Mon, Jun 08, 2015 - Page 9 News List

‘Climate club’ could induce global change

An innovative strategy that punishes nations’ failure to curb emissions could turn the tide before catastrophe hits

By Eduardo Porter  /  NY Times News Service

Few economists are as versed in the global diplomatic effort to combat climate change as Nicholas Stern of Britain.

So it was particularly distressing to hear him say, at a debate in New York a few weeks ago, that the international effort to achieve a worldwide climate agreement in Paris in December is already falling short on its most critical goal: The various pledges by nations to cut their emissions of heat-trapping greenhouse gases, he said, would not be enough to prevent the Earth’s temperature from rising beyond the level that scientists consider the tipping point to devastating environmental disruption.

Stern does not call this “failure.” At least emissions would be lower than without a deal. He also expects the agreement to include a mechanism to review progress every few years, so countries might ramp up their efforts to cut emissions as needed.

“This is very much worth having,” he said.

However, perhaps the word failure fits. More than a quarter-century of fruitless efforts to induce the world’s major greenhouse gas polluters, like China and the US, to significantly cut their emissions suggests that the entire approach might be fundamentally flawed.

Such failure indicates that getting nations to make the costly, but necessary, investments to reduce their greenhouse gas emissions requires more than diplomacy. It requires a big stick.

Consider the US, the world’s No. 2 greenhouse gas emitter.

What if every other advanced nation, as a way to encourage energy efficiency and spur investments in alternatives to fossil fuels, agreed to put a price of US$25 per tonne on carbon dioxide emitted into the atmosphere? As a tax, that would add about US$0.22 to the price of a gallon (US$0.06 per liter) of gasoline, something few US politicians — fearing public anger — are yet ready to consider.

According to calculations by William Nordhaus, an expert on the economics of climate change at Yale University, the US, on net, would gain US$8 billion a year by benefiting from everybody else’s efforts to slow down the Earth’s warming without having to exert any effort itself.

However, if the other advanced nations had a stick — a tariff of 4 percent on the imports from countries not in the “climate club” — the cost-benefit calculation for the US would flip. Not participating in the club would cost Americans US$44 billion a year.

This sort of approach offers perhaps the best chance of preventing a climatic upheaval.

In an article published in April in The American Economic Review, Nordhaus proposed just such a climate club, in which nations committed to reducing carbon emissions would impose a uniform tariff on imports from nonmembers.

Even if they agreed on a carbon price of as much as US$50 a tonne — which is consistent with the White House’s estimates of the overall costs imposed by climate change on society — a fairly low external tariff could induce near-universal participation in the club.

“The idea is exciting and provocative,” said Scott Barrett of Columbia University, one of the world’s leading experts on the dynamics of climate diplomacy. “He is aiming at a central problem in a direct and ambitious way.”

Martin Weitzman, a professor of economics at Harvard University and coauthor of Climate Shock, published by Princeton University Press in February, agreed.

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