[E66] Wall Street Journal op-ed: Hot Air in Bali (8 Dec 07)

[ehrbar]

Hot Air in Bali
By GWYN PRINS and STEVE RAYNER
December 8, 2007; Page A11

This week in Bali, Indonesia, delegates are considering climate policy
after the Kyoto Protocol expires in 2012. We will witness a well-known
human response to failure. Delegates will insist on doing more of what is
not working: in this case more stringent emissions-reduction targets, and
timetables involving more countries. A bigger and "better" Kyoto will be a
bigger and worse failure.

The 1997 Kyoto Protocol was a symbolically important expression of concern
about climate change. It sought to manipulate a basket of diverse
greenhouse gases and all their sources. It required its signatories to
show demonstrable progress toward a 5% emissions reduction over 1990
levels by 2005. It did so partly through an international cap-and-trade
system, and also by establishing a Clean Development Mechanism that would
enable big greenhouse-gas emitters to claim credit for reducing emissions
which they secured by buying reductions elsewhere, in developing
countries.

None of this has worked. Nevertheless, support for "Kyoto" has become the
test by which individuals and nations demonstrate whether they are for or
against the planet and its poor.

Kevin Rudd's Australian government just showed this. It will ratify the
Protocol to show that it is serious about climate change. But Australia,
like other countries already signed up to Kyoto, will produce no
demonstrable reductions in emissions or even in anticipated emissions
growth as a result of doing so.

Where emissions reductions have happened, notably in eastern Europe,
re-unified Germany and the United Kingdom, they were the result of
unrelated policies -- such as the collapse of communism, and with it the
shutdown of highly inefficient and polluting industries, or Margaret
Thatcher's smashing of union power by destroying the British coal
industry, which meant the substitution of coal by cleaner North Sea gas.

Strip out Germany and the U.K. from the EU-15, and European emissions
actually increased 10% between 1990 and 2005. In five countries, emissions
rates rose more than in the U.S. Without the collapse of Russia and
Ukraine, the Kyoto Protocol's "all signatory total" registers rises since
1990. Even in Japan, emission levels are rising. Kyoto's supporters blame
nonsignatory governments, especially the U.S. and, (until last week)
Australia.

But Kyoto was both a technical and a political failure. Fifteen years have
been wasted. Kyoto could never succeed. Why? It was constructed by
borrowing from other treaty regimes dealing with ozone, sulphur emissions
and nuclear bombs -- all problems with straightforward, technical
solutions. Climate change, on the other hand, is much more complex: It is
a symptom of a particular development path whose globally interlaced
supply system of fossil energy forms a complex nexus of human behavior,
physical materials and energy technologies.

We understand how such path-dependent systems come into being, but no one
has yet determined how to unlock them deliberately. Change, when it
occurs, is usually initiated by unexpected factors. Target-driven
solutions like Kyoto often end up producing unintended, negative
consequences.

Examples of this are the many scams that have enabled profiteers to make
big money from the Clean Development Mechanism, without materially
reducing emissions or helping the world's poor. Such scams included the
making of potent greenhouse gases and then destroying them, selling the
credits for doing so at great profit.

Time is not on our side. Some 200,000 megawatts of power alone need to be
replaced in Europe by 2020 and, lacking viable alternative base-load
capacity (apart from nuclear power), the world will continue for another
two decades installing carbon-intensive infrastructure with a further
50-year design life.

If climate change is as serious a threat to planetary well-being as we are
told, we must take action now, especially as carbon emissions are
increasing at record rates. It's time to ditch Kyoto-like mechanisms in
favor of strategies that could actually reduce carbon emissions, instead
of just producing hot air.

There can be no silver bullet. But we could assemble a portfolio of
approaches that would move us in the right direction, even though we
cannot predict which specific action will stimulate necessary fundamental
change. This would include creating genuine emissions markets, evolved
from the bottom up, some tax-signaling to the markets, more funding for
research, and adaptation -- building resilience to climate variability and
change.

Adaptation is central to any serious climate response strategy. We have to
deal with the amount of change to which the climate system is already
committed due to past emissions, as well as the increasing amount of
people and property that are already in harm's way. Just as the Dutch
built their dikes to survive in a hostile environment, the Bangladeshis
need to be protected from storm surges and the Filipinos from flooding
today.

For over a decade, adaptation was kept off the policy agenda by those who
feared it would attenuate support for reducing emissions. Yet any
reduction in greenhouse-gas concentrations would take decades. Adaptation
has a faster response time cycle and a closer coupling with innovation and
incentive structures. It thereby confers more protection more quickly on
more people, especially the poor currently dependent on marginal
ecosystems.

Top-down creation of a global carbon market to drive down carbon emissions
was never going to revolutionize the world's energy system in time, much
less build resilience to climate change. It cannot deliver the escape
velocity required to get investment in technological innovation into orbit
before mid-century. That calls for something else: wartime levels of
public investment in energy technology.

Without major investment in research and development, the technology
needed for a viable emissions-reduction strategy will not be available in
time. The International Energy Agency predicts a doubling of global demand
for energy from present levels in the next 25 years. Yet, as the IEA also
documents, government budgets for energy R&D were slashed by 40% since
1980.

The good news is that the political stars are auspiciously aligned. In the
U.S., voices as various as Al Gore and the American Enterprise Institute
have supported increasing research investments in energy technologies. In
2006, the president of the U.K.'s Royal Society supported the idea that
major public investment in R&D should be kick-started in research
facilities like the U.S. National Laboratories by a new Manhattan Project
of research into new and/or highly improved energy technologies.

It seems reasonable for the world's leading economies (and carbon
emitters) to invest as much money in this challenge as they have in
military R&D (currently $75 billion-$80 billion annually in the U.S.).
This investment program must be designed to avoid government bureaucrats
"picking winners" from among the candidate technologies, and "Manhattan
II" does not need the agreement of 170 countries. The program would
provide incentives, like R&D spinoffs and profits, for the emergent big
emitters, China and India, to join the process.

What would be the best outcome from Bali? It would be a post-Kyoto regime
that ditches universalism with respect to mitigation efforts: Fewer than
20 countries are responsible for about 80% of the world's emissions. It
would make a serious commitment to technological innovation. And it would
agree to spend as much time and money on adaptation as on mitigation.

Mr. Prins is director of the Mackinder Centre at the London School of
Economics & Political Science. Mr. Rayner is director of the James Martin
Institute at the University of Oxford.