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A New Approach To Tackling Climate Change

Author: Jagdish N. Bhagwati, Senior Fellow for International Economics
February 22, 2010
Financial Times

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The resignation last week of Yvo de Boer, the Dutch diplomat, as executive secretary of the United Nations Framework Convention on Climate Change, reflected his frustration over the Copenhagen meeting and problems in climate change treaty design.

In fact, the soon-to-expire Kyoto protocol before it was also flawed. Nearly all of the 36 industrialised rich countries in annex 1 (which excluded the developing countries) failed to fulfil the emission-reduction targets they had signed on to. The U.S. (along with Australia) had not even ratified the protocol. The Senate, in a bipartisan 99-1 demonstration of defiance, had also rejected the protocol under the administration of Bill Clinton.

The failure of Copenhagen lay in the fact that creativity was required to bridge differences between rich and poor countries. It was badly missing. Building international institutions requires that we seek their principles in actual practice, not utopian ideas. We need to build the new protocol on principles in existing international institutions, such as the World Trade Organisation. How can this be done?

First, while the Kyoto protocol had obfuscated the distinction, it is now customary for negotiators to distinguish between commitments arising from the "stock" and "flow" aspects of climate change. The former relates to commitments arising from historical carbon emissions; the latter to current emissions. But, though the language of "legally binding" commitments is routinely used, there is no process by which anyone's feet can be held to the fire if the delivery falls short.

With the new protocol we need to draw on the example of the WTO. There, failure to deliver on accepted trade-openness obligations can be challenged and a dispute settlement process exists where an adverse finding leads to penalties. A climate change protocol where the commitments on stock or flow aspects are mere declarations with no consequences would lead to a charade and breed cynicism, not produce action.

Second, the pledge by rich countries at Copenhagen to spend $100bn (€73.5bn, £64.5bn) on mitigation and local adaptation may be seen as a response to the "stock" issue of past damage. But the sum has been explained as funds to be given to the poorest countries and that it can come at the expense of normal aid. This reflects faulty thinking.

The U.S. in addressing domestic pollution created the superfund after the Love Canal incident, where a successful tort action was filed against Pacific Gas & Electric in 1996 for leaking toxic chromium into the ground water. Under the superfund legislation, hazardous waste has to be eliminated by the offending company. This tort liability is also "strict", such that it exists even if the material discharged was not known at the time to be hazardous (as carbon emissions were until recently). In addition, the people hurt can make their own tort claims.

Rejecting this legal tradition in U.S. domestic pollution, Todd Stern, the principal U.S. negotiator, refused to concede any liability for past emissions. This stand is even more astonishing given that Barack Obama, the U.S. president, belongs to a party that thrives on contributions from tort lawyers.

Evidently, the U.S. needs to reverse this stand. Each of the rich countries needs to accept a tort liability which can be pro rata to the Intergovernmental Panel on Climate Change-estimated share of historic world carbon emissions. Since the payment would be on the tort principle, the idea that the funds would substitute for normal aid would be outrageous: you do not take away the pension of a person who has won a tort settlement.

Third, on "flow" liability for current emissions, the WTO principle of a "single undertaking", where each member state accepts obligations, is a better model than one where the world is divided into annex 1 countries and the rest. But, as with the WTO, special treatment can be accorded to developing countries in the shape of suitably extended grace periods before the obligations kick in.

Finally, in determining these obligations for developing countries such as India, it is clear that cutting emissions can damage growth. New technologies can help, provided they can be accessed at negligible cost. However, no one will subsidise the sale of technologies to India and China. But, why not take a sizeable fraction of the tort funds in each country and use them to create the technologies by open tenders and make them freely accessible to India or China - just as we did when the U.S. used its public funds to develop new seeds in the 1960s and made them freely accessible by India et al. Those seeds created the Green Revolution in agriculture. The same strategy could create a revolution in climate change.

This article appears in full on CFR.org by permission of its original publisher. It was originally available here.

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IPCC Assessment Report

The main activity of the UN's Intergovernmental Panel on Climate Change is to publish regular reports on the state of knowledge about climate...