Taking the lead
Developing countries must take the lead in proposing a system of entitlements, and North-South trading, which is both ecologically effective and socially just

THE KEY ISSUES
PREVENTlNG, global warming raises a very serious question for the world"s nations. It means putting a cap or a limit on the world"s greenhouse gas emissions which are accumulating in the world"s atmosphere and threatening to overheat the Earth which has the potential to wipe out humanity, at the worst, and disrupt and dislocate many economies and populations. But since the current process of economic growth is so intensely linked to the use of fossil fuels which are the biggest source of greenhouse gas emissions, and the world economy is highly unevenly distributed, the key question is: How should the responsibility for this cap on greenhouse gas emissions be shared? The challenge becomes further compounded when we recognise that controlling greenhouse gas emissions has certain economic costs. Therefore, how do nations deal with global warming in a way that is ecologically effective, that is, effective in controlling global warming, and yet equitous and socially just?

And since the US government has been insisting on "meaningful participation of key developing countries" before it signs the Kyoto Protocol (KP) which is aimed at reducing greenhouse gas emissions of industrialised countries, it becomes equally important to ask: What do we mean by "meaningful participation" of developing countries? Instead of letting the US define what it means by "meaningful participation", the key developing countries, which include India and China, could define it themselves. What is equal to the North? The question of who has been or will be responsible for global warming has been repeatedly raised both by industrialised countries and by developing countries. The picture on this, as far as available studies go, complicated. It is as follows:

• If past and current emissions are taken into account, then industrialised countries are largely responsible for the greenhouse gas emissions. Therefore, it is argued that industrialised countries must take the lead in cutting greenhouse gas emissions.

• But with economies of developing countries growing rapidly, their future emissions will become very high. Industrialised countries argue what is the point of our cutting emissions, if the developing countries are going to increase their emissions. So when should developing countries take on responsibility to cut down their greenhouse gas emissions?

• According to the Intergovernmental Panel on Climate Change (IPCC), a body of scientists from across the world, sponsored by the United Nations, the annual emissions of developing countries will equal that of industrialised countries in 2037. But others point out that on a per capita comparison these emissions will still be lopsided in favour of industrialised countries. Some 20 per cent of the world"s population will still be responsible for 50 per cent of the greenhouse gas emissions.

• A Brazilian study meanwhile says that if industrialised past emissions are taken into account, that is, emissions from the start of the Industrial Revolution, then the emissions of developing countries will catch up with those of industrialised countries only in the early 22nd century.

• The Washington-based World Resources Institute (WRI), however, argues that as a greenhouse gas like carbon dioxide stays for only about one hundred years in the atmosphere, some of the emissions from the early part of the Industrial Revolution would have gone out of the atmosphere. Therefore, if decay rates of greenhouse gases are factored in, then developing country emissions will catch up with industrialised country emissions, even if historical emissions are taken into account, by the latter part of the 21st century.

• But when will per capita emissions of developing country emissions and industrialised countries become equal? Probably not even in the 22nd century, says an expert of the WRI. But that is partly because developing country population is increasing.

It is very clear that sharing responsibility and distributing the cap on greenhouse gas emissions is not going to be an easy task for governments, especially governments in democratic countries from the developing world whose leaders must assure the people that combating global warming will not disrupt their fledgling economies but also ensure future ecological and economic rights of their people. Therefore, discussions of the numerous matters that the KP, hurriedly put together in the wee hours of the last day in Kyoto in 1997, left undecided are going to be critical for finding an ecologically effective and yet just and equitous solution for combating global warming, are going to be very important for the future of the world.
Southern vulnerability The KP is a step ahead in the world"s resolve to arrest the problem of human-induced climate change which could wreak havoc on millions of people worldwide. Nobody as yet knows precisely what will happen as a result of human-induced global warming: Which countries will gain from the resulting climatic changes and which countries will lose out? But polar ice melt definitely has the potential to drown a large part of low-lying countries like the Maldives and Bangladesh and, in India, a shift or an intensification in the monsoon could wreak enormous economic, social and ecological havoc.

The IPCC has already reported that developing countries will be twice more vulnerable than developed countries, because of their economic conditions, and small island nations will be three times more vulnerable. If carbon dioxide concentration were to double, the economic damages and adaptation costs would amount to 1-2 per cent of GDP for developed countries and 2-9 per cent for developing countries.

