Martin Khor stresses the need to link development and environment for developing countries and cooperation between North and South especially in the next period of the Kyoto Protocol
Now is the time to clarify the crucial issues for the Bali meetings this December, which we hope will launch a roadmap for global action to combat climate change, especially after 2012, when the first period of the Kyoto Protocol commitments expires.
For a climate regime that is equitable and fair, there are at least four important building blocks: targets based on a broad scientific consensus; fair North-South relations; linking development and environment; and coherent policies at national and international levels.
Science has progressed to a point where there is broad consensus that climate change is real and serious, and that developing countries will be most affected.
There is a need to set targets for global action, such as to limit temperature rise to 2 degrees centigrade (in fact, well below that), and to prevent greenhouse gas concentration from exceeding 450 parts per million (ppm) of carbon dioxide equivalent. Even at those levels, there will be great damage. At levels higher than that, scientists tell us that the damage will be catastrophic.
However, the establishment of such science-based targets has to be linked to agreement on “burden-sharing” principles, particularly between North and South.
The UNFCCC (UN Framework Convention on Climate Change) and Kyoto principles of equity, historical responsibility, and common but differentiated responsibilities have to be re-affirmed and, more importantly, put into operation in concrete terms and the measures to be spelt out.
Indeed, these principles must be infused into all aspects of the negotiations and reflected in the agreements to be made.
The implications for developing countries of proposals on global targets should be more explicitly discussed. For example, the European Union (EU) has made a proposal for a global emission cut of 50 percent (of 1990 levels) by 2050, and a cut of 60-80 percent for developed countries.
It is good that the EU has started the ball rolling by putting forward these proposals and figures. Of course it is only a start and the EU and other developed-country parties must be expected to improve on their proposed commitments.
But the figures proposed for developing countries have implications that must be considered seriously. If we assume, for simplicity, that developed and developing countries account 50:50 for total emissions, then a global 50 percent cut with 70 percent in developed-country cut implies a 30 percent emission cut for developing countries.
If the population in developing countries doubles in that period (from 1990 to 2050), then the implication is a 65 cut collectively in their per capita emission. This is a very deep cut, and whether developing countries should or could take on such cuts must be openly debated. It is not enough to leave these as implicit targets, as a residue of the targets for the developed countries and the world as a whole. The emission target is of course only one aspect, though an important one, for putting into action the principles of equity, common but differentiated responsibilities, etc.
Addressing climate change as an environmental crisis requires simultaneously a development solution. The development challenges are enormous, far more than has been generally acknowledged as yet.
As has been effectively argued  (see The Economics of Climate Change, SiS 33), if climate change is not addressed, its effects would devastate development prospects. Thus, adequately addressing climate change through mitigation and adaptation is crucial, and is more cost-effective than adopting a business-as-usual attitude. For example, the Vienna meeting (March 2006) heard presentations that the economic costs of addressing climate change would be only 0.12 percent of world Gross National Product (GNP) per year up to 2050.
At the same time, we should not underestimate the tremendous efforts required to switch to new development pathways required to match the new emissions targets.
Putting this into operation would still be an enormous challenge. It may imply, for instance, that if developed countries are growing at 2.12 percent a year, they would have to make do with 2 percent and if developing countries are growing at 6.12 percent, they would have to make do with 6 percent. (Of course, if developed countries were to agree to reduce their growth rates more than this, developing countries will have more space to grow.) This may be a relatively small price to pay to address climate change and still enable relatively good growth. But it would be a tremendous challenge indeed for developing countries to be able to grow economically at 6 percent a year and also be able simultaneously to reduce their per capita emissions by 65 percent by 2050.
Perhaps it can be done. But many in-depth studies must be undertaken to show how this tremendous transformation can come about, or it would remain at this stage only a vision.
On the issue of finance, there should not be an impression that the sums are small and that the private sector will take care of most of the costs.
The UNFCCC Secretariat paper on investments needed to address climate change (presented at Vienna) has done a good job of stimulating discussions on a complex issue. It has given estimates of an extra investment and financial flow of US$200-210 billion required in 2030 for mitigation, plus “tens of billions of dollars” for adaptation.
