- Sep 18 2015
“Paris in December is not quite what it is in springtime. But who cares if someone else is footing the bill! Paris is the venue of the next Conference of the Parties (COP), from November 30 to December 11 — an annual jamboree that has been trying, since 1992, to limit carbon emissions and save the planet from what scientists predict will be the drastic impact of global warming and associated climate change. They have not succeeded thus far in taming emissions.
How much carbon space is left before disaster strikes is somewhat iffy and mired in science, negotiating stances and the “”precautionary principle”” which advocates that if danger lurks it is best to run rather than hang around assessing the extent to which you personally are at risk.
Except that there’s no place to run.
The problem is that whilst Americans and others in the rich countries are reducing emissions slowly, China, India and the rest of the developing world are eager to do exactly what the rich did earlier — use energy to grow their economies. This is fair, just and inevitable.
The only way this can stop is if money is spent to replace the existing technology for producing and using energy with less carbon-intensive and more efficient options. But no one has the commercial incentive to do so. Most technology is developed in the rich world, which uses the most energy per capita and is the most heavily invested in traditional, inefficient, carbon-intensive energy chains.
They — Australia, Russia and the US are good examples — have preferred to milk their past investments in fossil fuel-based technologies rather than switch over rapidly to clean energy technology even though they have been talking about the problem in annual COP meetings since 1992. Thus, 20 of the 100 years available since 1995, to act, have been wasted.
To be fair, the northern European economies, including France have been more conscientious than the rest of the rich and have reduced carbon emissions significantly by bearing the additional cost of doing so. Singapore is a stellar Asian example. It reduced per capita emissions by 66 per cent of its 1990 level.
But the rest, particularly the poorer, developing countries have no incentive to divert their meager fiscal resources to clean energy other than efficiency and local environmental benefits. But with so many competing priorities — stopping mothers and infants from dying due to poor healthcare, educating the young, creating basic infrastructure for trade and industry — just keeping energy, the lifeblood of a modern economy, flowing is tough.
Kyoto Protocol 1997, the framework guiding the interminable COP meetings, lacks teeth. It fixed emission targets for rich countries till 2012 which were weak and inadequate because nothing more stringent was acceptable to the rich — a six per cent reduction over 1990 levels. But countries can opt out of the agreement. The US, Russia and Canada did just that, making COP even more toothless and bureaucratic.
It’s now 2015 and the world has changed. Extremely wealthy people are to be found everywhere, not just in the earlier “”rich”” countries. Ruling political, industrial and commercial elites in developing countries have incomes and consumption levels that rival those in the “”developed”” countries. Poor countries often have very rich governments, though fiscal resources do not filter down to the poor. Traditional archetypes have transmuted. A billionaire from the Forbes List could be living on your street rather than in far off London or New York.
So the continual “”fingering”” of rich countries as evil carbon emitters is unlikely to resonate. We are all responsible collectively for the mess we have created. To cut through two decades of verbiage and accumulated legal baggage two things must change.
First, Paris must fix a common emissions target which all countries buy into. The level of the target, whilst important, is less so than all countries agreeing to shoulder the burden according to their capacity.
Second, till now we have depended on charity — aid from the rich world — to fund the technology transformation. This is degrading for the poor who have a right to access the available carbon space and inefficient because allocation and priorities get warped when dealing with “”free”” money.
A transactions tax to fund climate mitigation and adaptation is best. In depressed economic times, such as the present, a new generalised tax is abhorrent. But if the incidence of tax is tiny per transaction, individuals and entities may not feel its pinch. If it has a massive tax base on which it is levied, the tax collection could be huge. Of course the tax must be progressive — the rich, who have enjoyed a disproportionate share in wealth-creating growth, the root cause of climate change — must be taxed more.
A tax on outbound international capital transfers from all countries meets all these criteria. A 0.01 per cent tax can net close to $300 billion annually. This is three times the volume of the 2015 replenishment of the Green Climate Fund proposed at $100 billion.
The bulk of capital-outflow happens from rich or newly rich countries (like China), to mitigate risk and increase returns. To insulate poor countries, the tax could be levied only on those countries which are non-compliant with the emissions target — all developing countries, but very few rich countries, will be compliant. The tax collected would be transferred to a fund manager and overseen by an inclusive and representative board.
A tax puts a tangible cost to not meeting emission targets and creates a reasonable financial incentive for reducing the agreed level of emission.
China, for example, has already announced that it would reduce emissions going forward. By 2030 they would be 60 per cent below their 2005 level. This should reassure all developing countries that it is possible to grow in double digits every year and still beat the carbon ceiling in future.
Developing countries should consider adopting the carbon ceiling volunteered by China. That would embolden them to press for a tax on outbound capital from non-compliant countries.
Climate “”warriors”” headed for Paris should consider this proposition as they savour the Crottin de Chavignol served to them. Sometimes, the cobwebs have to be swept aside to see the light. There is much cleaning to be done at Paris.
Courtesy: The Asian Age”