An agenda for the Federal Reserve’s review of its monetary policy framework


An agenda for the Federal Reserve’s review of its monetary policy framework



Climate Dèjà Vu

Nigel Purvis
Nigel Purvis Former Brookings Expert

December 10, 2007

Admirably, Europe has led the world on climate change. Yet, unless Europe learns from the Kyoto experience, the world may miss its chance to avert a severe climate crisis.

Ministers from 190 nations are gathered now in Bali, Indonesia, to complete by week’s end a roadmap for negotiating the next global climate change treaty. The 1997 Kyoto Protocol expires in 2012 and new international arrangements are urgently needed.

Chancellor Merkel and other European leaders have stressed the importance they attach to completing the climate roadmap now and finalizing the new treaty in 2009. Europe favors an agreement that would obligate all developed countries to reduce emissions 30% by 2020 compared to 1990 levels, with less stringent but nonetheless meaningful contributions from developing nations.

President Bush’s concept of an acceptable climate treaty is one built around non-binding pledges, with each nation pursuing whatever mix of policies it chooses to adopt. Europe is right to reject the Bush proposal as totally inadequate. Fortunately, American climate policy will improve when President Bush leaves office in January 2009, regardless of which political party wins the White House. But for now the U.S. position may present an obstacle to securing a good roadmap in Bali since all decisions there must be made by consensus.

And the United States is not the only problem for Europe. While developing nations increasingly understand that the risks of climate change outweigh the costs of climate action, they are also worried about fairness. Per capita emissions in developing nations remain relatively low and many of these countries lack the means to do much on their own. Even rapidly industrializing nations such as China and India, which are among the world’s leading climate polluters, are seeking written assurances in Bali that the next climate treaty will contribute to their sustainable development rather than constrain their economic growth.

Does this negotiating dynamic seem familiar – Europe at odds with the United States, China and India asking for more time and special favors? It should. In 1995, the international community met in Berlin to draft the terms of reference for what would become the Kyoto Protocol. Then, China and India sought Europe’s help in resisting American demands that all major emitters limit their emissions. In Berlin, European negotiators sided with developing nations in exchange for their support for the Kyoto process and for help in pressing the United States to do more. Many in Europe believed China and India where right in calling for developed countries to set an example by reducing emissions first. Seeing they were diplomatically isolated on this point, U.S. negotiators backed down and the so-called ‘Berlin mandate’ explicitly ruled out new climate commitments by developing nations. Reaction in the United States to the Berlin mandate was so negative that the Kyoto Protocol never really had a chance. In fact, the U.S. Senate unanimously adopted a resolution rejecting the approach taken in the Berlin mandate several months before the Kyoto treaty was even finished.

This time around European policy makers insist that advanced developing nations must also take action. Yet, in the heat of the negotiations this week European negotiators may be tempted to characterize in rather soft terms what is expected of China and India in exchange for support from these key nations for completing the roadmap in Bali and endorsing Europe’s call for legally binding emission targets for developed nations. In fact, at last month’s preparatory meeting to the Bali conference European environment ministers were reported to have explored a bargain of this nature. Striking such a deal in Bali would be dangerous for several reasons.

First, the urgency of the climate problem requires strong action by all major emitters. The world simply cannot afford to give China and India assurances that they will not be asked to make some sacrifices. Given their state of development and limited responsibility for climate change, all developing nations deserve help and market-based incentives hold great promise. But fundamental policy and industrial reforms are also necessary to avoid uncontrollable emissions growth in advanced developing nations. A spoonful of sugar helps the medicine go down, but sugar alone does little to cure an illness.

Second, any suggestion of a sweetheart deal for China and India could provoke an American backlash. Whether fair or not, the Bali framework could be characterized by influential voices in the United States as an unacceptable repeat of the Kyoto process, even if the Bush administration endorsed it. A strong negative attack on the Bali process now could make it difficult for the United States to join the new climate treaty and might also undermine the real progress being made in the Congress toward a mandatory national emissions target.

Third, the United States is far more likely to join the new climate treaty if the contributions of all major emitters, including the United States, China and India, are worked out with the active participation of the next U.S. President. To secure U.S. participation Europe needs a new President to champion an eventual deal as his or her own, and that cannot happen easily if the die is cast in Bali.

Finally, there is no need to get specific in Bali about what China, India or the United States need to do. A strong international consensus exists for opening new climate negotiations. While every nation would like the Bali roadmap to give it an edge in the negotiations that will follow, no nation will block agreement on a roadmap that leaves all options and directions open. A stronger agreement will be easier to negotiate later.

Europe was right to move forward with Kyoto despite U.S. opposition, and it should not bow to America now. But if Europe wants the United States to join in, it must consider the political consequences of deciding too much too quickly. By leaving key issues open now Europe would create space for the next U.S. President to join the call for strong action by all major emitters. In contrast, another Berlin mandate, or the suggestion that rapidly developing nations need not make any sacrifices, could set back global climate diplomacy another decade, with potentially catastrophic consequences.