Friday, October 26, 2007

Time to ditch Kyoto - Mitigating European Pollution with Patagonia Dams

Climate policy after 2012, when the Kyoto treaty expires, needs a radical rethink. More of the same won't do, argue Gwyn Prins and Steve Rayner.


The Kyoto Protocol is a symbolically important expression of governments' concern about climate change. But as an instrument for achieving emissions reductions, it has failed. It has produced no demonstrable reductions in emissions or even in anticipated emissions growth. And it pays no more than token attention to the needs of societies to adapt to existing climate change. The impending United Nations Climate Change Conference being held in Bali in December — to decide international policy after 2012 — needs to radically rethink climate policy.


Kyoto has failed in several ways, not just in its lack of success in slowing global warming, but also because it has stifled discussion of alternative policy approaches that could both combat climate change and adapt to its unavoidable consequences. As Kyoto became a litmus test of political correctness, those who were concerned about climate change, but sceptical of the top-down approach adopted by the protocol were sternly admonished that "Kyoto is the only game in town". We are anxious that the same mistake is not repeated in the current round of negotiations.


In practice, Kyoto depends on the top-down creation of a global market in carbon dioxide by allowing countries to buy and sell their agreed allowances of emissions. But there is little sign of a stable global carbon price emerging in the next 5–10 years. Even if such a price were to be established, it is likely to be modest — sufficient only to stimulate efficiency gains. Without a significant increase in publicly funded research and development (R&D) for clean energy technology and changes to innovation policies, there will be considerable delay before innovation catches up with this modest price signal.

On present trends, for another 20 years, the world will continue installing carbon-intensive infrastructure, such as coal power plants, with a 50-year lifetime. If climate change is as serious a threat to planetary well-being as we have long believed it to be, it is time to interrupt this cycle.

Social scientists understand how path-dependent systems arise; but no one has yet determined how to deliberately unlock them. When change does occur it is usually initiated by quite unexpected factors. When single-shot solutions such as Kyoto are attempted, they often produce quite unintended, often negative consequences. The many loopholes that have enabled profiteers to make money from the Clean Development Mechanism, without materially affecting emissions, are examples. Therefore, there can be no silver bullet — in this case the top-down creation of a global carbon market — to bring about the desired end.


There is no precedent for imposing a global trading system from above. First, lessons need to be learned from regional experiments with trading. The European Union Emission Trading Scheme confined itself to trading only in carbon, but then made the fatal error of allowing governments unrestricted powers to allocate allowances instead of auctioning a limited supply, leading to a collapse in the price. The Chicago Climate Exchange is successfully trading a basket of gases, but participation is voluntary. Eventually, different trading systems could evolve and link up as sensible standard practices emerge, giving rise to a global market. But in the final analysis, cap-and-trade cannot deliver the escape velocity required to get investment in technological innovation into orbit, in time. That calls for something else.

Here is the full article.