Success at Copenhagen. Pointing the way to Kyoto II was not a fool’s supper.
ORIGINAL REPORT from CONSERVATIVE POLICY NEWS
The general narrative that has emerged from the Copenhagen Climate Change Conference is that it was a failure because no binding agreement on carbon reduction goals was signed. But, despite the predictable assertions by developing and poorer countries, and environmental NGO that the summit was “farcical,” the critique conceals the successful nature of the Accord for climate change activists.
While many of the developing countries did not get the deep emission cuts they sought from the industrialized world, what was agreed to in no way defeats the push for an international policy architecture that advantages developing nations, nor does it curtail the notion that vigorous redistributive efforts, through cap-and-trade, will be employed in the future.
On the contrary, the resulting document, the Copenhagen Accord, marks the first time that the United States has signed on to the idea that a “climate debt” is somehow owed to developing countries by advanced, industrialized ones. This is a remarkable precedent and probably what Obama meant when he said the Accord was “an important first step” before he left the Conference.
Through the Copenhagen Accord, a goal that would redistribute $100 billion a year by 2020 was agreed to by the developing countries. The U.S., the European Union, and Japan also agreed to provide $30 billion in financing to developing countries between 2010 and 2012. In addition the signatories have obligated themselves to “pursue opportunities to use markets to achieve cost-effective mitigation actions.” This is an important development for the United States as the Waxman-Markey Cap and Trade Bill was passed in U.S. Congress in 2009 and there is a possibility that it may pass the United States Senate in early 2010. In fact, at least one commentator has suggested that the outcome of the so-called “shameful” Copenhagen Accord could be that it boosts the odds for the U.S. Senate to pass a bipartisan cap-and-trade bill.
The passage of cap-and-trade in the United States would be the beginning of a truly global redistributive scheme, that would effectively take money from the American energy consumer and put it in the hands of foreign governments or foreign investors. With cap-and-trade, American consumers may possibly be taxed (through additional costs) every time they turn up the heat, use their air conditioning, drive a car and take a plane. Though China and India would be the main beneficiaries of this policy, anti-American countries in Latin America, notably Lula Da Silva’s Brazil and Hugo Chavez’s Venezuela, also stand to benefit from this transfer. Is there any wonder that Chavez railed against the United States and insulted Obama at Copenhagen-he was amongst Marxist friends who believe the West owes them a climate debt.
So, it is important to understand that the narrative of Copenhagen’s “failure” comes from the Left and is diversionary. For, the Copenhagen Accord was really just a patchwork agreement that was meant to ameliorate and gauge the present political environment on climate change and also supplement treaty provisions before the renegotiation of the Kyoto Protocol that expires at the end of 2012. The outlines of Kyoto II has already been agreed to at the Washington summit in 2007 by the way.
For his part, Obama has been given credit for bringing China to heel, and this, it is hoped, will also allow him to effectively advocate for passage of cap-and-trade in the U.S. Senate before 2012. But, the much reported spat between the U.S. and China at Copenhagen, was, in fact pure theatre. For one thing, the U.S. and China had already made an agreement in November that essentially mirrors in full the outcome achieved by the Copenhagen Accord. In a joint statement issued by President Barack Obama and President Hu Jintao on November 17 in Beijing, the two leaders agreed on a common approach and a successful outcome in international climate agreements. The joint statement expressly stated:
Regarding the upcoming Copenhagen Conference, both sides agree on the importance of actively furthering the full, effective and sustained implementation of the United Nations Framework Convention on Climate Change in accordance with the Bali Action Plan. The United States and China, consistent with their national circumstances, resolve to take significant mitigation actions and recognize the important role that their countries play in promoting a sustainable outcome that will strengthen the world’s ability to combat climate change. The two sides resolve to stand behind these commitments.
In this context both sides believe that, while striving for final legal agreement, an agreed outcome at Copenhagen should, based on the principle of common but differentiated responsibilities and respective capabilities, include emission reduction targets of developed countries and nationally appropriate mitigation actions of developing countries. The outcome should also substantially scale up financial assistance to developing countries, promote technology development, dissemination and transfer, pay particular attention to the needs of the poorest and most vulnerable to adapt to climate change, promote steps to preserve and enhance forests, and provide for full transparency with respect to the implementation of mitigation measures and provision of financial, technology and capacity building support.
