6 responses to “US climate change bill – how international provisions work”

1. The US congress is acting as an international bully! The US has dragged international efforts to reduce emissions for many years. Now once it starts to do something, its wants to impose trade sanctions, even though sanctions will not start until 2020.

   What a bully it is!

   The problem is whether it will have the international influence or not in that regard by then. International economies will change and with them influences. Besides, few other countries will act as the US congress wishes to.

   The US congress will need to wake up to world new reality.

2. There is a need for a fair international game for all in reducing emissions.

   The US house of representatives has passed a bill to reduce greenhouse emissions and the bill will need to be past in the US senate to become a law. It is an encouraging sign from the US that has acted to drag the international efforts to reduce emissions in the past, re the Kyoto protocol.

   The recent G-8 meeting is reported to be going to make declaration on reducing greenhouse emissions. Some reports say G-8 countries would reduce their emissions by 80 per cent by 2050. It is commendable target and encouraging.

   There are also reports that the developing countries are expected to reduce their emissions by 50 per cent by 2050.

   While all these seem to be good, there are some interesting questions that demand answers sooner or later. For example, what is a fair target of emissions reductions and hence the level of emissions by a certain time for a particular country? This is relevant and unavoidable, because some of the developing countries have almost negligible emissions per capita. Do we ask them also to reduce their emissions by 50 per cent by 2050? Is that fair for that country? How can that country raise its living standard?

   It would be difficult to reach an agreement on fair emissions levels for countries. However, it seems fair enough to have an equal right for every person to have the same level of emissions at a future time, even the past responsibility of who have contributed to the greenhouse gases in the atmosphere is forgiven. The number of total population should also be decided at a time, so any future changes in population should be the responsibility of individual countries. If a country has faster population growth its total allowable emissions levels will not be increased.

   An equal per capita level of allowable emissions should be an important part of fundamental human rights, irrespective who is rich or poor, where he or she lives, which country he or she belongs to.

   The international community must resolve this fundamental issue of fair levels of emission entitlement for everyone on the global at a certain time.

3. Lincoln, Unless China mitigates its emissions eventually a global agreement on carbon emissions will fail to be effective. If China just reduces its energy intensities that will be insuffiicient. The lead time of 2020 gives China the change to implement its current plan of reducing energy intensities considerably.

   The US isn’t acting as a bully – it is helping to internalise an externality. That it has adverse equity effects can be dealt with by compensations – by for example giving China a large share of marketable international carbon quotas and by financing green energy projects in China. This should be the focus in the leadup to Copenhagen and in fact it seems that this is ther main focus.

4. hc, I understand your point that China will need and must to join in the international efforts in the fight to limit global warming. However, you say that the lead time of 2020 gives China the change to do something. I was not talking about China only. I was talking about the whole issue, that includes how the US has behaved itself until a few months ago and how it intends to behave towards others, that is one. If you say it is not bully, then what is bully? Is there any agreeable definition of bully? Is that because the US is so strong that other people cannot openly say it is bullying if it is doing it? Let’s be fair to everyone, including ourselves, alright?

   Secondly, it is not China, there are so many developing economies. China has been singled out by you probably because you think China’s emissions are so large. That is a fair point and I don’t disagree with you on that. But why didn’t you mention how much China’s emissions are on a per person basis, and compare that with the in the US or in Australia? Why don’t you ask for the US and Australia and for that matter every OECD country to reduce their emissions to the Chinese per capita level? Then ask China to begin its reduction?

   Is there any conspiracy against the Chinese in terms of their rapid economic growth by some people, so an unfair or unequal playing field is created for China in terms of reducing greenhouse emissions to limit and slow its rapid growth, so it would be poor forever without joining the rich club in which the US and Australia belong? In this regard, China is only one of the fast growing developing countries that also have a considerable size.

   Are we afraid that the past poor people will be joining in our ranks so to diminishing our glories?

