Two Worlds, One Climate: Forget Kyoto. There's a much better way to persuade the developing world to fight climate change.
May 23, 2012
Publisher: Foreign Policy

Climate change, we are often told, is everyone's problem. And without a lot of help containing greenhouse gas emissions from rapidly growing emerging market countries (not to mention a host of wannabes), the prospects of avoiding disaster are small to nil. Now you tell us, retort policymakers in the have-less countries: How convenient of you to discover virtue only after two centuries of growth and unfettered carbon emissions. Since you were the ones to get us into this mess, it's your job to get us out. (The United States' what-me-worry posture on climate change does not, of course, make the West's efforts to co-opt the moral high ground any more convincing.)

This clash of wills is a bit more nuanced than that, but not much. Almost all the net growth in greenhouse gas emissions for the last two decades -- and more than half the total emissions today -- is coming from the developing world. What's more, most of the cheap opportunities for reducing emissions are to be found in the same countries. But as a matter of equity, it's hard to argue with "you've had your turn, now it's ours." And it's equally hard to see how the stalemate will be resolved before the world goes to hell in a plague of locusts (in some places, literally).

The carbon emissions stats by country are startling, and would be even more startling if we had comprehensive numbers for years since 2009. Carbon emissions from OECD countries grew by 8 percent between 1990 and 2009, while emissions from the rest of the world grew by 73 percent (albeit from a smaller base). Breaking down the latter by country: China's emissions were up 207 percent, India's by 173 percent, Indonesia's by 165 percent, Vietnam's 563 percent (!!) and the Middle East's by 171 percent.

If you have any doubts about where the emissions containment opportunities lie, consider this: In 2009, non-OECD countries generated four times as much carbon emissions per unit of GDP (at prevailing exchange rates) as OECD countries. Granted, these numbers don't look as bad if GDP is calculated in terms of purchasing power rather than exchange rates. But this is one of the few instances in which GDP comparisons at international exchange rates probably make more sense, because they offer better insight into a future in which consumption patterns across countries are likely to converge; that not-so-distant day when Indians drive cars to work instead of riding bicycles, and virtually everyone who experiences winter in emerging-market countries takes the chill off with central heating.

But those focused on social justice rather than efficiency point to yet another set of numbers. While most developing countries waste fossil fuel because their heating, cooking, lighting and motorized transportation depend on older, fuel-guzzling technologies, they are still too poor to consume enough in total to leave much of a carbon footprint. Indeed, emissions per person in non-OECD countries are just 30 percent that of OECD countries.

Bolivians, for example, emitted 1,300 kilos of CO2 per person in 2009, compared to 16,900 kilos per person in the United States. Resident of tropical Nigeria emitted a mere 266 kilos each, compared to 9,000 each in tropical Singapore. All told, those living in poor- and middle-income countries do emit more than half of all carbon emissions -- but only because there are so many of them.

There's another element here that distinguishes developed from developing countries. If, as expected, climate change brings rising sea levels and more severe weather of every sort -- droughts, floods, hurricanes, tornados -- the rich countries will muddle through with dykes, crops redesigned to survive drought, more air conditioning and the like. It will be expensive, but manageable, unless global warming triggers truly destabilizing changes, like the release of vast quantities of methane gas from now-frozen arctic tundra.

But the rich countries' travails may well be poor countries' damnation: the inundation of Pacific islands, catastrophic storm surges on the Bengal plain, the collapse of farm yields in semi-arid parts of Africa, and the spread of insect-vectored disease in the warmer, wetter parts. So, fair or not, poor countries have every reason to make emissions priority-one, right?

Maybe, and maybe not. The iconoclastic, Nobel Prize winning economist Tom Schelling has long argued that our interests diverge from theirs. What poor countries need most, he says, is to invest in economic growth, which will give them the income to mitigate the consequences of climate change. Roads must be paved to prevent the isolation of rural areas in heavy rains; sea walls must be built to protect coastal cities; canals must be dug to irrigate drought-prone land; emergency infrastructure must be created to minimize loss of life in weather-related disasters. So poor countries would be foolish to divert scarce capital to emissions containment, which has only a "second-order" impact on their own welfare. Spending a dollar would, in effect, generate two cents' worth of benefits for themselves, and 98 cents' worth for the rest of the world.

If all this sounds like a recipe for righteous posturing and diplomatic delay, go to the head of the class. Environmental policymakers and pundits, who once expected to build on the foundation of the Kyoto Treaty to create a truly collective effort to contain emissions, are now thinking smaller. The European Union, for example, is going its own way, investing heavily in emissions reduction in hope that others will be shamed into following its lead.

The containment part is more or less working: European emissions declined by 12 percent between 1990 and 2009. But the shame part isn't. China is reducing emissions per unit of GDP, mostly as a consequence of adding productive capacity that is far more energy-efficient than "legacy" capacity. But it is nonetheless widening its lead as emitter number one because the GDP is growing so rapidly. And there is no sign that the other big emerging market economies are planning to mend their emitting ways.

Must we then just accept the reality that the developing half of the global economy won't lend a hand in climate change containment? The rich countries might bully where blandishments fail, by imposing tariffs, for example, on imports that are less than green. Might, but probably won't: The United States, in particular, is in no position (geopolitical or financial) to complicate its relationships with either China or India. Besides, it's far from clear that such tariffs would meet the standards of the World Trade Organization.

A more plausible option -- one that appeals in terms of both economic efficiency and social justice -- would be to buy their cooperation. Europe already has in place incentives for businesses to invest in emissions-sparing activities in developing countries: For example, paying landowners in Africa to sequester carbon by growing trees on scrubland. By the same token, one could imagine western governments paying their counterparts in the tropics to lock up forest land that would otherwise give way to logging and grazing.

But the scale of such initiatives is probably limited by the inherent accounting ambiguities. How would you know, for example, that the forest wouldn't be preserved, anyway? Even more to the point, how would one verify that a government, paid to build natural-gas-fired power plants rather than coal ones, would have gone that way without the incentive?

Arguably, the most promising approach to gaining the cooperation of emerging market countries lies in innovation. It wouldn't take much persuasion to get developing countries to adopt technologies that are climate-friendlier if they are also cheaper than emissions-as-usual. One could certainly imagine government-subsidized R&D that cut the cost of solar panels by 90 percent, or transformed the hydrogen-producing artificial leaf into a viable source of fuel.

The idea of a global grand bargain in which emerging market countries would join the west in an ambitious, cost-minimizing containment program is dead. The best hope, at least for now, is a pragmatic search for common ground, one that appeals to the angels but relies on self-interest.

A decade late and a trillion dollars short, you say? To paraphrase a former secretary of defense, you go to war with the army you've got, not the one you'd like to have.

Mr. Passell is a senior fellow at the Milken Institute and the economics editor of the Legatum Institute's Democracy Lab.