The South African Civil Society Information Service

Why the New Round of the Kyoto Protocol is a Long Way From Being Signed and Sealed

By Saliem Fakir · 18 Jun 2008

The key to the success of the Kyoto Protocol, which is meant to protect us from climate change, is dependent on collective global action.

Collective action is a product of enlightened self-interested power using its soft power to garner the world’s support and leadership. It too, requires a shared system of values and beliefs.

But whatever there was of this enlightened self-interest before 9/11 has gone to the wind. When you run the world economy and geo-politics on the winner takes all principle then we should not be remiss of the fact that solidarity around global issues will be hard to come by.

Nobody disputes we should not act irresponsibly towards the environment. But let’s face it – the ethic of a global good is always in conflict with the ethic of self-preservation.

In uncertain times when you don’t know who your friends are anymore or who the real enemy is, trying to make peace with one’s neighbour is a bit of a challenge. Climate change issues are like that - they are about good neighbourliness between states as no one state can be totally free from the other.

Good neighbourliness in the past worked because the rich neighbours could bribe the poorer ones or shower them with gifts so as to earn their hand of peace. They did so out of enlightened self-interest and for no other reason. In this way too they hoped to create stability and protect themselves from discontent and bad behaviour.

The rich neighbours did not always agree with each other. The more powerful ones tended to ignore the rest and did whatever they wanted. Others wanted to set an example because their members demanded it and because they had the means to do so.

They tended to be the good ones. But the world can’t change only if some good ones carry the burden for the rest. At some point the weight of the burden will be too much. They will lose steam and also give up.

South Africa’s own good neighbourliness will come under scrutiny as we are one of the world’s great polluters. Our smoke and air-borne pollution swirls around the sub-region, making a three-hundred and sixty degree turn back home after our smothering plume makes others suffer its obnoxious presence. What we do down here affects others up there too.

That's the nature of green house gases (GHGs), the unremitting obscenity with which it rudely intrudes on the existential experience of others if there is too much of it in the sky. Once up in the air and freely being blown about it is oblivious to the rights of humans and nature.

These days the world is on hyper-self-preservation mode. It is difficult to see how collective action on a global scale can be achieved when you can’t easily bribe or shower the lesser neighbours with gifts and other rewards like before. One power seems to be able to play-off the other. It is so, because they simply have the capacity to do so.

Richard Haas, the President of the Council for Foreign Relations, has characterised our period as a period of non-polarity. He writes: "The principal characteristic of twenty-first-century international relations is turning out to be non-polarity: a world dominated not by one or two or even several states but rather by dozens of actors possessing and exercising various kinds of power. This represents a tectonic shift from the past".

Others may differ and suggest we are already in the throes of distinct centres of power – and would rather refer to the current global situation as being multi-polar. Be that as it may, new powers simply fragment the worldview and in so doing set a myriad new outcomes making one course or route a very arduous prospect to negotiate. Democracy between more centres of power is far more difficult compared to when there were once only two or three ruling the world.

The very economic rationale that was the basis for the bribes and gifts that kept the Kyoto Protocol glued together is coming unstuck. In the hey-day when the Climate Change Convention was signed, oil was cheap – hovering between $10-$20 per barrel. These days oil prices are volatile. The moment you clear your nose the price has already escalated to new highs.

When the oil price per barrel was dirt-cheap, adding, then, a little extra fossil fuel tax to taper the consumption or change consumer behaviour made a lot of sense. These days talking about carbon taxes with record high oil prices makes for little economic sense. It may make sense when one talks about coal. But coal prices too are rising. This year alone they have doubled compared to last year’s price per ton.

The externality cost is already, inadvertently, being priced into the commodity and high petrol prices. They are making people rethink their driving habits and household energy usage. Oil is likely to go up to $200 per barrel by the end of this year or mid-year next year. Even a correction of 30 percent by the markets, as some expect will happen, will be high in any case.

The fact that the oil price is high is a good thing in one respect - it is driving consumer consciousness, technological change and slowing down the world’s economy. On the other hand it is contributing to inflation.

All of this raises questions about the premises under which negotiations are being undertaken for the new round of the Kyoto Protocol. The UN Conference on Climate Change in 2009, to be held in Copenhagen, is facing a crunch – the post 2012 continuation of the Kyoto Protocol all depends on what happens in Copenhagen.

Nicolas Stern, following his infamous seven hundred pages long Stern Review Report has released a new discussion document called: "Key Elements of a Global Deal on Climate Change". Stern's thesis has not changed.

