The Russians are coming - "why Kyoto is useless"

Alexander Bedritsky, the Russian advisor on climate change, has come out to state what everyone else is thinking, already knows but is afraid to say clearly.

The revelation is that Kyoto will have "virtually no" impact on slowing global warming without the US, China and other developed countries.

There is the argument that something HAS to be better than nothing (surely) but there is an element on truth to his words.

The issue is whether 28% of the world can actually so something or should be just all give up and go home (preferably to a house on the top of a hill).

It is interesting to note that it took an environmental disaster (the summer fires in Russia) for the Russian's famed climate scepticism to change.

Kremlin Adviser Says Kyoto Can't Stop Climate Change[Planet Ark]

The Kyoto Protocol will have virtually no impact on slowing global warming unless it expands to take in the United States, China and more developing countries, Russia's chief climate negotiator said on Wednesday.

Russia is the world's fourth largest emitter of carbon dioxide and a key player in United Nations talks about whether to extend Kyoto when its first phase lapses in 2013, or replace it with a wider treaty that brings in poorer nations.

President Dmitry Medvedev's top climate change adviser, Alexander Bedritsky, said Russia is demanding a new deal as the 40 industrialized nations bound by Kyoto represent only 28 percent of global emissions.

"28 percent of the world cannot change anything," Bedritsky told journalists on the sidelines of an Arctic forum in Moscow.

"Countries can work and fulfill their targets, but nothing will change. The burden on the climate will grow."

Instead, the next round of U.N. climate talks in Cancun, Mexico in December should develop a non-binding agreement between countries representing 81 percent of emissions agreed at a U.N. climate summit in Copenhagen last year, he said.

The Kyoto Protocol was agreed at a 1997 U.N. conference to reduce greenhouse gases emitted by developed countries by an average of 5.2 percent below 1990 levels during 2008-2012. A total of about 190 nations have ratified the pact.

"We want cooperation in the period after 2012 to be all inclusive," Bedritsky said. The United States, which refused to ratify Kyoto, agreed to the Copenhagen deal.

Bedritsky said no binding agreement would be signed at the conference in Cancun but that he expected progress toward a deal. At the top of Russia's list of demands is recognition for the role its vast forests play in absorbing carbon dioxide.

While many Western nations are struggling to meet their Kyoto obligations, in 2008 Russia was 33 percent below its Kyoto target of keeping emissions below 1990 levels, mostly due to the collapse of high-polluting Soviet industries after 1991.

Moscow plans to let emissions rise from current levels to between 15 and 25 percent bellow 1990 levels by 2020, Bedritsky said, despite pleas by many nations for a tougher goal.

RUSSIAN DOUBTS RECEED

Russia developed a reputation as a climate skeptic after several senior officials suggested global warming might help Russia by easing its harsh winters, with Prime Minister Vladimir Putin saying Russia could save money on fur coats.

But a deadly heat wave this summer broke all temperature records, killed dozens in wildfires and destroyed a quarter of Russia's grain crop, prompting Medvedev to publicly acknowledge that the country's climate was changing.

Bedritsky said Russia had decided the threats from global warming outweigh the potential benefits, which include saving on heating costs and increasing the amount of arable land.

"But this does not counterbalance the need to act to decrease the human burden on climate and the ecosystem, the need to adapt to the changes and the need to neutralize the dangerous consequences."

He said scientists cannot say unequivocally there is a direct link between climate change and the heat wave in Russia and the flooding in Pakistan, but that they are obvious changes. "But I think of course you can consider them as signs of changes," he added.

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Rules for the Global Environment

A recent paper by Horst Siebert considers the rules by which the global environment should be managed. Useful as a refresher on the various policy initiatives out there at the moment.

Rules for the Global Environment

Date: 2008-05
By: Horst Siebert

URL: http://d.repec.org/n?u=RePEc:kie:kieliw:1422&r=env [PDF]

The paper looks at the global environment as a public good and as a sink for CO2-emissions. It discusses problems to be solved in institutional arrangements to protect global environmental media and looks at criteria for allocating the costs of emission reduction and emission rights. It analyzes institutional mechanisms that stabilize CO2-agreements and reviews the Kyoto Protocol, the perspectives for its successor and EU emission trading. The paper also reviews arrangements for iodiversity and existing multilateral arrangements.

Keywords: Public good, Global warming, Emission reduction, Emission rights, Institutional Mechanisms, Kyoto Protocol, Post-Bali negotiations, EU emission trading, fauna and flora, existing multilateral arrangements

JEL: D62 F02 H41 Q20 Q54

China Chokes - pollution haven or comparative advantage

The New York Times recently published a lengthy article on China and its environmental problems.

