The Geopolitics of Emissions Reduction
Michael Robertson. February 2005
Alarmed by the prospect of global warming, a number of countries may sign up to a "Beyond Kyoto" Protocol with the aim of stabilising world greenhouse emissions for the next 30 years (after which they will be reduced). But what happens if the United States doesn't join up, and refuses to significantly cut back its emissions? Two measures could be used: moral pressure and trade sanctions.
Beyond Kyoto
Suppose that, alarmed by the prospect of global warming, a number of countries sign up to a "Beyond Kyoto" Protocol with the aim of stabilising world greenhouse emissions for the next 30 years (after which they will be reduced).
On the Protocol, the member countries form a single greenhouse-emissions cap-and-trade "bubble". Each month, a quantity of emission permits are auctioned to greenhouse emitting firms in the member countries, who may use them that month (to emit greenhouse gases), or save them up for later use or resale.
To keep administration costs down, small energy consumers such as households are not required to purchase permits; the permits are purchased by a smaller number of firms, mainly energy suppliers such as oil and gas companies, and some electricity generators. The revenue raised by auctioning the permits is returned to the member countries on a (roughly) per capita basis, on condition that it is spent on measures to accelerate each country's transition to a low-emitting economy, and to assist people and regions unduly affected by that transition.
The per capita basis of the redistribution results in a flow of funds from richer industrialised countries with high per capita emissions, to poorer less industrialised countries with lower per capita emissions. This is considered an acceptable by-product, as long as it doesn't become too burdensome. Allowance is made for poorer, high per capita emitters, and countries with special needs, or fewer alternative energy resources.
Recalcitrants
But suppose that the United States refuses to join the new Protocol, and does not submit its economy to the restraint of a limited supply of auctioned permits. And suppose that the Protocol countries, in an effort to keep global emissions stable, gradually reduce the supply of permits they allocate themselves, in order to offset US emissions which continue to grow.
We can imagine the Protocol countries using persuasion and pressure to convince the United States to reduce or at least stabilise its emissions. Moral pressure will be employed, and trade sanctions will be threatened. The effectiveness of these two measures will depend on the following conditions.
If the permits that the Protocol countries allocate themselves results in their having a combined per capita emission rate that is higher than the world average, then the moral pressure they can apply will be weakened. If they accuse the United States of effectively stealing emission permits from the rest of the world, the US can reply that the Protocol countries are doing so as well.
The need to arm itself with a strong moral authority will act as an incentive to include more low per capita emitting countries in the Protocol, although this will result in a greater flow of funds out of the richer, industrialised countries.
The effectiveness of trade sanctions will depend on to what extent could the Protocol countries go without trade with the United States, and to what extent could the United States go without trade with the Protocol countries. If China, Japan and the European Union joined to threaten trade sanctions against the US, if it did not did not sufficiently restrain its greenhouse gas emissions, then the US might be forced to cave in. If one of these countries (eg China) defected, and kept trade open with the United States, then such pressure would be greatly weakened.
The need to arm itself with stronger trade power would act as incentive for stronger economic ties between countries concerned about global warming.
Conclusion
Whatever multilateral arrangements countries may form in order to cooperate to slow global warming, these two factors, moral authority and the threat of trade sanctions will play an important role. Expect to see this shape geopolitics of the next few years as the richer industrialised countries with moderate per capita emissions such as Japan and Europe, increase economic ties with countries with lower per capita emissions, especially China, in order to face off against richer, industrialised countries with higher per capita emissions such as the United States and Australia.
2007.10.24