will be a similar scenario as it was for companies that supported the current cap-and-trade bill in Congress in exchange for the promise of auction proceeds to fund development and adoption of new energy technologies. They are now feeling betrayed by politicians who want the auction proceeds to pay for health care and other entitlement programs.
Companies that have pursued research and development of many of the new technologies believed that they would help the United States become “energy independent” and also get their money back and then some. But that is unlikely if there are technology “giveaways” to China and India.
But even the best offers the United States and the European Union are willing to make to the developing world in terms of money and technology transfers still may not be enough to offset the costs to India and China of reducing CO2 output.
Assuming that the Indians and Chinese refuse to go through with any real deal firmly to reduce their carbon emissions in the next 40 years, is it still worth the effort and cost for the United States and Europe to do so?
If the test is whether global warming can be slowed before it becomes unstoppable, the West alone cannot adopt any measures that would offset continued and unimpeded development of CO2 emitting energies such as coal, oil and natural gas by the rest of the world.
In fact, any unilateral attempt by the United States to cut back on oil consumption would only lead to depressed oil prices globally as a result of the U.S. leaving the market. The natural outcome will be that India and China take up that slack.
The net effect will not be zero, it will be worse than zero, because China and India will probably burn coal without any of the scrubbers or environmental standards that are in place in the United States and Europe. Not only will CO2 output keep rising, but also other pollutants — such as sulfur — will be pushed up into the air in unprecedented quantities. There will be more acid rain and other unwanted effects.
Furthermore, environmentalists in the United States realize that the politicians are not delivering on a plan that can actually stop or even slow global warming. The metrics indicate that not only would nations need to cut back equally by 2050, they would also need to cut back even more. If India and China were to reconsider and sign off on the G8 summit targets, it still wouldn’t change a thing. Global warming would still happen, at least according to the computer models.
Why are these targets still being talked about when the metrics of the global warming community show the futility of all this? The answer is a combination of momentum from the 2008 U.S. elections, pull from the European Union to get U.S. companies into a regime that will force them to bid up the carbon permits, financial interests that hope to make a fortune from trading those carbon permits, and special interests bent on using new regulations to handicap less lobby-savvy competitors.
Climate regulation promises to be the newest conduct of business warfare by other means for many players who don’t care for or even believe in global warming.
One wonders if smart people in Beijing and New Delhi also quietly know all this and therefore don’t feel any great compulsion to abandon their more pressing priorities of making life better for their people until and unless the price is such that they all come out ahead.
The last thing their poor need is to be denied a chance to climb their way out of poverty because guilt-ridden rich people in the West want to undo the industrial revolution before the poor in developing nations finally get a chance to move up the rungs of the ladder. As those billions climb the ladder out of poverty, for China and India playing for time makes a lot of sense. Michael G. Frodl is a tax attorney and emerging risks advisor. John M. Manoyan is a chemical engineer, nuclear physicist and investment advisor. They are co-founders of the Washington, D.C.-based Forum for Environmental Law, Science, Engineering and Finance. They consult together on energy matters.