The gist of the story is that a lot of dirty industries from the West have been relocating to China. This has the effect of (1) making China dirtier, (2) making the West cleaner (in terms of local pollutants), (3) increasing global emissions (or no change at best).

The pollution haven hypothesis as used by economists infers that polluters deliberately relocate their production to those countries with less stringent environmental regulations or domestic firms displace Western firms (who close) because they cannot compete on price as a direct result of regulation differentials.

Despite anecdotal evidence such as this article, the evidence is mixed. One reason is that industry relocates for many reasons and regulations are only a small percentage of total costs. Wages and other factors are more likely to be the cause of any shift. This is clear from this article.

China Grabs West’s Smoke-Spewing Factories [NY Times]

Talking about two towns, one in Germany and one in China.

These two steel towns have an unusual kinship, spanning 5,000 miles and a decade of economic upheaval. They have shared the same hulking blast furnace, dismantled and shipped piece by piece from Germany’s old industrial heartland to Hebei Province, China’s new Ruhr Valley.

The transfer, one of dozens since the late 1990s, contributed to a burst in China’s steel production, which now exceeds that of Germany, Japan and the United States combined. It left Germany with lost jobs and a bad case of postindustrial angst.

What we want to know as economists is WHY did this furnace move?

In its rush to re-create the industrial revolution that made the West rich, China has absorbed most of the major industries that once made the West dirty. Spurred by strong state support, Chinese companies have become the dominant makers of steel, coke, aluminum, cement, chemicals, leather, paper and other goods that faced high costs, including tougher environmental rules, in other parts of the world. China has become the world’s factory, but also its smokestack.

Clearly, this is NOT a problem of Germany PUSHING dirty production to China but the Chinese PULLING dirty production into China.
This issue quickly gets to the heart of the climate change debate:

China’s worsening environment has also upended the geopolitics of global warming. It produces and exports so many goods once made in the West that many wealthy countries can boast of declining carbon emissions, even while the world’s overall emissions are rising quickly.

In the following quote we are looking at the environmental cost of production - the issue here is not that Chinese regulations are not strict but that they are not enforced and that corruption is rife.

The Ruhr Valley city of Dortmund, where ThyssenKrupp once made steel, still suffers from high unemployment because of the loss of jobs to lower-cost countries like China. But Germans can buy Chinese-made iPods, washing machines and cargo ships at prices that, because of lax pollution controls, do not reflect the toll on the environment. And the outsourcing of polluting industries has given them cleaner air and water.

The Chinese government is finally seeing the folly of their ways. This has been clear for years and yet only now are they beginning to see that things will need to change.

“Some enterprises are abusing the environment to lower export prices,” Chen Guanglong, a Ministry of Commerce official, said in announcing a crackdown on polluters this fall. “They sell their products abroad, but the pollution is left at home.”

Another important issue is that it is NOT environmental economics that is the problem but the sheer lack of basic economic understanding in China. Steel is not the only sector to have massive over capacity and firms that are kept open by loss making local banks. The bad debt provisions of Chinese banks should NOT be underestimated. The issue is that it is jobs that matter but not profits. Such a situation is unsustainable.

But steel has also proved a curse. China has 77 large steel mills like Hangang, and hundreds of smaller rivals. They have so much excess capacity that production of some basic steel products has become unprofitable at home and abroad. Worse, steel pollutes more than any other industry in China, perhaps in the world.

Clearly there are different ways of looking at this problem and this is what economists need to do:

A study by researchers at Carnegie Mellon University found that if all the goods that the United States imported between 1997 and 2004 had been produced domestically, America’s carbon emissions would have been 30 percent higher.

Good news for the US perhaps and US citizens being able to breath cleaner air. But:

A separate study for the European Parliament examined the transfer of steel production to China from Germany. It found that China’s less efficient steel mills, and its greater reliance on coal, meant that it emitted three times as much carbon dioxide per ton of steel as German steel producers.

Not so good for global emissions.

There is plenty of scope for more research in this area.

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Bali Boo Hoo Boys Win the Day - but what have they really won?

The delegates at Bali have eventually come up with a road map for progress on climate change. Whilst this is undoubtedly better than no deal at all, as economists we like to see numbers. It is the numbers that are conspicuous by their absence.

We will not comment at length in this blog as this is headline news and more to do with politics than economics.

However, the political wrangling was impressive and the pincer movement by India and the EU that isolated the US was an excellent example of orchestrated political maneuvering. I expect the US and George Bush are secretly or not so secretly livid.

