Poor countries should use the same carbon price as everyone else

During Bali, everyone was telling the US that China’s lack of a binding emissions reduction plan is not a reasonable excuse for not having one yourself. It is a fair point. Many environmentalists and Southern politicians also argue that any obligation to reduce emissions rests with the North.

There are four reasons that are given for turning a blind eye to China (and the South): (i) its per-capita emissions are much lower than those of developed countries (true, see chart), (ii) Northern countries have a larger historical responsibility for the emissions already in the atmosphere (true), (iii) many parts of China are very poor and we should not hamper their development (agreed), and (iv) much of China’s emissions are associated with its exports to the North, which is ‘outsourcing’ the pollution that results from manufacturing its goods.

From a perspective of developing a global plan for reducing emissions, all but the last of these arguments are True But Irrelevant. Climate science clearly shows that it is the absolute volume of greenhouse gases that is important, and dividing a country’s emissions by its population has no bearing on the environmental risk associated with the emissions.

In fact all emissions – no matter what the current or historical intensity of their source – must be assigned the same cost if we are to achieve a global cap without ‘leakage’. Leakage is where global production lines arbitrage between weak and strong emissions regimes. Production is located under a weak or non-existent regime and the resulting high intensity goods are sold to consumers in strong regimes, distorting trade relationships and undermining the environmental benefit of the strong regime.

The question is not who should reduce and under what relative conditions, but how should the international community structure aid to China and the South so that the carbon price does not adversely affect welfare or development. Something much more ambitious than the Clean Development Mechanism is required.

The last argument – that we are exporting pollution to the South and it is our responsibility – is false. The emissions associated with domestic consumption (which according to recent Tyndall Centre research are 77% of the country’s total emissions) are growing very quickly too. Chinese production methods, whether for export or the Chinese market, are very polluting and it is the Chinese government’s responsibility to manage them.

A possible stepping stone between a global carbon price and the current situation of leaky national and regional regimes would be to negotiate carbon ‘tariffs’ for Northern countries. Importers would have to buy credits when importing goods from countries with no cap, increasing the price and encouraging producers to invest in more efficient processes.