The proposals contained in the new document are emphatic about market mechanisms playing a key role in offsetting green house gases (GHGs). By market mechanisms, Stern means correct price signals that factor in the cost of carbon in production and usage of goods as well as subsidies and tax rebates as incentives to adopt new technologies.

He recommends an expansion of the cap-and-trade system which generated, so far, $24 billion in carbon finance and a re-hauling of the Clean Development Mechanism (CDM) from being project based to being more programmatic and also ensuring, as a result, increased flow of carbon finance from the CDM - so far the CDM has generated about $6 billion worth of carbon credits.

The document also recommends a stabilisation target for GHG emissions (which must include the main emerging economies such as China and India) and should be around 450-550 ppmv (parts per million by volume). 

However, one must put things into perspective. As Kishor Mahbubani in his book, "The New Asian Hemisphere: The Irresistible Shift of Global Power to the East" noted, while China and India are increasing their share of global per capital emissions, theirs are in no way close to the levels of the developed economies.

Mahbubani goes back to 1850 – China’s total carbon dioxide emissions amounts to eight percent of world emissions, whereas that of the US is 29 percent and western Europe 27 percent. India's per capita greenhouse gas emissions is four percent of those of the US and 12 percent of those of the European Union.

The Stern document recommends the setting of a new target for cutting GHGs by 50 percent by the year 2050 together with binding national targets for emerging economies. Stern does concede that getting fast growing middle income countries to abide by new targets will be politically difficult and it all depends on what developed countries commit to and have achieved so far.

They will have to do it by introducing carbon emission reduction targets using the market or other instruments. Whichever they choose, it will be expensive. What is all more surprising is how little the Stern report, both the past and the present discussion document, takes into account changes in the political economy of the world.

A political economy that is being redefined by the price of commodities like coal and oil and the fact that while the emerging economies are growing fast, they do not seem in the near term a little interested in slowing down their growth. They have good reasons – they want to be world powers and they do still have a significant number of people who are poor.

The high oil price is also making it more profitable to dig out more oil from previously unrecoverable wells, tar sands, oil shale and even conversion of coal to liquid (a notoriously unclean process). If anything, the life span of fossil fuels look to be extended despite what Peak Oil pundits say. There seems to be an enthusiasm for more fossil fuels, not less of it.

There are also questions about whether the current regime under the Kyoto Protocol is the least cost option. Bjorn Lomborg, who is not the most likeable of environmentalist, has made some rather interesting arguments in his new book Cool It. They are worth a hearing despite the tendency of environmentalist to shut their ears when he says something.

Lomborg thinks the Kyoto Protocol is the worst deal ever and far too costly in terms of the tonnage of carbon emissions that must be reduced per individual. His cost estimates puts the annual cost for the next 50 years at a horrendous price tag of $180 billion per annum. Lomborg thinks the world can be saved in better ways.

He is not alone in thinking that the Kyoto Protocol is too expensive. William Nordhaus is a professional economist, and in his book, "A Question of Balance: Weighing the Options on Global Warming Policies", he calculates aggregated expenditures and costs and gains. Everything is calculated by running a single computer model, which he calls DICE, an acronym for Dynamic Integrated Model of Climate and the Economy.

The main conclusion from Nordhaus’s work is that the proposals made by 'Stern' and 'Gore' are too expensive. They get the ear of decision-makers because they are celebrity politicians and so ordinary people are reluctant to question them or simply the media does not promote alternative views that could foster a wider debate.

Nordhaus thinks there are 'low-cost backstop' solutions. Suggestions of genetically engineering fast growing and fast eating carbon trees will rub the anti-biotechnology fundamentalist the wrong way. However, a solution may be in the offering if we just give it a hearing.

Nordhaus' conclusions are also important for another reason – remember collective action and the incentive to participate without being harmed further. Well, it turns out that Stern’s approach to things will cost China dearly.

It will slow China's growth rate and impoverish future generations of Chinese. While the British are enthusiastic about their own Stern, the Chinese are not. Leading Nordhaus to cheekily remark that the Stern review "takes the lofty vantage point of the world social planner, perhaps stoking the dying embers of the British Empire".

Stern's review is already out of date. It does not sufficiently accommodate the effects of the three main global shifts: shifts in global power and how this will affect negotiations; the changing economic dynamics of fossil fuels and the inflationary effects of the high energy prices and finally, that nagging feeling that he is still gung-ho about a universal one- size-fits-all framework for climate action. This may work in Britain, but what goes for Britain may not be good for the rest of the world.

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