The booing of the US delegate will be remembered for many years to come as a pivotal moment in the history of climate change action. Political drama at its best.

So where are we now:

The "Bali roadmap" initiates a two-year process of negotiations designed to agree a new set of emissions targets to replace those in the Kyoto Protocol.

So now we have 2 years of negotiations ahead on how to cut emissions. It all comes back to the stand-off between developing countries who have growth as a priority and the developed nations who want all countries to cut emissions proportionately even though the current climate change crisis was due primarily to Western and not LDC pollution.

There is no simple solution but one that involves a transfer of green and clean technologies (as requested by India) seems a logical way forward.

Climate deal sealed by US U-turn [BBC]

The final paragraph of the BBC report simply states:

"We need to find a new mechanism that values standing forests," said Andrew Mitchell, executive director of the Global Canopy Programme, an alliance of research institutions.

"Ultimately, if this does its job, [deforestation] goes down to nothing."

Mr Mitchell said the only feasible source of sufficient funds was a global carbon market.

But many economists believe mandatory emissions targets are needed to create a meaningful global market.

Greenpeace Bali blog

From the inbox:

For those interested in keeping abreast of events in Bali the Greenpeace blog will provide the NGO perspective.

http://weblog.greenpeace.org/climate/


Latest documents and reports from Greenpeace HERE.

PDFs are available for the following reports:

Tropical Deforestation Emission Reduction Mechanism - A Discussion Paper

Tropical deforestation and the Kyoto Protocol

Greenpeace briefing: Kyoto and the Bali Mandate: what the world needs to do to combat climate change

How the palm oil industry is Cooking the Climate

What is the IPCC

Greenpeace Briefing: China - taking action on climate change

ChinaDialogue also have an interesting piece called "Why does Bali matter?" by Tan Copsey for anyone still needing a little revision on this topic.

Why does Bali matter?

Bewildered by Bali? Tan Copsey provides a short background to the politics of global warming, Kyoto and why the world is watching the climate talks now taking place in Indonesia.

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OK, but what’s Bali all about?

Bali hosts to the thirteenth UN Climate Change Conference. Yvo de Boer, the UNFCCC executive secretary, has said there are reasons to be optimistic about a more far-reaching agreement being reached at the meeting, stressing that the conference would be a “culmination of a momentous 12 months in the climate debate” . A large increase in public awareness of climate change has upped the political pressure for a more extensive accord, and many nations – including prominent EU countries – will be pushing for increased reduction targets.

However, the negotiations are likely to hinge on the positions taken by the US and China, the world’s two largest emitters, whose positions have been highly interdependent historically. Neither nation has agreed yet to binding targets. China needs the US to take the lead in reducing emissions, but the Bush administration has refused to sign up to targets without the participation of developing countries. The likelihood of this impasse being overcome at Bali remains slim.

Negotiations at Bali are expected to focus on extending Kyoto’s central approach, which is characterised by “liberal environmental” economic mechanisms such as emissions trading and technology transfer.

However, issues such as mitigation, deforestation, development and resource mobilisation also will be addressed, and increasingly urgent discussions of climate-change adaptation will take place – reflecting the increased acceptance that climate change is not entirely preventable.

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Greenpeace protestors shot at in Indonesia

When Greenpeace decide on their next location for a protest - the standard thing - climb something big and unfurl a large banner whilst videoing the whole affair for websites and blogs - they might want to avoid Indonesia.

The video is good publicity and the gun firing incident looks good on film.

Greenpeace activists shot at as climate conference opens [Greenpeace website]



All activists were arrested.

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Chronology of Global Climate Gatherings

If there was ever any doubt that climate change had gone "mainstream" we present a timeline of this years "climate change" gatherings leading up to the Bali submit in December.

CHRONOLOGY - From LiveEarth To Bali: A Year Of Climate Gatherings [PlanetArk]

Feb 2, PARIS: First of four reports this year by the UN climate panel concludes that mankind is very likely to be to blame for global warming. Subsequent panel reports highlight the risks of extreme weather events, such as floods, droughts and heatwaves and that poor nations would bear the brunt of a warmer world. The cost of even the most stringent scenarios to dramatically curb emissions meant a loss of global GDP by 2030 of less than 3 percent.

* July 7, NEW YORK, LONDON, SYDNEY, TOKYO, SHANGHAI, RIO DE JANEIRO, JOHANNESBURG, HAMBURG: former US Vice President Al Gore organises the "Live Earth" global climate change benefit involving 24 hours of music across seven continents beamed to an estimated two billion people.