   You talk about the internalisation of an externality. Yes, that is a very good point. The question I have for you is that why don’t say the externality in terms of per capita emissions? Why don’t you say the externality in terms of historical contributions by the rich countries? The externality they cause to other poor countries?

   You talk about the adverse equity effects can be addressed. That is also correct, and that is my central point. However, does the US bill talk and address those adverse equity effects? Does it talk about the per capita equity and historical equity at all?

   I am not against the US recent efforts. I think its efforts needs to be congratulated. However, the international community needs to stand up for justice, for rich and for poor countries equally, and for powerful and weak countries equally. We should not just follow the superpower and become the coalition of the “willing” to do whatever blindly of the superpower wants us to do. We especially need to stand up for the poor and weak countries when they are treated unfairly by the most powerful countries.

   Many people understand the issue of externality and free lunch and how they work. Those theories are no longer the monopoly of the rich. The poor also can apply it. Isn’t it the case the US was having free lunch after the Kyoto? Why does it suddenly wake up to this externality issue now? Why don’t mention these?

5. Could I ask the authors some questions about this post?

   US exporters will get free carbon allowances uo to 2025 so that local firms which both export and supply the local market will gain an increased price if they divert their outputs internationally. Isn’t this distortionary? Something like an export subsidy in effect and hence would – at least if industries are competitive – tend to raise local prices by the full extent of the implied carbon charge.

   Under certain conditions you write US producers of finished goods could also get rebates if producers petition for coverage and EPA determines they meet ‘statutory criteria and should be covered’. This seems to open up a can of worms if it means producers of non-traded goods.

   Imports that must purchase such emmission allowances shall be 85% sourced from countries for which it is not true that: The country has an emissions reduction commitment as stringent as the US commitment or the country and the US are parties to a sectoral international agreement or the energy or carbon intensity of the sector is less than in the US.

   This is an interesting type of provision since it does not target the specific carbon regulation that a product is subject to but the general level of emissions control in the economy. The US will exempt its own exporters by giving them free carbon allowances – why won’t other countries do the same raising competitiveness concerns in the US? Am I misinterpreting?

   Quote: “But EPA must adjust to as low as zero the international reserve allowance requirement for a sector to account for the benefit to that sector of free allowances to electricity providers and rebates to industrial sectors”. That doesn’t sound right – if anything you would increase this allowance – at least for imports.

   BTW thanks for the post – I am studying this Bill and it was very helpful.

6. Lincoln. Your points are valid. Historical and per capita emissions are both highly relevant. And the link between these – especially the historical emissions – and comparative wealth levels between nations is also relevant. All of which indicates that the richer nations must shoulder the lion’s share of the burden of reducing emissions – including through support of the developing nations.

   The challenge of climate change is the ubiquitous nature both of the problem and the solution. It is a problem which affects us all, and which requires all of us to

   More-or-less all of our social paradigms and institutions (nation states, political movements, philosophy, economics, global finance, religion, capitalism / business models to name some of the most obvious of these) show almost no ability to encompass the level of change we require. Nations rarely transcend the national interest, politicians rarely go beyond concern over simply staying in power, philosophers are unable to articulate how or why anyone would truly act for the common good, economists struggle to prove that we should act now on climate change – nor that we might need an economic model that allows for steady state or even decline rather than growth, the global money supply needs to grow to avoid collapse, capitalism requires growth (and return) to avoid collapse, business executives are obliged to place shareholder returns above all other considerations.

   The challenge is not to articulate not how the proposed solutions are wrong – that is very easy. Rather the challenge is to welcome the good things that are happening, and to personally commit to doing everything in our personal power to actively reduce emissions everywhere.

   If enough people start, then humanity can find its own tipping point, and we can truly turn the corner on climate change – and the wider issues of sustainability. And in so doing we will find ourselves naturally tackling all of the deficiencies listed above – because it is impossible to see those “old” institutions surviving in anything like the same form as we make this transition to a new order.

   Ben in Australia