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Let's be fair about climate targets

By Nicholas Gruen - posted Friday, 28 December 2007


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.

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Here we are a decade after Kyoto. China will shortly overtake America 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 cliché 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 so, 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.

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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 now.

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.

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First published in The Australian on December 17, 2007.



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About the Author

Dr Nicholas Gruen is CEO of Lateral Economics and Chairman of Peach Refund Mortgage Broker. He is working on a book entitled Reimagining Economic Reform.

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