Although we were told that the rift between the U.S. and China was about transparency, it was not a rift at all, but was an expected application of diplomatic pressure by China and other “emerging economies'” ( India, Brazil, South Africa, Mexico, and Korea) that would enable them to emit greenhouse gases and continue as a non-annex I countries well beyond Kyoto II. Staying in the classification reserved for developing nations, China and the other “emerging economies” understand that they could then continue to grow their industry while being allowed to apply less stringent reporting on their emissions. While the Copenhagen Accord sets up a framework for these “emerging economies” to report their mitigation efforts to the U.N., it also significant that the three-tiered Kyoto system apparently has remained intact.
Consequently, two significant details in the Accord seem designed to give China and others some wiggle room. Contained in the second annex, it is clearly stated that emission goals for “developing” countries are voluntary. This means that unlike developing countries who can be punished for over-emitting, developing countries will be allowed to stay in Kyoto II even if they fail to meet their goals.
Second, the langauge in the section concerning reporting and mitigation is weak as it allows “international consultations and analysis,” which would help keep track of whether the country is meeting its goals, but is not really an enforcement provision. There is also an escape clause in the agreement that provides the international consultations be designed “to ensure that national sovereignty is respected.” If “domestic imperative” provisions are carried over to Kyoto II, it is difficult to fathom that there will be any rigid international checks on the carbon emissions of countries with “emerging economies.”
However, there is another reason why the developing countries see it as beneficial to keep emitting with operational impunity but remain in the Kyoto regime: Carbon credits.
Essentially, China and India stand to make windfall profits if they are allowed to keep their emissions at or close to present levels. This is because those countries are the main beneficiaries of UN’s Clean Development Mechanism (CDM).This mechanism was formally created in 1997 by the Kyoto climate treaty and started operation in 1998. It began with 78 million “credits” (or Certified Emission Reductions, CER, as they are formally known) and grew to 333 million this year with a projection of 1.7 billion by the end of 2012.
Additionally, the global carbon market is one of the hottest items in town. In 2004, it was valued at less than $300 million. But in 2005, the trade really started to soar, ending the year with $10.8 billion-worth of transactions. A year later, in 2006, the “carbon” market had grown to $31 billion. In 2007, again it more than doubled its turnover, to $64 billion. Last year, it did it again, reaching a colossal $126 billion. By 2020, some estimates suggest the annual value of the market will reach $2 trillion.
This is why the renegotiation of Kyoto is a major milestone because at that time, there must be considerable will amongst policy-makers to commit their countries to long-range integration of parts of their national energy economies to a global cap-and-trade system. Although the European Union’s Emissions Trading Scheme accounts for 73 percent of the market at present, the whole enterprise is underpinned by “project based transactions” comprised mainly of the CDM generated carbon credits. The better positioned a nation is to benefit from the emerging global carbon market at the end of 2012, the more money they can make through the global carbon trading scheme. And presently, China, India and Brazil are positioned to do that in a big way. The chart below shows what countries own the most carbon credits under CDM:
This also explains why governments and investors from the West are chomping at the bit to establish a functioning system of carbon trading: Untold gobs of money can be had from the guilty, browbeaten citizenry of Western nations when prices are increased throughout the system by the taxation and regulation of carbon emissions. If you can pervert the mind of the energy consumer into accepting that they have a “climate debt” you no longer have to guarantee efficient and low-cost energy to them. Instead, if you have a population that believes it does not deserve to be warm in the winter and cool in summer and accepts higher energy prices as they support “development” in poorer countries, you have pulled off the greatest political rip-off of all times.
This is why Christopher Booker has said:
The only really concrete achievement of Copenhagen was to win agreement to the perpetuating of those Kyoto rules that have created this vast industry, which has two main beneficiaries. On one hand are that small number of people in China and India who have learnt how to work this system to their huge advantage. On the other are all those Western entrepreneurs who have piled into what has become the fastest‑growing commodity market in the world…The only tree they were concerned with hugging was the money tree and all the vast political apparatus that now supports it, allowing governments to tax and regulate us into handing over ever more of our money…