The South African Civil Society Information Service

Change Trade, Not Our Climate!

By Ronnie Hall · 6 Nov 2009

Picture: net efekt

In just a few weeks, government negotiators will be jetting in to Europe primed and ready to hammer out a new global deal: fractious, coffee-fuelled all-night negotiations seem inevitable, as each country battles to reach some kind of face-saving deal that sounds far-reaching and progressive, but won’t damage its own economy. All involved claim to be worried about the possibility that talks might collapse: but would a deal, any deal, be better than nothing?

The answer is a resounding ‘No!’ Because while the world watches and waits, praying that governments meeting in Copenhagen can conjure up a last minute reprieve from the impending threat of climate change, these negotiators are heading to a radically different set of talks. Just one week before the make-or-break climate change summit in December, officials from the very same governments will pitch up in Geneva, ostensibly to start wrapping up the World Trade Organization’s (WTO) eight-year old deadlocked ‘Doha round’ of trade negotiations. And that could be very bad news for our climate, whatever happens in Copenhagen.

Why? Well even without a ‘Doha round’, the rules are stacked in favour of trade and against climate. With Doha, it looks like a dead cert: prioritising short-term trade concerns will see us fiddling while the world burns. 

International trade and investment agreements already drive the overall growth of energy-intensive industrial sectors, the continued extraction and processing of fossil fuels, and the expansion of intensive agriculture. These carbon-hungry activities also contribute to the relentless destruction of climate-regulating forests, and international transport generates a significant chunk of the world’s emissions too. According to the Intergovernmental Panel on Climate Change industry, energy, deforestation and agriculture are collectively responsible for 89.3% of the world’s annual human-induced emissions. Yet WTO rules prohibit any differentiation between climate-friendly and climate-threatening sectors if it’s based on production and processing methods.

The same rules also place severe constraints on what governments can actually do to promote low-carbon alternatives or help people adapt to climate change. Rules on intellectual property rights, for example, push up the cost of climate-friendly technologies, making it that much harder for developing countries to switch to sustainable low-carbon technologies and climate-resilient development. Rules on the patenting of life forms could also prevent farmers adapting food production to climate change, with severe implications for food security. There are even rules on subsidies that could stop governments providing financial support for the development of climate-friendly fuels or technologies. All these rules have to go.

Yet trade negotiations are currently moving in exactly the opposite direction. A ‘Doha’ deal could even lead to the removal of national energy efficiency laws already in place: in one of the WTO’s lesser-known domestic regulation discussions, the gauntlet has already been slapped down by a number of countries. The United States, for example, has registered its dislike of fuel-efficient vehicle taxation policies based on engine size (as used in the UK, for example). Ironically, though, Korea has also complained about the US’s own ‘Corporate Average Fuel Economy’ fuel efficiency standards. China objects to a range of EU energy efficiency measures for household appliances, air conditioning units and heating. 

This simmering tension between the worlds of trade and climate change also creates a ‘chilling effect’ on the development of new climate change policy measures, both nationally and internationally: governments become reluctant to introduce any national measures that might be challenged through the trade system. Many multilateral environmental agreements even have built-in ‘trade loopholes’: the UN Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol, for example, have wording explicitly advising against measures or ‘disguised restrictions’ on international trade.

Energy security concerns are clearly at the heart of many current trade negotiations too. The EU, the US and others, for example, are trying to use the WTO to remove international trade restrictions impeding energy service companies. This would make life a great deal easier for energy transnationals like Halliburton hoping to secure new oil exploration, extraction and distribution contracts, but could make it a whole lot harder to keep fossil fuels locked up underground. The EU has also been talking up the need for a ban on national export restrictions, which could also boost trade in energy products. Similar concerns about energy are evident in bilateral trade negotiations: Japan, for example, is seeking to include ‘energy security’ clauses in any bilateral agreement with Australia, in order to maintain access to Australia’s coal resources.

Energy services liberalisation could also place serious constraints on governments’ ability to implement national policies to reduce reliance on energy imports or shift to sustainable energy sources. An energy services deal could, for example, allow foreign energy companies to influence national energy policies, potentially allowing them to decide which energy resources, energy workers and energy technologies to use. It’s also possible that energy companies could switch to whatever type of energy was most profitable at the time, with little or no governmental control. The liberalization of energy services has to be stopped.

A deal on agriculture could also have a profound and direct impact on the world’s climate. Any free trade deals that opens vulnerable developing country markets to subsidised food products from the North is likely to make local food production by small farmers wildly uneconomic. They may then leave their farms in droves (at the same time making way for more industrial-scale production of food and biofuels for export to the already well-fed and well-fuelled North).

This would be a disaster from a climate point of view. We would be replacing a form of farming that has minimal climate impacts, enhances food security, reduces deforestation, and helps people to diversify food production in response to changing weather patterns, with a model of industrial agriculture we already know to be partly responsible for our changing climate. Changing what we eat and the way that we grow it, on the other hand, could work wonders, by protecting and developing sustainable low-impact food production that promotes food sovereignty, protects family farms, and uses seasonal food to provide first and foremost for local needs.

Above and beyond trade rules, governments’ fixation with maintaining economies’ and industries’ competitiveness in an increasingly tough globalised economy also presents a major hurdle to implementing climate change mitigation policies. As countries have progressively engaged in international trade, they have also become more dependent upon it. As a result, governments are ever more reluctant to introduce costly climate-friendly policies, such as carbon taxes, on the basis that these could place their domestic industries at a disadvantage (by increasing their operating costs compared to those of their foreign competitors). But this argument doesn’t hold much water: G20 countries are currently spending something in the order of US$200 billion every year subsidizing the use of fossil fuels: sometimes, it seems, money is no object. It will be interesting to see how quickly the G20 countries move to fulfil their Pittsburgh promise to end fossil fuel subsidies and switch to investment in cleaner energy sources.