Weakness of Kyoto Protocol
The KP mandates industrialised countries (that is, Annex I countries) to take the lead in arresting greenhouse gas emissions. But the KP has several weaknesses:

• The strategy outlined in the KP is full of loopholes and allows Annex I parties to meet their commitments without undertaking substantial greenhouse gas reductions at home and may, therefore, not result in the "stabilisation of greenhouse gas concentrations at a level that would prevent dangerous anthropogenic interference with the climate system" - the ultimate objective of the FCCC.

•Even though the strategy outlined in the KP does not insist on participation by developing countries, except through the Clean Development Mechanism and Emissions Trading, it sets the world on a path that does not recognise the atmospheric rights of the current and future generations of developing countries even as it provides the current generations of industrialised countries greenhouse gas - not based on equity but on the basis of "current emissions" - and, furthermore, provides developing countries perverse incentives to pollute further.

As several commentators, especially western commentators, have already written a lot on the possible "ineffectiveness" of the KP in meeting the ultimate objective of the FCCC, because of the "creative carbon accounting" it encourages nations to undertake, this paper will dwell more on the neglect of the long-term interests of the current and future generations of people living in developing countries which is inherent in the strategy outlined in the KP this question has become even more important with the US insistence on "meaningful participation" by developing countries if it is to ratify the protocol - and yet propose an ecologically effective solution.

If stabilisation of atmospheric greenhouse gas concentrations is to be achieved, it is clear that the current rate of emissions has to be arrested, to begin with in industrialised countries, and ultimately reduced to sustainable levels.

The two key elements of the strategy outlined in the KP to achieve this objective are, firstly, the calculation of emissions of a clearly identified base year, and, secondly, agreed emissions reduction targets in terms of percentages of the emissions in the base year.

BASE YEAR POLITICS
The basic weakness of the KP is that it has turned "compliance" with the protocol into an intense "numbers game". With the world"s civil society and especially its environmental community demanding strong action, the world is focusing on the percentage reduction being targeted by a country. Countries which promise a higher "percentage reduction" are seen as good players and those arguing for a lower "percentage reduction" are seen as difficult ones. As control of greenhouse gas emissions means considerable economic and technological changes, many of which could hurt in the short-term, especially in a world that is so heavily dependent on fossil fuels, most countries are fighting for easy and manageable targets and even more so, easy and manageable ways of meeting them. Therefore, in the KP numbers game, anything that helps to increase the emissions in the base year, especially because of activities that have since ceased or reduced, immediately gives the country a headstart. For instance, Australia had high emissions because of deforestation in 1990 and since this deforestation has already stopped, it can claim to have reduced its emissions since 1990. And emissions trading, joint implementation and clean development mechanism, further provide opportunities to borrow "emissions reduction" from other countries where "emissions reduction" is already taking place because of a slowing down of the economy, like Russia, for instance, or from those countries where reducing emissions is cheaper in the short-run, like developing countries.

For developing countries, which will one day enter this same numbers game, their emissions in the base year, which is yet to be set for them, would be very important. If a developing country were to move towards energy efficiency in a big way, then it would already have an energy-efficient economy by the time its base year is set and then high percentage reductions on that base year would be not only difficult to achieve but also expensive. On the contrary, if that country were to continue using high-emission technologies and fuels, then by the time its base year is set, it could easily accept "high percentage reductions" and look good in front of the world whereas those who have already taken advance action and, therefore, contributed proportionately less to atmospheric greenhouse gas concentrations would look bad in front of the world. The strategy spelt out in the KP, thus, provides non-Annex I countries with a perverse incentive to continue with their current rate of greenhouse gas emissions and make it even worse, if possible.

The Chinese, for example have repeatedly argued that they do not want to take on any burden of green-house gas reductions till 2020 by when they hope to become a middle-income country in the global economy.

Unclean mechanism
Article 12 defines the Clean Development Mechanism (CDM) which has been identified by the KP as a mechanism for North-South co-operation. But the CDM is riddled with moral and other loopholes. The KP itself says that the purpose of CDM is to allow developing countries "... to assist parties in Annex 1 in achieving compliance with their quantified emission limitation and reduction commitments..." One can, therefore, ask: Why does the KP see no other role for developing countries in combating climate change other than just helping Annex I countries to meet their commitments under the protocol?

