Wealth of Nations December 2005

A Chill In Montreal Despite The Hot Air

The debate over global warming is marked by blithe complacency on one side and quasi-religious zealotry on the other. No wonder not much is happening.
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Environment ministers from around the world have been meeting this week in Montreal to review progress in implementing the Kyoto Protocol on climate change, and to decide what should replace that agreement when it expires in 2012. The gathering has been an unhappy one.

Most of the governments taking part had been advocates of the Kyoto approach. Many are now being forced to admit that the policy is failing—so embarrassingly that nothing similar is likely to take its place. As usual on such occasions, some face-saving scapegoating formula (you can guess which country is going be blamed) may emerge before the meeting wraps up. But the truth is that unless a new scheme is designed, there simply won't be an ongoing, effective, internationally coordinated effort to curb emissions of carbon to replace the failed Kyoto plan.

Will that matter? A lot of people in Washington think not. Some question whether global warming is even happening, and delight in mocking people (including the great majority of climate scientists, as it happens) who say otherwise and who worry about it. James Taranto's blog for The Wall Street Journal struck that familiar note a few days ago when it laughed at a recent headline linking the danger that temperatures in Northern Europe might abruptly fall with the broader issue of global climate change, as if to say, "Make your minds up, guys. Is the planet warming up or cooling down?"

Well, overall warming combined with Northern European cooling is a long-recognized scenario. The two phenomena are perfectly consistent, and it is hardly as though they cancel each other out. In the United States, this kind of blithe complacency on one side meets the quasi-religious zealotry of many environmentalists (who think consumption is evil and find the phrase "costs of abatement" disgusting) on the other. Even by Washington standards, neither side wants to think or to listen. If ever there were a dialogue of the deaf, this is it.

Yes, the failure of the Kyoto regime does matter. A well-designed response to the danger of global warming is needed. The Kyoto model was a dead end, to be sure: It has made getting to the right place far more difficult, and it has wasted more than 10 years. Even now, governments are reluctant to acknowledge that the whole thing was ill-conceived. But the issue of global warming is no figment of environmentalists' imagination—much as they may be given, as a group, to twisting and exaggerating evidence for tactical purposes.

The planet is warming, that much is clear. Man-made emissions of carbon are implicated, almost all climate scientists agree. The main uncertainties—and they are huge, to be sure—concern the rate of growth of future carbon emissions; the sensitivity of temperatures to those emissions; the net economic costs of rising temperatures (net, because there will be some offsetting benefits, and some countries will gain while others lose); and the risk of other climate disturbances if temperatures keep rising. In the end, this pattern of uncertainty was what made the Kyoto approach so flawed. But that, of course, is not to say—and this is the administration's position—that the issue of climate change is not urgent, and that there is no need for a bold, internationally coordinated policy response.

Climate change is urgent; there is just such a need. In the worst case, global warming is capable of doing great harm. The worst may not come to pass, but the risk still needs be to be recognized and, depending on the cost, reduced and/or planned for.

This is not a case where governments have to get out in front of voters. At least in the abstract (that is, before you start talking about gas taxes), people seem to want action. News coverage of Hurricane Katrina often discussed the association between global warming and the intensity of hurricanes. The story that the Taranto blog linked to—the finding that the Gulf Stream, which keeps Northern Europe far warmer than it should be, is slowing down, perhaps because of melting Arctic ice—was also widely reported. Such stories, sometimes spun but usually having a kernel of truth, are nudging American opinion. Even as the Kyoto process collapses, the political context for purposeful action is improving.

You could not tell that from Montreal, with ministers uselessly scurrying about, and acrimony all around. For once, this was not just a case of the United States against the world—though there was a lot of that, obviously. America spent the week trying to block efforts to start new formal negotiations on limits to carbon emissions. This gave other countries the customary opportunity for empty moralizing. Canadian Prime Minister Paul Martin declared: "To the United States... there is such a thing as a global conscience, and now is the time to listen to it." A suitably Canadian sentiment, which the meeting's host was entitled to express, you might think—except that Canada is a leading Kyoto defector. Under the terms of the protocol, Canada promised to cut its carbon emissions, by 2008-12, to 6 percent less than their 1990 level. That will not happen. By 2003, Canadian emissions were already running at 24 percent above the 1990 benchmark.

Canada is not alone in mixing visionary calls for global salvation with brazen failure to honor its own Kyoto commitments. British Prime Minister Tony Blair, another great moralizer, was a leading spokesman for the Kyoto effort. That is changing, as Britain struggles to honor its own obligations under the agreement. Last month, Blair said that legally binding targets to reduce pollution make people "very nervous and very worried." Post-Kyoto, instead of the tougher regime once envisaged, he said the world needed "a better, more sensitive set of mechanisms." Britain's Guardian newspaper observed that Blair "appeared to undermine more than 15 years of climate-change negotiations when he signaled a shift away from a target-based approach to cutting greenhouse emissions." Quite so. Blair's grandiosity on the subject makes his defection especially amusing, but many other leaders are doing the same thing, or soon will be.

Kyoto's flaws were structural, and one towers above the rest, even above the failure to include developing countries such as China and India: The plan commits governments to achieve rapid, fixed, and internationally standardized reductions in emissions, regardless of cost. The system that genuinely is needed (whatever the administration may think) to replace Kyoto must instead be based on long-term action, cost containment, and country-by-country flexibility. Over time, this can reduce emissions far more effectively than the Kyoto method, and not just because anything else is politically unrealistic.

The Australian economist Warwick McKibbin (currently residing at the Brookings Institution) has described a detailed plan for such an approach.

It is based on a combination of long-term carbon permits (whose number would be capped by international agreement; these might be sold or given away in each country at the discretion of its government; permits could then be traded domestically) and one-year permits (which would be issued by national governments as they saw fit, at an internationally agreed price of so many dollars per ton of carbon). This combines the advantages of a tradable-permit scheme (which encourages carbon to be reduced where it costs least to do it) with an assurance that the maximum cost per ton of carbon abatement will be no greater than the price of a one-year permit.

This design also makes it easy for countries to leave or join the agreement without its having to be completely renegotiated.

All of these features give the plan staying power and added certainty. That is important. Such a regime is more likely than the unstable Kyoto approach to call forth investment in carbon-reducing technologies. And innovation is crucial in all of this—the key to addressing the problem without crushing the world's economies.

The question for the White House is, therefore, not why it failed to back Kyoto—a system that is crumbling, as the administration said it would, because the countries that ratified it are preparing to renege on their commitments. What the White House does need to explain is why it has failed to offer the better-designed alternative that President Bush promised when he first rejected the Kyoto plan.

The responsible alternative to Kyoto is not to do nothing (except to make fun of greens and subsidize hybrid vehicles). It is to devise and champion a long-term international plan that recognizes the risks associated with global warming, which takes seriously the costs of carbon abatement and the opportunities for adapting to (rather than trying to stop) climate change, but which also, as part of that balanced response, aims to reduce carbon emissions. Such a plan would be politically sustainable—it might even be popular—as well as economically intelligent.

There is no sign of it. Even for critics of Kyoto, the disarray in Montreal is no cause for celebration. The problem is real, and has not gone away.

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Clive Crook is a senior editor of The Atlantic and a columnist for Bloomberg View. He was the Washington columnist for the Financial Times, and before that worked at The Economist for more than 20 years, including 11 years as deputy editor. Crook writes about the intersection of politics and economics. More

Crook writes about the intersection of politics and economics.

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