Some propose addressing concerns about competitiveness by applying equalizing ‘border tax adjustments’ to imports (so that those imports are made correspondingly more expensive, which protects domestic production). But this approach is highly controversial as it contravenes the accepted principle of ‘common but differentiated responsibility’, which underpins the existing climate change convention. It was industrialised countries that caused climate change, it is industrialised countries that owe a huge climate debt to the rest of the world, and it is industrialised countries that have to realise time’s up: this debt now has to be paid. That payment surely includes bearing the economic cost in terms of lost competitiveness, however bitter a pill it is to swallow.  

However, the governments responsible for climate change should be rapidly restructuring their economies anyway as they move to low-carbon economies, and this potentially painful transformation could actually be eased by removing the many trade restrictions and priorities that work to stop governments introducing strict energy efficiency regulations, protecting infant industries, subsidizing the development of climate-friendly technologies, and creating new, green jobs for displaced workers who should not bear the brunt of climate change.

The current free trade stranglehold over economic policy means that governments have also chosen to prioritize business-friendly solutions to climate change, rather than opting for more effective and predictable regulatory options. This is bad news, because it means we are already banking heavily on the success of a number of highly uncertain ‘false solutions’ that minimize inconvenience to, or even benefit, industry. These include voluntary certification and labelling systems, for example, which are favoured precisely because they have minimal impacts on trade, are not designed to address excessive consumption, and can lend a very pleasant shade of green to company profiles. 

More ‘false solutions’ are now being proposed and implemented, as industry moves to invest in the potentially profitable spin-offs of the climate change crisis. The main risk is that the urgency of the situation, combined with the dominant ‘market-friendly’ approach, could lead to a hasty acceptance of untried and untested technologies, including some outlandish geo-engineering experiments, such as solar radiation management technologies, potentially land-grabbing ‘bio-charcoal’, a revival of the once-rejected genetic modification and nuclear industries, and reliance on as yet undeveloped ‘carbon capture and sequestration technologies’ (which is being used to justify the continued use of fossil fuels such as ‘clean coal’). 

Governments have also opted to use carbon trading mechanisms to drive and finance many of these climate change measures and technologies, in spite of the fact that these offer a route for the rich, industrialized North to buy its way out of its commitments (by buying carbon credits, known as ‘offsets’, from less polluting projects in developing countries). But the outcomes of carbon markets to-date have been highly dubious, to say the least. In particular, the Kyoto Protocol’s Clean Development Mechanism (CDM) has failed. Even its supporters, such as the World Bank, now recognize that it is also complex, slow and cumbersome, and seems to be riddled with fraud, with “the vast majority of energy efficiency and renewable energy projects remaining stuck somewhere in the pipeline.” 

Carbon markets, like any other market, are also volatile. Yet instability and unpredictability are hardly desirable characteristics in a determined and structured effort to mitigate climate change. Any factor that causes the price of carbon to drop will make it cheaper for companies to pollute, and thus less likely that they will implement energy efficiency measures or develop new technologies. Uncertainty will also reduce upfront investment in desirable technologies. 

Still many governments seem willing to continue as if nothing were amiss. Ignoring lessons that might have been learned from the global financial crisis, they seem determined to press ahead with carbon markets, regardless of the consequences. There are even proposals to use carbon markets to finance a new mechanism, Reducing Emissions from Deforestation in Developing countries (REDD), which is currently being discussed in the UN’s climate change negotiations. But a closer analysis shows that some government favour a form of REDD that is not intended to stop deforestation, only to reduce it in a way that is comfortable and convenient for industry. REDD could also be used to reward those engaged in logging and industrial agriculture, whilst ignoring those countries and communities that already have low deforestation rates.  Critically, REDD could also hamper much-needed efforts to mitigate climate change if it is based on a definition of forests that includes plantations, which only store 20% or less of the carbon that intact old growth forests do. 

Governments urgently need to refocus trade and investment to actively promote the use of sustainable energy, by stopping trade and investment negotiations and agreements that promote energy-intensive industries. They need to redirect their efforts - and the very substantial public subsidies currently allocated to the fossil fuel and agrofuel sectors - into developing and implementing sustainable clean, renewable, locally-controlled and low-impact energy resources and technologies, based on the principle of energy sovereignty. It’s also critical that we stop consuming ever increasing but unnecessary quantities of goods – paper, timber, metals and meat – that are increasing greenhouse gas emissions. It’s overconsumption and trade, or our climate. Is that really such a hard choice to make?

The answer is clear: we need to move away from neoliberal economics if we are to avoid the worst impacts of climate change. We need a coherent, practical, and fair rights-based framework that prioritizes long-term climate change concerns over short-term trade interests, and puts the long-term health of the planet and the well-being of all its people first. If we don’t change the rules of the global economy, it’s most unlikely we’ll be able to stop runaway climate change, no matter what deals are done in Denmark. We need climate justice. And we need it now.

By Ronnie Hall. This article is based on a new publication of the same name, ‘Change trade, not our climate!’ by Ronnie Hall and published by the Our World Is Not For Sale global network, which can be downloaded at www.ourworldisnotforsale.org.

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