The purpose of the KP is to set a strategy that would ultimately help all countries to combat climate change in a way that would benefit both current and future generations and on the basis of equity, which are the two key guiding principles identified in Article 3 of the Framework Convention on Climate Change (FCCC). Therefore, the KP strategy should be one which helps all countries to combat climate change taking their "common but differentiated responsibilities" into account.

Developing countries will also not get any long-term benefits from participation in a CDM process. The only existing rationale for joint implementation (JI), one that is being globally pushed at the moment, is the one that was outlined by the government of Norway in the early 1990s. The Norwegian government had argued that cutting future carbon dioxide emissions in industrialised countries will be more expensive than cutting future carbon dioxide emissions in developing countries. This is because developing countries are using outdated technologies which are very energy-inefficient whereas developed countries are already using very energy-efficient technologies. So if Norway wants to cut its carbon dioxide emissions then it should financially assist India to acquire more efficient power stations but the credit for the saving that would thus result in carbon dioxide emissions would go to Norway. Similarly, it can be argued that developing countries can be given money to plant trees on a big scale to remove some carbon dioxide from the atmosphere because it would be cheaper to plant trees in developing countries instead of developed countries, largely because land and labour are cheaper in developing countries. As Raul Estrada-Oyuela, the Argentinean head of the negotiations in the Adhoc Group on the Berlin Mandate once told a journalist, "Of course, everything is cheaper in the developing countries - including life." And since "cheapness" of emissions control is the key interest in the creation of CDM, there is no reason why the next logical step - that of creating a competitive situation so that sellers of emissions sell their emissions at cheapest possible costs - cannot be taken. Many economists and institutions are already talking of and conceptualising such schemes.

But in all this, it is important to realise that industrialised countries need not change anything domestically and yet meet their carbon dioxide emission reduction targets by investing in JI projects in developing countries.

Many experts and countries have, however, also argued that it is false to assume that it is very expensive to reduce emissions in the developed countries. The key problem is the high political cost. For example, many people do not want higher energy prices which would restrict their use of the car and switch to public transport and politicians in democratic countries have to pander to their wishes.

Janet Yellen, chairperson of the White House"s Council of Economic Advisors recently reassured the commerce subcommittee on energy and power of the house of representatives that the government would do its best to keep the economic costs of cutting greenhouse gas emissions as low as possible. She presented the following calculations: Whereas reducing one tonne of greenhouse gases equivalent to one tonne of carbon through domestic action would be US $120, the cost of doing the same through emissions trading and JI with other industrialised countries like Russia will be US $30-50 and with developing countries only US $14-23. Therefore she proposed only 3 per cent of the 7 per cent reduction to be achieved by 2008-2012 will be through domestic action. Even if the rationale for ii with developing countries is accepted, there are several serious practical problems with JI:

• Firstly, there is the economic question. If developing countries accept JI then all that they are doing is to let the cheaper carbon dioxide reduction programmes go to industrialised countries. Let us assume that JI works and developing countries move towards more energy-efficient technologies. But once they have reached high levels of energy efficiency industrialised countries would have no economic incentive to invest in developing countries. They would rather invest in their own countries. And if global warming is still a threat - as it would be, because industrialised countries which are major producers of greenhouse gases, have not taken any action at home - then there will be pressure on developing countries to cut back on carbon dioxide emissions on their own. And by then the costs of cutting back on carbon dioxide emissions will be very high even for developing countries. So what will be the form of international cooperation then? CDM does not answer this question. It leaves the future of North-South cooperation on climate change hanging in the air. More than that it allows current generations in developing countries to sell off cheaper emissions-control options today leaving their future generations straddled with high cost options.

• Secondly, there is the question of practicality. How will one differentiate when is a more energy-efficient technology being brought into a developing country to cut carbon dioxide emissions and when is it coming simply because foreign or domestic industrialists want to move towards better technology for competitive reasons. After all, technological upgradation takes place all the time. New cars definitely have less carbon dioxide emissions per km than the older ones. So, will all foreign manufacturers of new cars in India take the credit for reducing carbon dioxide to their home countries. There is also the danger that companies can use COM to push all kinds of experimental technologies that may not be economically viable otherwise. Developing countries could easily get used as technological guinea pigs.

