As the Obama administration-to-be gets set to unveil its amibitious plan to make the economy more energy efficient, perhaps it is a good time to revisit our old friend, the Kyoto Protocols. For those of you following at home, the Kyoto Protocols were the international framework developed during the early 90s (finally adopted in 1997) designed to set a path forward in limiting the amount of greenhouse gases that were released into the atmosphere.
One of the biggest stumbling blocks for the Kyoto Protocol in the United States is the differential treatment of developed and developing countries. The protocol set mandates for the US and most of the countries in the EU to reduce emissions back to 1990 levels, but did little to curb emissions in China, India, and the rest of the developing world. The best estimates indicate that in 2006, China emitted 6200 megatonnes of greenhouse gases while the United States only emitted 5800 megatonnes. Furthermore, China's emissions are growing at a much faster rate than the US. While obvious math indicates that China's emissions are much lower on a per capita basis, opponents to the Kyoto Protocols latched on to this and other arguments (e.g. competitiveness) in order to prevent ratification of Kyoto in the Senate.
Last week, the Belfer Center released this report detailing a few modifications that could be made to address some of the shortcomings of the Kyoto protocol and move the discussion on greenhouse gas emissions reduction forward.
The shorcomings are as follows:
1. The largest emitters are not constrained by Kyoto (US and China)
2. Small number of countries asked to take action
3. Nature of the Protocol's emissions trading is seen as ineffective and hard to implement
4. Five year time horizon is essentially a very short-term view on a long-term problem
5. Insufficient enforecement / incentive mechanisms exist
There are three features of the paper which bear mentioning:
First, the need to institute an international system of carbon taxes (more to come on these later). Perhaps unsurprisingly, it seems that the quickest way to alter the quantity demanded of products or services that are carbon intensive is to distort the price through a tax. If the collection is done upstream (the coal mine, the oil rig, or the natural gas field) it is incredibly easy to implement. Harmonizing this system across regions is incredibly valuable since it creates relatively few variables to manage while trying to influence consumption.
Also, deforestation policies need to be included in any new international framework. This often doesn't get mentioned in the debates regarding greenhouse gas emissions, but it is incredibly important. Forests tend to consume huge amounts of carbon dioxide and can serve as a relatively low cost way to reduce the amount of carbon dioxide emitted without actually altering quantity demanded.
Finally, an incredibly important area of consideration should be creation of green technologies through private and public methods. This is where climate change can fit part and parcel into an Obama administration stimulus plan. Conventional theory holds that the record government spending deficits created as a result of World War II stimulated the economy by increasing investment and reducing unemployment. If government spending deficits financed a similar reduction in unemployment and investment in green technology, the country could pull itself out of the current recession and invest in infrastructure that will improve long-run efficiencies. While this may not immediately improve or even return standard-of-living to pre-recession levels, it will certainly create a healthy platform for long-term stability and growth (much as winning World War II did).
One of the biggest stumbling blocks for the Kyoto Protocol in the United States is the differential treatment of developed and developing countries. The protocol set mandates for the US and most of the countries in the EU to reduce emissions back to 1990 levels, but did little to curb emissions in China, India, and the rest of the developing world. The best estimates indicate that in 2006, China emitted 6200 megatonnes of greenhouse gases while the United States only emitted 5800 megatonnes. Furthermore, China's emissions are growing at a much faster rate than the US. While obvious math indicates that China's emissions are much lower on a per capita basis, opponents to the Kyoto Protocols latched on to this and other arguments (e.g. competitiveness) in order to prevent ratification of Kyoto in the Senate.
Last week, the Belfer Center released this report detailing a few modifications that could be made to address some of the shortcomings of the Kyoto protocol and move the discussion on greenhouse gas emissions reduction forward.
The shorcomings are as follows:
1. The largest emitters are not constrained by Kyoto (US and China)
2. Small number of countries asked to take action
3. Nature of the Protocol's emissions trading is seen as ineffective and hard to implement
4. Five year time horizon is essentially a very short-term view on a long-term problem
5. Insufficient enforecement / incentive mechanisms exist
There are three features of the paper which bear mentioning:
First, the need to institute an international system of carbon taxes (more to come on these later). Perhaps unsurprisingly, it seems that the quickest way to alter the quantity demanded of products or services that are carbon intensive is to distort the price through a tax. If the collection is done upstream (the coal mine, the oil rig, or the natural gas field) it is incredibly easy to implement. Harmonizing this system across regions is incredibly valuable since it creates relatively few variables to manage while trying to influence consumption.
Also, deforestation policies need to be included in any new international framework. This often doesn't get mentioned in the debates regarding greenhouse gas emissions, but it is incredibly important. Forests tend to consume huge amounts of carbon dioxide and can serve as a relatively low cost way to reduce the amount of carbon dioxide emitted without actually altering quantity demanded.
Finally, an incredibly important area of consideration should be creation of green technologies through private and public methods. This is where climate change can fit part and parcel into an Obama administration stimulus plan. Conventional theory holds that the record government spending deficits created as a result of World War II stimulated the economy by increasing investment and reducing unemployment. If government spending deficits financed a similar reduction in unemployment and investment in green technology, the country could pull itself out of the current recession and invest in infrastructure that will improve long-run efficiencies. While this may not immediately improve or even return standard-of-living to pre-recession levels, it will certainly create a healthy platform for long-term stability and growth (much as winning World War II did).
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1 comment:
The solutions proposed at the end of your post are great, but they are not as simple as they appear. As you mentioned in your post, carbon taxes could help decrease consumption. However, it can affect companies' profitability; in this economic situation, anything that can hurt industry is feared and frowned upon. It would be great to stop, or at least reduce, deforestation, but one of the current causes is the high soy costs that is driving more Amazonian farmers to cut down the rainforest to plant crops. Trying to solve this problem is even more complicated because of the global issues. The last suggestion that government create green jobs is probably the best solution given the relative simplicity of the task and its potential ability to improve the economy.
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