Eric Hutchens

January 11, 2010

Although the Copenhagen conference on climate change is this month, that event—and its strongest proponent, the European Union—has taken a backseat to important commitments and assertions made by world economic superpowers. China, in unilateral talks with the U.S., made pledges to slow emissions growth. While China stopped short of beginning to reduce emissions, it was nonetheless an important statement for two reasons. First, China's huge population is still largely rural and poor, making double digit growth a continuing likelihood for several years to come. Thus, any pledge to grow with more accountability will have large impacts in total global emissions. Second, the statements are among the first to indicate that China cares at all about the issue of global warming. This "foot in the door" should likely lead to deeper future engagement. Meanwhile, the U.S. has pledged reductions in the 17% area by 2020. This cut, deep by American standards, signifies the strongest commitment to reducing carbon emissions in years in the United States, and possibly ever.

Following these talks, India also set goals to, like China, slow the growth of emissions. Again, while this is far below EU goals, it is an important sign of accountability from the Indians, where carbon output per capita is still quite low. The pledges by the U.S. and China seem to be more persuasive for the Indians than the EU's "lead by example" strategies. This connection underlies the important relationship between global trade and global commitment to reducing carbon emissions.

As such a connection between economics and environment becomes more and more obvious, it is important to read such news with thoughts about a future global cap-and-trade system. Since the EU's stated goal is a global climate change system (and since a cap-and-trade system seems to be the consensus pick among carbon-control programs), all announcements made by these large countries could be thought of as steps towards an end outcome of globally-linked cap-and-trade systems. Clearly, the EU would be in favor of such a program. For countries such as India and China to join, however, they would demand conditions and allowances that compromise the overall goal of such a system.

The question becomes, therefore, is it worthwhile for the EU to join a cap-and-trade program that would engage India, China, and the U.S. but would result, at least initially, in an imbalance of carbon-reducing burden on the EU. Such a program would arguably do little for global climate issues during the first few years (when reduction is arguably most direly needed to stem temperature rise). Further, it could possibly sap the EU of industry and investment. However, engaging the economic superpowers sets the stage for future improvements: once the mechanism is in place, all that is needed is a substantive agreement. Further, the EU already faces difficulties maintaining the competitiveness of its economic base. If significant carbon allowances are to be granted to India and China, similar trade benefits ought to, and can be, effectively reciprocated to the EU, thereby protecting Europe's businesses.

Sources

James Kanter, Europe Bypassed on Climate Summit, N.Y. Times, Dec. 1, 2009.

India to Slow Emissions Growth, Wall St. J., Dec. 3, 2009.

Daniel Gros, Why a Cap-and-Trade System Can Be Bad for Your Health, Vox, Dec. 5, 2009, http://www.voxeu.org/index.php?q=node/4324.

Neil Peretz, Carbon Leakage Under the European Union Emissions Trading Scheme: Is It a Major Policy Concern?, 23 Tul. Envtl. L.J. 57 (2009).

Jody Freeman, Climate Change and U.S. Interests, 109 Colum. L. Rev. 1531 (2009).