The worst aspect of the KP is that it has already given the heaviest emitters of greenhouse gases, namely, the industrialised countries full entitlements to their heavy "current emissions" minus small amounts that they are expected to reduce as a percentage of their current emissions. The final level of emissions that industrialised countries are expected to reach in their first commitment period from 2008 to 2012 is described as their "assigned amount". But, in the KP, this "assigned amount" has gone well beyond being a mere target to be reached. It has been turned into a "right" by giving developed nations several "property rights" over these "assigned amounts". Under the KP, the property rights bestowed on the "assigned amounts" include:

• The right of a nation to use the assigned amount (Article 3 of the KP).

• The right of a nation to trade any part of the assigned amount it is not going to use (Article 3, paragraphs 10, 11 and 12 of the KP).

• The right of a nation to bank any part of the assigned amount it is not going to use in the first commitment period for use in future commitment periods.

It is hard to think of what other property rights can be bestowed on the "assigned amount" - an entitlement created out of "current emissions".

This provision of rights over the "assigned amounts1 of industrialised countries, which takes them well beyond being mere targets to be reached, have not only opened up opportunities for "hot air" to be traded - Russia, for instance, can now trade a large part of its assigned amount which it is quite unlikely to use without mending any of its ways because of its economic collapse - it has left developing countries without any entitlements of their own. Even though their per capita emissions are both currently and have historically been low, they cannot bank any emissions for use by their future generations. The only rationale for trading emissions between industrialised countries and developing countries is that reducing emissions in developing countries will be far cheaper than undertaking emissions reduction in industrialised countries. Though the guiding principles of the KP say that all measures that are undertaken to protect the global climate system should bring benefits to both the present and future generations and, furthermore, they should be built on the basis of equity (Article 3 of the FCCC), there is nothing in the KP that gives credence to these principles. Firstly, entitlements, built around current emissions, have been created on the basis of a most unjust principle. And, secondly, there is nothing in the KP that protects the rights of the future generations living in developing countries.

The principles of emissions trading" (under Article 17) which have to be elaborated at the next Conference of Parties (COP), to be held in November in Buenos Aires, must now take into account and build on the equitous principle of "equal per capita entitlements". Not only would such a step be globally just and in conformity with the principles of the FCCC, it would help to take the world towards the "ultimate objective" of the convention, namely, the stabilisation of the atmospheric concentrations of the greenhouse gases, far faster and better than the "creative accounting" strategy presently inherent in the KP.The sunny side
The transition from an economy dependent on fossil fuels to one based on non-carbon energy has become imperative to free the world from the fetters of carbon

Unlike the Eastern European countries and Russia, which cannot use their assigned amounts built on 1990 emissions because of their economic problems, developing countries, and especially the larger developing countries like China and India are growing at a rapid rate. Any entitlement they obtain would get used up rapidly. But as it is unlikely they can use up their assigned amount in the immediate future, they have the potential to trade their unused assigned amounts. This provision would immediately give them the incentive to trade - not merely to help industrialised countries to "meet their targets", so ingeniously stated in the KP, but also to move towards a low-emissions developmental path so that the benefits from trading emissions can stay with them for a long time. The trading system would also provide sufficient financial resources and an "enabling economic environment for technology transfer" to take place, as indicated in article 10 of the KP.

Such an economic environment would help to create a global market for western solar energy technologies -first in developing countries and then later in industrialised countries - and help to kick-start the global transition towards zero-emissions technologies. This makes sense because developing countries have more solar energy than western countries and if global warming is to be averted in the long run, the more solar energy is used by them instead of coal and oil, the better.

If India were to find the current high cost of a solar power plant minus the economic advantages obtained by saving emissions lower than the cost of building a coal-based power station, it is quite likely to think in terms of investing in a solar power project, and thus help to create a market for solar energy technologies worldwide. What holds true for India would equally hold true for all other countries. In this way, developing countries would enter into the most meaningful form of participation - to use the US phrase.

In fact the emissions trading price would be pegged more to a cost that would encourage developing countries which have more fossil fuels to move away from fossil fuels rather than providing the cheapest alternative to the cost of reducing greenhouse gas emissions in industrialised countries, as is being suggested in the global warming debate in the US. Such trading would truly help to prevent climate change. Otherwise the ultimate objective of the FCCC will not be met.

