Views from the World
Towards a Global Compact for Managing Climate Change: One Indian?fs Perspective
Ramgopal Agarwala, Research and Information System for Developing Countries
(Keizai Koho, July 2009 issue)

Despite the dangers of climate change, there is little progress toward a global climate agreement. This paper presents an approach that could reconcile the perspectives of developing and developed countries, differences which have deviled potential agreements for quite some time.

The primary factor behind lack of progress in multilateral negotiations is the changing power equation in the global economy. Until recently, the developed countries were the undisputed leaders in these negotiations. However, the global South has stood up and is determined to make its voice heard. In view of the serious risks that humanity faces from continued global warming, a paralysis on agreement on managing climate change would be most unfortunate.

Disputing the Details
Perhaps the most dramatic demonstration of the differences in perspectives of developed and developing countries on climate change came out in July 2008 summit meetings of G8 and G5 countries in Hokkaido, Japan. The G8 declaration calls for adoption of the goal for achieving at least a 50% reduction of global emissions by 2050 while emphasizing the need for &quot; contributions from all major economies, the code words for including major economies such as China an India in the compact. But it does not specify the base from which this reduction is to be achieved. Nor does it specify the targets for developed countries for 2050 or 2020. It also asserts that "all major economies will need to commit to meaningful mitigation actions to be bound in the international agreement to be negotiated by the end of 2009" (italics added). The need for resource transfers to developing countries for adaptation and mitigation and for technology development and dissemination is recognized in broad general terms without any commitment to numerical targets. On the other hand, the G5 declaration states that a shared vision on climate change must be &quot; based on an equitable burden-sharing paradigm that ensures equal sustainable development potential for all citizens of the world and takes into account historical responsibility and respective capabilities as a fair and just approach." The G5 leaders do not mention a global target for mitigation but call for quantified emission targets for the developed countries under Kyoto Protocol of at least 25-40% below 1990 levels by 2020, and by 2050, between 80% and 95% below those levels. They do not call for any commitments on mitigation by developing countries, either in aggregate or in per capita terms or in terms of emission per unit of GDP. They call upon the international community to work towards a strengthened scheme for technology innovation, development, transfer and deployment, and a comprehensive review of intellectual property rights regimes for such technologies in order to strike an adequate balance between rewards for innovators and global public good. They also call upon developed countries to commit clearly to significant additional funding for both mitigation and adaptation in developing countries. The additionality should be obtained not only in relation to current programs of official development assistance but also the financial arrangements under the Kyoto Protocol. They welcome further exploration of the Chinese proposal for setting up a climate financing goal for all developed countries, such as 0.5% of GDP (in addition to ODA) for climate action in developing countries. Clearly, if the Hokkaido G8 Summit is any indication, the developed and developing countries are not on the same page for managing climate change.

The nature of the problems in the international dialogue on climate change is also clearly shown by the &quot; National Action Plan on Climate Change&quot; published by a high-level Council chaired by the Prime Minister of India (Government of India, 2008). The paper begins with a clear statement on historical responsibilities of developed countries for the global threat of climate change and calls for the transfer of new and additional financial resources and climate-friendly technologies to support both adaptation and mitigation in developing countries. At the same time, the report shows great agnosticism so far as the adverse effects of global warming on India are concerned. The report highlights the need for low carbon growth but avoids any quantification of targets on energy efficiency or carbon efficiency even to the extent that other Government of India documents on energy policy seem to do. There is obviously a concern that any national targets may be seized upon by the international community as national commitments irrespective of the availability of resources and technology to achieve these targets. The only target that is mentioned is that India is determined that its per capita greenhouse gas emissions will at no point exceed that of developed countries. Since that is not a likely outcome for decades, this approach could become an alibi for inaction in the foreseeable future. So far as the global climate change architecture is concerned, the Indian position is that the Kyoto Protocol does not expire in 2012, but rather a new phase of the Kyoto Protocol shall be discussed for the period beyond 2012. Thus the commitments for mitigation will be made by developed countries only and the developing countries will benefit from resources made available under the Clean Development Mechanism and funds for adaptation.

