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The Honolulu Advertiser
Posted on: Friday, November 30, 2007

COMMENTARY
Global effort needed on climate change

By Sebastian Mallaby

Hawaii news photo - The Honolulu Advertiser

Clouds of smoke billow from a metal alloy factory in Gaolan county in China's Gansu province Nov. 7, 2006. China is expected to over-take the United States as the world's biggest polluter.

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The good news on climate change is that the world wants to do something. It's no longer just the Europeans and a few fellow travelers; a recent survey suggested that 96 percent of South Koreans and 66 percent of Ukrainians regard global warming as an important threat. The latest report from the Nobel-anointed Intergovernmental Panel on Climate Change got the blanket media coverage it warranted. In the United States, business and congressional leaders have decided action is inevitable.

Then there is the bad news: None of these fine sentiments will matter unless a critical mass of countries unites around a real policy. And unity is miles away. Former Treasury Secretary Larry Summers remarked recently that today's climate debate is like the U.S. health care debate of 15 years ago. People agree that action is essential, but they disagree so fiercely on the details that action may prove impossible.

Start with the international arena. Delegates from around the world will meet next month in Bali, supposedly to launch negotiations on a successor agreement to the Kyoto Protocol. But there is no consensus on what these negotiations should accomplish. Should they aim to create some kind of global cap-and-trade system? Should they go for a series of narrower agreements on biofuels, forest conservation and so on? The first task in Bali will be to negotiate what to negotiate about.

The one certainty in Bali is that excessive ambition will backfire. The failure of the Doha trade talks has shown that the multilateral system is clogged: It cannot deliver tariff cuts even though the intellectual case for trade is more widely accepted than at any time in recent history — think of the transformation of once autarkic nations such as Brazil, India and China into successful globalizers. Given Doha's failure, the idea of negotiating a global cap-and-trade regime seems absurdly ambitious. Trade boosts countries' prosperity, so a deal should in principle be doable. But climate action imposes costs, and negotiators are likely to argue forever about who pays what.

Some argue that the United States should force collective action on foreign foot-draggers. The leading Senate climate bill, written by Joe Lieberman and John Warner, would threaten countries that fail to curb emissions with a quasi-tariff. The logic is that, if rich countries limit emissions while developing countries don't, greenhouse-gas-intensive industries will migrate to developing countries. If developing countries have dirtier factories than rich ones, the perverse effect of limits on greenhouse gases in the U.S. might be a rise in global emissions.

Then there is the disunity within the United States. Many economists favor a carbon tax over cap-and-trade, mainly because the complexity of cap-and-trade systems opens the door to political mischief.

Maybe Congress can produce a cap-and-trade bill that avoids these pitfalls. Lieberman-Warner is an honorable effort; the risk is that lobbies may dilute it if it gets close to enactment. Even as it stands, the bill would initially give away two-fifths of the permits to polluters, which would blunt their incentive to curb emissions. Cap-and-trade systems are politically popular precisely because they disguise this sort of horse trading and make change sound painless. If politicians were willing to admit that an emissions cap amounts to disguised taxation, they would go ahead and propose just that — a tax.

So it's great that the world wants to act on global warming, and it's remarkable how fast the mood has changed. But we are a long way from clarity and honesty.

As deadlocked trade diplomacy tells us, it's one thing for the nations of the world to declare that they want action. Brokering the compromises that make action possible is altogether harder.

Sebastian Mallaby is a fellow for International Economics with the Council on Foreign Relations. He wrote this commentary for The Washington Post.