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Jan 29, 2013 No Comments ›› Toro520

Via Forbes:

Are the stars finally aligned for a global climate change treaty?

After years of frustration, momentum seemed to change in an instant last Monday.  President Obama’s second inaugural address made it clear he was going to lead the world on the issue, his words a “clarion call to action” as one observer put it.

Obama’s first term was marked by one failure after another on the climate issue.  For instance, his efforts to craft an agreement at Copenhagen in December 2009 were frustrated by developing nations, and subsequent conferences, such as the one last November and December in Doha, have not produced hoped-for progress.

At Doha, nations agreed to extend the Kyoto Protocol eight years to 2020, but few hailed the conference because the whole climate process, on balance, went into reverse.  China backed out of understandings made in 2011, states failed to reach meaningful carbon-reduction targets, and Kyoto fell apart as Russia, Canada, and Japan dropped out of the pact.  With the defections, Kyoto now covers less than 15% of the world’s emissions.  As the Canadian Broadcasting Corp. observed, the treaty has sputtered “to a sorry end.”

The U.S. never ratified Kyoto because the Bush administration sensibly decided not to support any arrangement that did not include emission caps for developing nations like China, the world’s largest emitter of greenhouse gases.  By now it’s clear that all countries will need to accept firm caps on emissions if there is to be a global climate pact.  Will Beijing now drop its “knee-jerk” opposition to an enforceable emissions limit?

There are three tantalizing signs it might, starting with the off-the-charts smog that blanketed northern China this month.  In Beijing, the level of dangerous PM2.5 particulates was more than 39 times higher than World Health Organization guidelines.  In Zhejiang province, a factory burned for three hours before neighbors realized the smoke was not smog.  Artist-turned-dissident Ai Weiwei famously posed in a gas mask.  In the most polluted country on earth, the “seemingly never-ending haze and fog” was the worst ever.

The resulting health crisis seems to have galvanized middle-class opinion where it counts, in the country’s coastal cities.  In response, government officials have had to drop rhetorical opposition to strong measures to clean up the air.  Now, they are merely trying to lower public expectations by saying, as the incoming premier did this month, that the clean-up will be “a long-term process.”

The second reason Chinese leaders might agree to emission caps as part of a global bargain is that they think they may be able to meet them, especially if their obligations are not onerous.  Zhou Shengxian, China’s environment minister, this month said that emissions of four major pollutants—sulfur dioxide, nitrogen oxides, chemical oxygen, and ammonia nitrogen—all fell 2% in 2012 and will drop by similar levels this year.

Moreover, Beijing says it plans to reduce carbon dioxide emissions by as much as 45% per unit of GDP by 2020.  “Cutting emissions is the only possible solution to a long list of development woes as a result of the blind pursuit of high growth rates for decades,” notes Li Junfeng, director of the National Strategic Research and International Co-Operation Centre for Climate Change, which is affiliated with the powerful National Development and Reform Commission.

The most important reason Beijing may accept emission caps is that a global pact will be all about money—money for China.  The country is already a recipient of environmental cash as it possesses nearly half of the world’s 4,200 projects supplying offsets in the U.N. Clean Development Mechanism.

Now Beijing wants even more dough.  The Doha conference produced one advance for climate activists by establishing the principle that developed nations have a responsibility for compensating poorer ones for damage due to climate change.  The rich had previously agreed to provide assistance for clean energy and other purposes but had not acknowledged an obligation for fixing the changing climate.

That changed in Doha.  “It is a breakthrough,” said Martin Khor of the South Centre, an organization of 52 developing states, to the BBC.  “The term Loss and Damage is in the text—this is a huge step in principle.  Next comes the fight for cash.”

The Doha text “encourages” rich nations to contribute at least $10 billion a year up to 2020, when a global deal is supposed to replace Kyoto.  For Beijing, that was not good enough.  The Chinese essentially scuttled the talks last month by demanding a tenfold increase in aid from developed nations, wanting $100 billion a year by 2020.  For Beijing, climate is a money issue.

Why?  The Chinese central government is cash-strapped these days and so does not want to commit to making big expenditures.  Moreover, China’s powerful state enterprises—the polluters—have indicated they will not pay either.  Similarly, local interests have already been fighting the central government’s environmental efforts, and they are sure to ignore any emission commitments Beijing might make if they have to bear costs.

Of particular concern are the country’s oil refiners, whose influence has increased as more cars have hit the roads.  They have refused to make upgrades because costs cannot be passed on to drivers, and they will not cooperate with clean-up mandates until the Ministry of Finance picks up the tab.

Another sector that can block change is steel.  In recent years, PM2.5 from China’s coal-fired generating stations fell while it increased from coal-powered iron and steel plants, which have successfully fought environmental rules with the support of local officials needing the tax revenue they provide.

The story in oil and steel is, in broad outline, repeated across China’s industrial sectors.  With the recent rise of state enterprises in the Chinese political system, it’s clear they will not be paying for environmental upgrades needed to meet the international commitments Beijing takes on.

And this means a climate change treaty is about who pays.  President Obama may be able to coax China into accepting a global accord, but to do that he will need to get the American taxpayer to subsidize Chinese industry.  The climate in Congress, however, will undoubtedly prevent any bargain of that sort.