Resolving difficulties
While it is true that the entitlements that would accrue to industrialised countries under the "equal per capita entitlements" principle, would be far less than the assigned amounts that have been given to them on the basis of current emissions under the KP, and therefore it would be economically very difficult for them to accept such low entitlements and therefore high reduction targets right away. But the reduction targets could be negotiated in successive commitment periods in a way that they steadily move towards "assigned amounts" based on per capita entitlements without disrupting their economies even as developing countries get an opportunity to trade their unused "entitlements" and use those resources to move towards a slower emissions growth trajectory. Given the fact that developing countries have a high population growth trajectory, the population distribution of the world could be frozen as of an agreed date in order to avoid giving developing countries an unfair advantage and a perverse incentive to increase their populations.

Unfortunately in the international debate very few suggestions have been made on how we define equity in the context of the atmosphere. In their submissions to the Subsidiary Body for Scientific and Technical Advice (SBSTA) meeting in Bonn in June, India, China, Switzerland, Samoa and South Africa mentioned the need for equity, but none defined it. The UK, New Zealand, Canada and Iceland did not mention the word equity, in their submissions.

Equal per capita entitlements
Equal per capita entitlements could be built on one or a combination of the following concepts:

- The emissions absorbed annually by the global atmospheric sinks, especially which arise out of common resources like the oceans, could be distributed equally amongst all the people of the world thus providing each person with an equal entitlement.

- A long-term per capita emissions convergence target could be identified and each person could be given that as an entitlement. This target itself could be kept flexible which can be moved up or down based on latest scientific information available of the seriousness of the emerging threat of global warming.

- Future atmospheric concentration targets for different greenhouse gases could be agreed upon, keeping in mind that the targeted concentration does not threaten to seriously destabilise the global climate, and then the global emissions budget that would allow humanity to reach that concentration target could be equally distributed among all nations on the basis of equal per capita entitlements. Such a "contraction and convergence" strategy would again hurt industrialised countries economically if the principle of equal per capita entitlements was implemented immediately. Once the principle is accepted, the national entitlements can be steadily phased in towards a convergence point of equal per capita entitlements over successive commitment periods. At the same time the targeted atmospheric concentration could be kept subject to review based on latest scientific information available.

It is obvious that in the future the world will have to accept some common maximum per capita emission for each country in order to deal with global warming. We can"t have a world in which some countries have to freeze their carbon dioxide emissions at one level and other countries at another level This would mean freezing global inequality. A convergence principle towards a just and sustainable norm can be the only rational principle in such a situation - those who have higher emissions than the norm cut back to the norm and those who have emissions below the norm can reach up to the norm.

The per capita principle may sound harsh to many in industrialised countries. On the other hand, it is a very gracious position for developing countries to take because such a position is only asking for the future benefits of the atmosphere to be shared equitably. It is not asking for the factoring in of the past emissions of the industrialised countries which began with the Industrial Revolution and which have already accumulated in large quantities in the atmosphere.

In sum, what developing countries should not - and nor should industrialised countries expect them to - accept is the principle of trading emissions or, for that matter, international cooperation to prevent climate change which is built on the argument that developing countries provide a lucrative opportunity to reduce emissions cheaply than in industrialised countries. Trading and cooperation must be built on equitable emission entitlements. Trading cannot simply be carried out to achieve economic efficiency. It must be undertaken in an environment that also promotes ecological efficiency and social efficiency (or social justice).

The ultimate point to note is the opportunity offered to us by the potential of solar energy, a carbon-free form of energy. The purpose of equity and an equal per capita entitlements principle is hopefully not to force industrialised countries to curtail their economy drastically but to create a framework for global cooperation so that the world can move as fast as possible towards a world economy which can keep on growing without carbon limits and therefore will have to be one which is based on solar energy. Only if the world fails to move out of the fossil fuel based economy in time to avert the threat of global warming, the world"s nations will have to contend with low per capita emissions. But why should that happen?

The price of solar energy technologies - per unit of energy delivered - have been falling rapidly and we only need to hasten that process. Unfortunately with the price of oil also falling to an all time low, we have to simultaneously ensure that low oil prices do not prevent the solar transition.