The enormous costs of mitigation and adaptation should be realistically spelt out. National studies (such as the one presented by India on the immense costs of emission-reducing reforms in industry) and examples of costs of addressing real-life climate-related events would be illustrative.
A report in USA Today (29 August 2007) stated that the 2005 Hurricane Katrina caused US$150 billion damage, and the costs of reconstruction include US$116 billion allocated by the US Congress and many more billions of dollars are to be met by private financing including insurance.
The 2004 tsunami would also have cost many billions of dollars in rehabilitation and reconstruction.
While mitigation and adaptation measures would help prevent or reduce such expensive costs of disaster-related reconstruction, the high costs of damage and reconstruction also have to be addressed.
At the very least, there is a need for a large publicly-financed and operated fund to address adaptation. Private finance can only be a supplement, especially since it is difficult for poorer countries to access those funds, and on affordable terms. A fund to address costs of damage may also need to be looked into, especially as climate-related damage is already taking place.
On technology transfer, the challenge is also enormous. A key question concerns intellectual property rights (IPRs) over climate-friendly technologies. IPRs confer monopoly rights, and can serve as a barrier for introducing or upgrading technologies by private industry or public-sector agencies in developing countries or simply curb affordable access on account of high prices.
The lower the cost and the greater the ability of private or public enterprises in developing countries to make use of new climate-friendly technologies, the faster would be their ability to switch to the new emission-stabilisation and development pathways.
A “full protection of intellectual property” in relation to climate-friendly technology would be a barrier to technology transfer. We should be reminded of how Indian companies were hindered from introducing a new chemical that is not harmful to the ozone layer as a substitute to chlorofluorocarbons (CFCs) because of patents on that chemical.
Thus, a post-2012 regime has to deal with this thorny issue of IPRs and developing countries’ access to technology (existing and new technologies, for mitigation, adaptation and reconstruction).
There should be more discussion and work done on new developmental pathways side-by-side with climate stabilisation pathways aimed at greater energy efficiency and emission reduction.
There are key issues if developing countries are to adopt new economic and social development strategies that meet the requirements of emission-stabilising pathways. The development pathways involve moving from primary production and commodity-based sectors to commodity processing and first-stage manufacturing and services to more mature industrialisation and services. They will need to address sustainable development in agriculture, industry, commercial and social services, and put in place appropriate policies for each sector. These are massive challenges.
If climate change is indeed the most pressing challenge of our times, then policies made in every area and forum have to be looked at through the fresh lens of addressing climate change, and made consistent with the aims and measures that we are trying to implement in combating climate change.
For example, at the World Trade Organisation (WTO), there are proposals to consider as a non-tariff barrier (which should be removed) the imposition of higher taxes on cars with a higher engine capacity, or the lack of government action to facilitate financing of consumers’ purchase of motor-cars.
Also at the WTO, some developed countries are pushing developing countries to drastically reduce their tariffs on food products, so that their highly subsidised farm products can penetrate the poorer countries’ markets, and at the same time they are insisting that the developing countries’ markets for industrial products should be opened up very significantly.
Developing countries that take measures, consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), to provide cheaper generic medicines for their population, are being condemned or punished by the major developed countries like the US and the EU, as in the recent case of Thailand and its compulsory licences on three types of medicines.
If some of the proposals at the WTO were to be adopted, they would make it far more difficult for developing countries to switch to an emission-stabilisation pathway and a sustainable development pathway.
Similarly, reviews should be made of the provisions of bilateral and regional free trade agreements, and of loan and aid conditionalities facing countries dependent on the international financial institutions and on aid donors.
These are some of the issues that could serve as stumbling blocks, which have to be transformed into building blocks towards the new roadmap to combating climate change.
This article is based on the statement made on behalf of the Third World Network at the Dialogue Plenary Session at the United Nations Framework Convention on Climate Change (UNFCCC) Vienna climate talks, 29 August 2007
Article first published 24/09/07
Saunders PT. The economics of climate change. Science in Society 33, 20-23, 2007.
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