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International climate change bargaining disappointing

17th July 2015

By: Saliem Fakir

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Scientific persuasion could not be more compelling than the growing evidence that climate change and variability pose the greatest threat to humanity. But whether collective political action will be taken to solve this challenge remains to be seen.

Even Pope Francis is convinced that something needs to be done quickly. It appears that, when he released his 183-page encyclical recently, he was also appealing for popular pressure as climate negotiations are notoriously slow and cumbersome and, when things look promising, bombshells can be dropped that can scupper the whole process at the last minute.

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Whether the twenty-first Conference of the Parties (COP 21) meeting, which is to take place in Paris at the end of the year, will lead to a fundamental shift towards action was not evident from the Bonn intersessional meeting on climate change, held in June.

A lot of what goes on in these meetings involves the shuffling of text. The draft text presented as part of Work Stream 1 was a voluminous document containing many different views and negotiating positions. Attempts to shorten the post-2020 framework document achieved minimal success.

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For those observing things from outside, shuffling text while mother earth burns seems rather mind-boggling, given the heat wave in Pakistan, which killed close to 1 200 people in a few days. What more evidence do you need that action is needed now rather than later?

It is worrying that even success in Paris will not bring us within the range of the 2 °C ‘requirement by science’ target, which means we have to reduce carbon emissions much faster than the post-2020 plan would allow.

Confidence in the process may, rightfully, be tempered with some scepticism, as some economists, such as William Nordhaus, argue that the problem of a global commons is that climate change is not only a moral issue but also an economic one. A country’s huge efforts to reduce carbon emissions may be an invitation to another country to do nothing to curb climate change. As Nordhaus points out, the problem is that, since nobody owns the atmosphere, anyone can freely pollute it and no one is willing to clean it up afterwords. And nobody has the power to make polluters pay, since the atmosphere is part of a global commons.

Nordhaus also believes that the only way climate change challenges can be dealt with is through a group of countries that form some sort of ‘mitigation club’ (I am paraphrasing his ideas here). These would mainly be the most developed economies, which have a strong industrial base and are responsible for the bulk of the world’s carbon emissions. China and the US certainly have to be part of this club.

Their relationship to work together on climate change was recently reinforced when the US and China held their Strategic and Economic Development dialogue. China indicated that its own climate plan would cost about $6 trillion dollars and has already rolled out 750 000 electric cars.

According to the deal, the US will reduce emissions by 26% to 28% below 2005 levels by 2025 and do its best to hit the higher end of that range as soon as possible. China will have its carbon dioxide emissions peak around 2030, “make best efforts to peak early” and increase the share of nonfossil fuels in its energy portfolio to around 20% by 2030. China’s investments in nonfossil fuel sources of energy are staggering.

It is only through the collective actions of this small but important group that there will likely be change in how the climate challenge will be dealt with. These economies – because of their size – will also be able to impose one form of carbon price or another. Dominant economies can dictate new terms of trade that can level the global playing field and eliminate the free-rider problem among the major polluters because they will all have to act in concert.

These countries, can, in turn, impose border tax adjustments (BTAs) through a carbon pricing mechanism. Any country exporting goods into their territory that does not meet certain carbon intensity standards will be subject to BTAs. A form of BTAs is already being considered for the aviation industry by the European Union.

Nordhaus’s club approach seems more viable than the United Nations Framework Convention on Climate Change (UNFCCC) process. It is more likely to have legs than the UNFCCC process, and this may already be in the offing, given the climate deal that the US and China have signed.

We also do not have to wait for the UNFCCC nor the ‘mitigation club’ for national efforts that can support local actions, as they are always a good place to start. This requires changing the power game from the utility model to local entrepreneurship.

Utilities are natural monopolies subjected to regulated pricing and tend to be uncreative in adjusting business models for changing technologies. And, in our country, where bail-outs are guaranteed, irrespective of performance, complacency and lock-in into particular ways of doing things remain pretty set until it is too late to change things.

The prices of solar panels have come down radically and are expected to go down further. This is spurring a diverse range of innovations not only in technology but also in the experimentation and application of new business models to drive scale, access and affordability in cleaner technologies. These business models are mainly focused on reductions in cost, installation time, logistics management and materials.

Empowering citizens to take on the low-carbon burden is the right way to go, and some countries are not waiting for the UNFCCC. They are simply doing it because it makes economic sense and it is good for the climate. The more citizens are empowered, the more they can make a dent in carbon emissions.

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