Why America is siding with India & China on climate change

M K Venu

18, November 2009
 

Seen in a medium-term (three to five years) perspective, the US actually wants emerging economies to consume more at this stage and drive massive domestic production and consumption to bail out the world economy. This does not exactly square with the objective of a global agreement on carbon reduction. By giving up on a legally binding deal, everyone can salvage something.

Sometime ago we asked if Barack Obama was black or white. Now we are wondering how green he is, going by the way the US establishment has already given up on a legally binding global agreement on climate change at Copenhagen.

However, the American president needs to be complimented for eschewing hypocrisy and stating upfront that nations are not yet ready for a single binding treaty instrument which seeks to adopt important features of the Kyoto Protocol while ensuring a differentiated treatment to developing economies like India and China for the emission cuts they might undertake. Plainly put, in all negotiations so far, no breakthrough could be reached on how the developed world would commit adequate compensation to economies like India and China for legally committing reduction in carbon emissions going forward.

Prime Minister Manmohan Singh clearly spelt out last week at the India Economic Summit that a reasonable agreement would be possible only if the developed nations committed themselves to adequate capital and technology transfer to facilitate emission reduction by the developing world. It seems the United States, partly for its own selfish reasons, recognised the logic of this proposition.

In recent weeks, it was perceived that India was getting pressured by an unduly climate-change proactive Obama administration. Those fears must now stand somewhat mitigated. On the contrary, by putting off a final binding agreement at Copenhagen, Obama has possibly ensured that some of the key principles of the Kyoto Protocol, which were reinforced in the Bali Action Plan, could get a fresh lease of life.

In the current negotiations, the emerging economies were apprehensive that a single internationally binding instrument at Copenhagen might have diluted some of the critical elements of the Kyoto Protocol, which mandated differentiated responsibility for the developed and developing worlds aimed at giving adequate carbon space for the latter.

In some ways, Obama has ensured that economies like China and India may get more carbon space even as they autonomously lay down their own nationally appropriate carbon development path. Other climate sensitive nations like Australia too have recently proposed that mitigation commitments and actions must be determined by national circumstances. So there can be a “spectrum of efforts”, they have said. Spectrum of efforts is another term for differentiated responsibilities undertaken by nations as per their development imperatives.

The latest pronouncements by the US may also have been motivated by other critical factors which affect the global economy and politics at the current juncture. History tells us that it is well nigh impossible to reach a consensus on such issues when the world is in deep economic distress. There is no knowing how many years the US, the EU and Japan will take to recover fully from the current recession. Unemployment and mortgage defaults are expected to peak in the US in the middle of 2010.

Obama is well aware of the tough times ahead for the US economy as well as its polity as he grapples with massive commitments on healthcare funding for American citizens. In the middle of such a domestic crisis, Obama may not want to get trapped by the highly contentious issue of climate change, especially when he needs cooperation of the fast-growing emerging economies like China to help in a global recovery.

Seen in a medium-term (three to five years) perspective, America actually wants emerging economies to consume more at this stage and drive massive domestic production and consumption to bail out the world economy. This does not exactly square with the objective of a global agreement on carbon reduction which effectively means somewhat altering the current consumption patterns. There lies the big contradiction.

The whole effort of the US-led fiscal and monetary stimulus is to revive consumption in a big way across the world. The US is constantly imploring China to push domestically driven growth by revaluing its currency. China has responded by creating the biggest ever bank-credit-driven infrastructure investments in its recent history. Now the obvious question to ask is how such massive construction activity over the next few years will square with a carbon reduction commitment at Copenhagen! The new G-20 framework is also riddled with the same contradiction.

The effort by G-20 is to help create massive consumption globally, even as it talks about dovetailing climate change issues within the overall agenda. In America, the massive fiscal stimulus is largely going towards reviving the same carbon-spewing industries like automobiles, etc. So there is no motivation, at least in the medium term, for America to push for a climate change agreement.

Obama's attempt to put off an internationally binding agreement must be seen in this context. The developed world, given its own economic woes, is also not in a position today to put in place credible efforts, especially in terms of funding, to support technology transfers to the developing economies. This could be another reason why the US wants to put off an internationally binding agreement.

There could be other political/ strategic motivations for the US to avoid a global agreement at this stage. It may feel more comfortable dealing with China and India, the two biggest aggregate polluters of the future, on a bilateral basis. After all, China and India cannot escape autonomous efforts at creating a green economy in the future.

According to British Prime Minister Gordon Brown, low carbon energy and infrastructure production would generate $33 trillion worth of investment by 2030. America may want to grab a lion's share of this on a bilateral basis. Never underestimate the mercantile instincts of the Americans!

M. K. Venu is Managing Editor of The Financial Express

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