Facing Facts
The Indian climate policy report is a good example of how the developing countries are not on the same page as the developed countries on post-2012 agreement on climate change.

Marking real progress towards an agreement will require being frank about the problems underlying climate negotiations. Both developed and developing nations must face up to some &quot; inconvenient truths.&quot; First, developed countries must accept responsibility for their historic emissions of greenhouse gases. Second, if the western lifestyle is not replicable for the world as a whole, it must be modified in both the developed and developing countries. Third, the global South needs to do its own research to understand that climate change discussions are not a tool that the North is using to slow the economic and political rise of the South. Fourth, the developing countries must stop hiding behind the poor. Fifth, the present discussions of climate change impacts concentrate too much on the long-term. Something more immediately relevant is needed.

Despite these challenges, a credible global compact is possible. It will need to satisfy five criteria. First, it has to be made comprehensive by including both developed and developing countries. Second, it has to be equitable. Third, the targets on emissions have to be realistic. Fourth, the program has to be efficient. Fifth, the program has to develop an institutional mechanism for effective implementation.

The Kyoto Protocol satisfies none of the five criteria described above for a credible global compact. First, the Protocol, which covered only 30% of global emissions in 2003, does not provide a comprehensive mechanism for emission control. Second, the Protocol?fs targets are based primarily on political bargaining, not on equity. Third, the Protocol does little to indicate, even in broad terms, the programs of technological dissemination, incentives, and resources needed for achieving the targets. Fourth, the Protocol?fs cap-and-trade system faces severe practical problems. Fifth, the Protocol relies on voluntary self-enforcement and allows countries to withdraw from the agreement without penalty. In view of these limitations, it is not surprising that the Protocol is not achieving its objective of reducing carbon emissions.

A post-Kyoto agreement should set a realistic target of stabilizing global CO2 emissions at 2003 levels until 2050 and reducing them by 50% by 2100. If emissions are allocated on a per capita basis, this will require a reduction in emissions in developed countries of about 70% by 2050 and allow about a 70% increase in developing countries?f emissions. This will allow 6% annual growth in GDP in developing countries provided they can reduce the carbon intensity of their GDP by 5% per year.

Key findings & recommendations

  • The agreement should set appropriate carbon prices by eliminating subsidies to emitters (particularly energy subsidies) and establishing a carbon tax. This approach would minimize bureaucratic intervention, provide appropriate incentives, and raise revenue for mitigation and adaptation.
  • The agreement should support development and dissemination of carbon-saving technologies. The massive programs popularizing family planning in developing countries provide an example of what should be done for climate change. More specific suggestions include patent buy-outs, reduction of tariffs on sale of technologies, a global clean-energy venture capital fund, transfer of technologies to public domain, licensing schemes with reduced duration of intellectual property rights, and flexible technology transfer mechanisms.
  • The agreement should be negotiated at the United Nations, but should be implemented using Bretton Woods Institutions, namely the International Monetary Fund and the World Bank. The UN system is the appropriate forum for negotiations and agreements on a global program for climate change. However, implementation of the agreements is likely to require substantial financial resources as well as formulation of concrete projects and programs. The IMF could be an ideal agency for reviewing the issues of carbon subsidies and carbon taxation at national and global levels. The World Bank could serve as an ideal agency for supporting projects and programs for carbon reduction.
  • Seigniorage (revenue from printing currency) from the creation of a new global currency to replace the dollar could be used to generate revenues to fund adaptation efforts. It appears increasingly likely that global warming of more than two degrees Celsius may be unavoidable and that funding of adaptation efforts will be needed. However, developed nations may be reluctant to transfer large sums to developing nations. The revenues from printing and issuing a new global currency could be a good alternative source of funding available only to those countries that comply with emission targets.

The ideas in this paper are undoubtedly ambitious. However, with the fate of humanity at stake, the world needs nothing less.

Dr. Ramgopal Agarwala is a Distinguished Fellow at Research and Information System for Developing Countries (RIS) at New Delhi. The views expressed above are his own.

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