Climate Change, Kyoto and impacts on China and India

The Economist has two interesting articles on the impact of climate change.

One is a leading article on what might succeed Kyoto and apart from

mentioning the fact that someone is seeking to turn Al Gore’s Inconvenient Truth into an opera, which may well give a whole new meaning to the phrase ‘it ain’t over til the fat lady sings’ outlines the shape of a deal which might benefit everyone:-

Again, the outlines of a deal are clear. The rich world should agree to increase the flow of clean investment dramatically, in exchange for a promise from fast-growing developing countries to take some steps of their own to curb emissions. That should not be such a hard sell in China and India. After all, their governments are all too aware of the devastating consequences if global warming were to cause the Himalayan glaciers to melt, or crop yields to fall . Moreover, Chinese and Indian firms, in particular, have become accustomed to the flow of funds from the CDM, and would be unhappy to see it evaporate.

Western countries would benefit too, thanks to the lower cost of cutting emissions abroad. That is why the European Union allows international offsets to be used in its “cap-and-trade” scheme. In this, governments issue a set number of permits to produce greenhouse gases, obliging firms to cut their own emissions or buy spare permits from others. The cap-and-trade scheme that America’s Senate began debating this week would also allow firms to fulfil some of their obligations through green investments in other countries.

The problem as so often is the American Congress, which is likely to restrict the amount of offsets, to factories that do not compete with American ones – nonsensical to say the least- and thus panders to the anti-trade, anti-China brigade. This is made worse by the fact that the Congress is contrlled in both houses by the Democrats and even worse by the fact that Barack Obama has shown himself to be weak on trade issues.

The second article focuses on China and India and the potentially huge impact climate change could have on the Himalayan glaciers and thus on the water resources of both countries.

As the article notes:-

The vast and sparsely populated Tibetan plateau is the origin of the great river systems of China, South-East and South Asia: the Yangzi and Yellow Rivers, the Brahmaputra, the Indus, the Mekong and the Salween. The Ganges rises on the Indian side of the plateau’s Himalayan rim. These rivers, fed by thousands of Himalayan glaciers, are an ecological miracle. They support some 1.3 billion people.

In the article the Economist discusses what is happening in both China and India and notes that China in fact may be responding more rapidly to the issue.

For a variety of reasons, including a desire to enhance the living standard of it’s people India is seen by some as somewhat of the villain of the piece, perhaps more so than China:-

At Bali, India Supported by other developing countries, they also watered down the draft’s most radical feature: a pledge by developing countries to undertake “measurable, reportable and verifiable” efforts to cut their emissions. At India’s instigation, the paragraph in which this phrase appeared was reshuffled, leaving its meaning unclear.

With such tough tactics, India has acquired an ugly reputation on the global front against climate change. Among big countries, perhaps only America and Russia are considered more obdurate. Although China has shown no inclination to commit to specific emissions-cutting targets in the post-Kyoto discussions, some Chinese academics familiar with the process say that after China reaches a certain per head emissions level it might agree to cut emissions. It is anxious not to be cast as a global-warming villain, particularly given pressures mounting on it over issues ranging from trade to Tibet. China is looking to America for its cue. If America commits itself to carbon cuts, China will feel obliged to make some kind of promise too.

Many see India as unhelpful by comparison. Almost nothing could annoy India more. Partly in response, perhaps, Mr Singh has shown some flexibility.

China is seeking to curb/rein in it’s emissions for a variety of reasons including security and public response to other major pollution issues.

The article concludes:-

Both countries are meanwhile trying to develop their renewables sectors. For example, India is the world’s fourth-biggest producer of wind power. Its solar yield is also bigger than any country except America. Still, in the coming decades, both countries will remain heavily dependent on coal.

These developments have the potential for India and China as well to harness the intellectual capability of their people and become leaders in the area of mitigation and alternative forms of energy.

Which is why rich-world climate activists are placing their faith in two factors that appeal to India’s and China’s self-interest. The first is the Clean Development Mechanism (CDM), a scheme whereby companies in rich countries outsource their obligation to cut carbon emissions, by sponsoring carbon-cutting schemes in poor countries. The CDM both allows emissions to be cut efficiently, because reductions take place where they can be made most cheaply, and offers developing countries an incentive to clean up.

China, which has put a lot of government effort into it, has done far better than India out of the scheme. Last year China made more money than any other country out of rich-world polluters—$5.4 billion, or 73% of the total. India, which, along with Brazil, came second, made $445m, 6% of the total. There are, however, question marks over the future of the scheme, because some rich-world businesses and politicians are beginning to argue against handing over such large sums of money to Asia. China, meanwhile, says that it needs not just money but also clean technology, and accuses rich-countries of being tight-fisted with their intellectual property.

This may drive the development of alternative schemes to offsets such as carbon taxes.

The second factor that may encourage China and India to become greener is the growth of indigenous alternative-energy companies. There, both China and India can claim some remarkable successes.

China’s Suntech, which was founded in 2001, is the third-largest manufacturer of solar cells in the world. India’s Suzlon Energy is one of the world’s five biggest makers of wind turbines; 15 years ago it was a modest Gujarati textiles firm. Both countries have innovative companies hungry to make money abroad and in growing local markets. As such firms grow, so will the volume of calls for more climate-friendly policies in China and India.

This is good. And yet, at a time of fast-melting glaciers and strange rains, of spreading deserts and rising seas, it is a frail and distant promise. As China and India awaken to climate change, few of their leaders and thinkers seem to expect a more solid solution: an ambitious replacement, or refreshment, of the Kyoto protocol. Such an accord would have to involve more specific commitments from China, India and other developing countries. But it would depend, first of all, upon binding action by the developed world.

Legitimately though India and China are entitled to demand that the developed world takes action also. It is not fair to penalise the developing world.

In this regard the prospect of a President McCain or Obama may well be helpful, if they can deliver and if what they deliver is not so bound up with exclusions and restrictions that it is worse than useless. Nor can the world afford the luxury of taking the sort of extended negotiation period that the Doha Round has taken.

Now all this is not to say that Adam is convinced that Climate Change as promoted by Al Gore is happening, rather he thinks that taking the steps necessary is likely to have tangible benefits in reducing overall pollution and driving the development of new technologies to deal with the potential decline in oil supplies for example.

The two articles referenced are useful contributions to understanding the issues.

Adam considers that in considering the impact upon China and India readers would do well to remember that both countries are emerging economic super powers and have a long history of rivalry.