* Sept 17-21, MONTREAL: Canada hosts week of talks on how to quickly eliminate hydrochlorofluorocarbons (HCFCs) at the 19th meeting of signatories to the Montreal Protocol. The chemicals, which are powerful greenhouse gases, harm the ozone layer that protects the Earth from ultraviolet radiation. The United States says faster phase-out of HCFCs would be twice as effective as the Kyoto Protocol in fighting climate change.

* Sept 24, NEW YORK: UN Secretary-General Ban Ki-Moon convenes one-day conference with top officials from more than 150 countries to build momentum before Bali. Ban says world leaders showed a "major political commitment" to forge a pact on climate change once the Kyoto Protocol runs out.

* Sept 28, WASHINGTON: US President George W. Bush holds his first major climate change meeting, inviting the 17 biggest greenhouse gas emitters to a two-day conference. Bush, who has refused to ratify Kyoto, stresses new environmental technology and voluntary measures to tackle the issue.

* Oct 12, OSLO: The UN Intergovernmental Panel on Climate Change (IPCC) and Al Gore, star of the Oscar-winning climate film "An Inconvenient Truth," are joint-winners of the Nobel Peace Prize for 2007 "for their efforts to build up and disseminate greater knowledge about man-made climate change, and to lay the foundations for the measures that are needed to counteract such change".

* Nov 20, BONN: The 41 industrialized nations that have signed up to the United Nations Framework Convention on Climate Change submit detailed emissions data for climate experts to assess. The data shows their total greenhouse gas emissions rose to a near all-time high.

* Nov 21, SINGAPORE: The 10 members of the Association of South East Asian Nations (ASEAN) and six other attendees Australia, China, India, Japan, South Korea and New Zealand, pledge collective action to combat climate change in the "Singapore Declaration" but set no targets to curb emissions.

"Kyoto Protocol" facts

Whilst I am sure I have posted on the basically underpinning the Kyoto Protocol before it doesn't do any harm to highlight some of the key issues again given the Bali conference will soon be taking place (December 3-14) to discuss what it to succeed Kyoto.

The elephant in the room is the US non-compliance that effectively undermines the whole process. Why should other rich countries such as Japan (see previous post) spend millions of dollars on carbon credits when the US simply sits back and carries on as usual leaving other developed countries fighting over political and economics scraps.

What is the Kyoto Protocol? [PlanetArk]

* WHAT IS THE KYOTO PROTOCOL?

-- It is a pact agreed by governments at a 1997 UN conference in Kyoto, Japan, to reduce greenhouse gases emitted by developed countries to at least 5 percent below 1990 levels by 2008-12. A total of 174 nations have ratified the pact.

* IS IT THE FIRST AGREEMENT OF ITS KIND?

-- Governments agreed to tackle climate change at an "Earth Summit" in Rio de Janeiro in 1992 with non-binding targets. Kyoto is the follow-up.

* SO IT IS LEGALLY BINDING?

-- Kyoto has legal force from Feb. 16, 2005. It represents 61.6 percent of developed nations' total emissions. The United States, the world's biggest source of emissions, came out against the pact in 2001, reckoning it would be too expensive and wrongly omits developing nations from a first round of targets to 2012.

* HOW WILL IT BE ENFORCED?

-- Countries overshooting their targets in 2012 will have to make both the promised cuts and 30 percent more in a second period from 2013.

* DO ALL COUNTRIES HAVE TO CUT EMISSIONS BY FIVE PERCENT?

-- No, only 36 relatively developed countries have agreed to targets for 2008-12 under a principle that richer countries are most to blame. They range from an 8 percent cut for the European Union from 1990 levels to a 10 percent rise for Iceland.

* WHAT ARE 'GREENHOUSE GASES?'

-- Greenhouse gases trap heat in the earth's atmosphere. The main culprit from human activities is carbon dioxide, produced largely from burning fossil fuel. The protocol also covers methane, much of which comes from agriculture, and nitrous oxide, mostly from fertiliser use. Three industrial gases are also included.

* HOW WILL COUNTRIES COMPLY?

-- The European Union set up a market in January 2005 under which about 12,000 factories and power stations are given carbon dioxide quotas. If they overshoot they can buy extra allowances in the market or pay a financial penalty; if they undershoot they can sell them.

* WHAT OTHER MECHANISMS ARE THERE?

-- Developed countries can earn credits to offset against their targets by funding clean technologies, such as solar power, in poorer countries. They can also have joint investments in former Soviet bloc nations.

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