Trade v climate change: what should developing countries be asked to do?

June 19, 2009

     By Duncan Green     

Last week, Oxfam published its proposals on how the burden of reducing carbon emissions should be shared between countries, both rich and poor. What struck me was the contrast with the stance Oxfam and other NGOs have taken in their advocacy on trade at the WTO and numerous other trade agreements. There, they have focused on what the rich countries must do (cut their subsidies, remove barriers to developing country exports), while stressing the importance of  retaining ‘policy space’ for developing countries to protect infant industries and generally practice an active industrial policy. The case for treating rich and poor countries differently is justified by history – industrial policy is an essential part of virtually all successful development take offs, as Dani Rodrik and Ha-Joon Chang have argued. But even though ‘developing countries’ in the WTO include everyone from Singapore to Mali, NGOs have assiduously avoided getting into discussions of ‘differentiation’ between different groups of developing countries, as this is seen (with good reason) as a divide and rule tactic practiced by the North.

Climate change is different, because (unlike trade) there is an absolute ceiling on the amount of emissions that the atmosphere can absorb without catastrophic warming. That means all significant emitters, even poor ones, will have to share the burden of reducing their emissions. Now Oxfam has bitten the bullet and laid out some ideas on how developing countries could be expected to contribute. Here are the bones of the argument set out in the paper:

‘Until developed countries take a leadership role consistent with their responsibility for emitting the vast majority of the atmospheric build-up of CO2 over the last century, and show that economic well-being and welfare can be maintained while drastically cutting emissions, developing countries cannot be expected to take the same kind or level of action as developed countries. Countries such as the UK and Germany have shown that it is possible to maintain economic growth while reducing emissions; other developed countries must also set this example.’

‘Yet even if industrialised countries were to cease all emissions from today, developing-country emissions alone would overshoot the 2°C pathway by 2020 on current trends. We now face a far greater climate challenge than when the Kyoto Protocol was first agreed over 10 years ago. Unbridled emissions growth in developing countries is no longer an option.’

‘A pathway to keep warming well within 2°C demands both that emissions in industrialised countries are reduced, well below the 1990 baseline adopted by the UN Climate Convention, and that emissions growth in developing countries be limited below ‘business-as-usual’ trajectories.’

‘The next commitment period that is agreed in Copenhagen needs to be a trust-building period that, as Stern argues, ‘…rewards developing countries for reducing emissions, but does not punish them for failing to do so’.’ So we’re not proposing ceilings for developing countries yet – rich countries first have to show good faith in cutting their own emissions.

Until that happens, the key to developing countries reducing their emissions is cash from the rich countries: ‘In order to receive funding, developing countries would create and submit a national mitigation plan. The national mitigation plan would identify the mitigation actions that the country proposes, the incremental costs of these actions, and the tonnes of carbon emissions that will be avoided (reduced) as a result.’ Developing countries should be financed on a sliding scale – the poorest countries should be 100% financed, the less poor ones partially financed.

By how much should developing countries reduce their emissions? Obviously that depends on whether the rich countries do their bit. If rich countries were to reduce their emissions by 40% below 1990 levels, that would provide sufficient ‘space’ to allow developing countries to continue to increase their emissions, albeit at a slower rate (something like 30 per cent below ‘business-as-usual’, although only a handful of experts have published relevant estimates).

Politically, this is pretty sensitive. The danger is that it feeds into efforts by opponents of climate change action to turn the negotiations into a ‘you go first’ stalemate between the rich countries and the big emitters in the South. But I think the emphasis on funding during a prior stage of trust building strikes a nice balance between the politics and the science.

June 19, 2009
Duncan Green