Articles:
Optimism about climate change

It is always right to look at agreements made at the annual Group of Eight (G8) summits of rich-country leaders with skepticism. These summits are little more than photo-opportunities with banquets attached. But the response of environmentalists to the G8’s agreement on July 8^th on how to deal with climate change has overdone that necessary skepticism.

The reason is that the pact the leaders signed up to at their meeting in Hokkaido, Japan’s northernmost island, is as good as could have been expected. They have accepted that action needs to be taken and that emissions of climate-changing gases need to be halved over the next 40 years. Yes, the agreement was vague and was cast so far in the future as to be barely a real commitment. Yes, it failed even to make clear whether the halving was to take place from current levels or those of 1990, as specified in previous agreements. Nevertheless the Hokkaido pact prepares the way for the real negotiations next year.

Nothing more could have been achieved this year because of America’s election season. Everyone is waiting to see who is elected president, and what attitude he and the new Congress take to climate change. Since the US is one of the world’s two biggest emitters of climate-changing gases—the other is China, which overtook the US as an emitter this year—and since the US refused to ratify the first global treaty on climate that was agreed in Kyoto in 1998, its attitude is crucial if anything is to be done.

Also crucial, as George W. Bush pointed out at the G8 summit, is the attitude of China and other fast-growing developing countries. Invited to the summit just as second-class observers, China, India, Brazil and the others cold-shouldered the G8 deal, welcoming its existence but refusing to make commitments of their own. Their argument is by now familiar: that since the industrial countries were responsible for almost all the carbon-dioxide and other gases now warming up the atmosphere, they should bear the burden of cutting emissions, not the poorer countries which are just adding new emissions as they struggle their way out of poverty.

Some thus conclude that the prospects of a serious global plan must be dim. If China does not sign up, then neither will America. But that is wrong. The Chinese response was just negotiation, a ploy in a poker game. Why reveal your hand when the game has barely begun?

The formal negotiating game is due to take place in Copenhagen in December 2009, under the auspices of the United Nations. But the real action will take place in Washington and Beijing, and in informal talks between the world’s biggest economies between now and the opening of the Copenhagen conference. Here is what should be done—and why the prospects for real action on climate change are much better than the environmentalists say.

What every rich country needs to do is to penalize activities that produce a lot of carbon dioxide and thus provide incentives for people and companies to switch to cleaner ways of doing things. The two ways of doing that are taxes and regulations. No one likes taxes. But a new presidency and a new Congress provides the best opportunity for America to get round that fact.

The new president, entering office with a clear mandate and great moral authority, should make a bold but also far-sighted proposal, which is just the sort of thing presidents can only really do when they are newly elected. He should propose a special budgetary package for dealing with global warming. It would consist of the introduction of a tax on carbon, which could start small but then be gradually increased over a long time period laid down in the legislation—as much as two decades.

That tax would thus be imposed on gasoline but also on all other forms of energy that involve carbon. Any gasoline tax is unpopular in the US, especially when gas prices are as high as they are now. That is why it must be small at first, but also why, in the same package, the president should announce that the revenues from this new tax will be used to finance a cut in federal income tax, also phased in gradually over the next two decades. Thus, since much of the revenue will come from taxes on other carbon use and not just gas, people will immediately see more benefit than personal pain. That is the only way to make higher taxes on gasoline politically acceptable.

That proposal, combined with anti-pollution regulations and targets, would make the new administration instantly credible in international negotiations. In fact, it would give America a strong leadership role. It would also give America great leverage in dealing with China.

China, in fact, is likely to be quite receptive to a deal. Its Communist leadership knows that public protests inside China about pollution are growing, and could pose a future threat to the regime. It has already been trying to enforce stricter environmental controls on local governments and municipal authorities.  It has found it difficult to succeed in that effort because the drive for personal profit and for local economic growth are so strong, and as a result resistance to the central government has been fierce and successful.

The central government needs every weapon it can get if it is to overcome this resistance. In the late 1990s, the leadership used China’s negotiations to gain entry to the World Trade Organisation as a powerful tool to force through reforms at home. The same trick will now be available through negotiations for a global environmental treaty under which China would gradually adopt targets for emissions reduction, beginning in 2012.

In fact, other poorer developing countries—notably India—promise to offer stiffer resistance to making emissions cuts than China will. China has reached the stage where cutting pollution is in its own interest. Bring on the poker game. It will be difficult. But it really can be won by the planet.