Climate change, fairness and level playing fields

Below the fold is my column on Bali and greenhouse from today’s Australian.

AS representatives of the world’s peoples wrestled in Bali with the greatest challenge to human co-operation we have ever known, different ideas of what was fair and what wasn’t threatened to tear them apart. They still do.

Environmental lobbyists keep insisting we can’t make progress without goodwill. True enough. Then they join the developing countries to wag their finger at the West saying, “You created the problem. You take the lead in fixing it.”

But though the West hasn’t been perfect, Europe and Japan did take the lead, back in Kyoto. And goodwill from the West won’t solve the global problem on its own.

Here we are a decade after Kyoto. China will shortly overtake the US as the earth’s biggest carbon emitter and the story’s the same. If we could wait a decade at Kyoto we can’t wait that long again. A clearer conception of fairness, to both developed and developing countries, might help our progress.

It’s a cliche that level playing fields between countries and between industries within them improve efficiency. But they also provide a basic kind of fairness.

Paradoxically, the greatest objection to excusing China and India from vigorous climate change effort is not its inefficiency, as unfortunate as that is, but its unfairness.

Right now Australians bear the cost and inconvenience of water restrictions. One might argue for some special help to the poor in this situation, but it’s hard to imagine anyone arguing for simply exempting them from water restrictions. Ditto for higher petrol prices.

Likewise, if developed countries take concerted action to reduce emissions only to watch aluminium smelters decamp to China and India in order to continue emitting as before, political support for our effort will evaporate. Without tolerably level playing fields, action on climate change will become farcical, and thus politically unsustainable.

But if bringing the developing countries properly into an abatement regime is the only way of being fair to the developed world, it can be done in a way that’s more than fair to the developing countries.

Ultimately the only fair way to allocate the world’s rights to emit is the way we allocate votes in a democracy. Each person has equal value. If we divided global emissions entitlements between countries this way, with equal per capita emissions entitlements, China’s population would entitle it to 66 times our own and over four times America’s entitlement.

Of course, once allocated between countries such entitlements should be traded to ensure their most efficient use. It beats me why the developing countries are not playing this card more forcefully now, rather than the delaying game we’re seeing. If citizens of developed countries are too greedy to transition to per capita emissions entitlements quickly, let’s hope we’re not too stupid to do it gradually. Because I can’t see any other way of making the deep engagement of the developing countries politically sustainable.

A gradual transition to such a regime of per capita emissions entitlements would enable developing countries to continue expanding their emissions for some time as they must to continue developing their economies. So we’d have to be prepared to reduce developing countries’ and our own entitlements accordingly.

That’s how the developed countries got engagement from Russia back in Kyoto. Russia was given more emissions entitlements than it needed as a bribe. But rather than the kind of fairness we’re dishing out to the developing countries now, entitling them to delay real action, it was the right kind of bribe. Russia had the same stake in immediately abating carbon as the countries facing tougher targets because it could sell its permits to them.

So as we navigate the new road map that was agreed at Bali we should be both warm-hearted and cool-headed. We can do so by valuing fairness to both developed and developing countries. We should be unapologetic about continuing our own relatively token actions unless and until all major emitters – including as a minimum the US and China – are fully engaged.

And we should focus on the goal and the benefits of carbon abatement, not just its costs. As with tariff cuts there’ll be big winners as well as losers. And some will surprise us. Providing the US and developing countries are engaged, carbon emitters such as gas production and even aluminium will be winners wherever their consumption reduces emissions by more than the emissions used in their production.

Given a tolerably level playing field in our region, the pain of quite deep cuts will be dwarfed by the usual process of economic growth. Indeed adjustment to deep cuts over the next 12 years would be slower than the adjustment we’ve just been through since petrol prices shot up, and that didn’t slow us down much.

And the overriding point of what pain we do experience is to achieve a greater benefit, in this case to reduce the risk of much higher costs from climate change (including the slim but real chance of really catastrophic warming).

If we can focus on securing the basic fairness that is the precondition for political sustainability, we should be unafraid to sign up to the kinds of aggressive carbon reduction target the UN has spruiked. If we can’t, perhaps we should stock up on sunscreen for our kids and grandkids. Things will probably hot up.