Posted August 7, 2009. Stiglitz is tops at international economic agreements.
Chapter 6: Saving the Planet, from Making Globalization Work
... The basic principle of the Kyoto Protocol -- targets based on reductions from 1990 levels -- makes no sense to the developing countries. By this logic, the poor countries, which polluted less in 1990, have less of an entitlement to pollute in the future. They naturally ask, "By what right are the developed countries entitled to pollute more than we are, simply because they polluted more in the past?" Their argument goes the other way: because the United States polluted more in the past. it should be made to pollute less in the future. At the very least. they argue, they should have the right to emit the same amount per capita as the United States. ...
The United States has not provided any coherent defense of why it should be entitled to pollute more than others; no one has really provided a reasoned defense of the premise underlying Kyoto. ...
If the Kyoto approach is to work, a compromise will have to be found between targets based on emissions per dollar of GDP and targets based on emissions per capita. If the standard is based even partly on emissions per capita, the United States will have to increase its energy efficiency at a far, far higher rate than it has done so far. Right now, there seems to be little prospect of the United States voluntarily doing this, and thus the targets approach is destined, I believe, quickly to reach an impasse. ...
The principal difficulty with Kyoto, as we have noted, is agreeing by how much each country should reduce its emissions. ... but I doubt that we will find an agreement acceptable to both the United States and the developing countries within the Kyoto approach. There is no set of generally accepted principles for allocating rights to usage. ...
The simple solution: make people pay for the full costs of what they do; that is, make them pay for their pollution. The way to do this is to have all the countries of the world impose a common tax on carbon emissions. ... What, then, is the advantage? It avoids setting national target levels. ...
Setting target levels is so contentious because allowing a country high emission levels is tantamount to giving it money—a fact that has become more obvious with the advent of carbon trading. ...
Under the common tax proposal, all of these issues are avoided. Each country would keep the revenue it receives from the tax, rather than having to give the money to another country.
With the world having invested so much in the development of the targets approach, it is understandable that there will be reluctance to abandon it. Yet there is not even a glimmer of an idea at the moment of how targets can be set that will be acceptable both to the United States and to the developing countries. ...
A commonly imposed tax on emissions may yield more or less reduction than anticipated, in which case we may want to lower or raise the tax rate. ...
Finally, even as I commend Europe and Japan for making commitments, on their own, to reduce their emissions and working hard to fulfill those commitments (though they will have to work still harder), I argue that these commitments by themselves will remain largely gestures unless the rest of the world can be brought along. This may entail significant assistance to developing countries.
