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Trading away our chances to end global warming

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Source: Boston Globe, 5/16/99

Trading away our chances to end global warming

By Ross Gelbspan, 05/16/99

Announcements of the ''hottest year in recorded history'' are becoming annual events.

The escalating losses from severe storms, droughts, and floods is sending shock waves through the property insurance industry. Last year's 9,000 hurricane casualties in Central America and the $1 billion in damages earlier this month from 318-mile-an-hour tornadoes are two recent examples.

The signs of warming-driven changes to our climate have become impossible to ignore. Despite congressional opposition, the United States will ultimately have to join the rest of the world in tackling the potentially catastrophic problem of global warming by cutting emissions of heat-trapping carbon dioxide from coal and oil burning.

But the Clinton administration's mechanism-of-choice for those reductions centers around a dubious system of international ''emissions trading'' designed to find the least costly ways for wealthy nations to reduce emissions.

Unfortunately, by embracing unrestricted trading, the administration is pandering to the fossil fuel lobby, alienating allies in Europe and the developing world, and ignoring what nature requires to keep this planet hospitable to civilization.

Scientific research states unambiguously that to stabilize the climate requires cuts of 60 to 70 percent in emissions. Against that background, a loophole-riddled paper system of international carbon trading is no more than an expression of institutional denial.

To truly address the climate crisis we need to embark now on large-scale energy efficiency and conservation programs. Ultimately we need a global project to replace coal-burning power plants, oil-burning furnaces and gas-burning cars with low-carbon and renewable energy. That kind of frontal approach, moreover, could substantially expand the real wealth and the stability of the global economy far more than a system of illusory trading credits.

Two years ago, 160 nations met in Japan to forge the Kyoto Protocol, which calls on wealthy nations to cut emissions by the year 2012. The US obligation amounts to 7 percent below 1990 levels. Developing nations will cut emissions under the next phase of the treaty.

Since the Kyoto agreement, the concept of permit trading has gathered momentum. Companies are researching schemes to pay others to preserve or increase their own emissions. The World Bank is attempting to price emissions to jump-start a trading market. Even the Environmental Defense Fund plans to make money by brokering carbon trades.

Trading between industrial countries allows a nation (or company) that reduces emissions by more than its quota to sell off leftover rights. Under a North-South variation, a company in the North can get credit for ''emissions avoided'' by paying for low-cost reductions in a developing country - planting trees in Costa Rica, upgrading old Chinese generating plants or financing coal cleaning equipment in India. But the ''emissions avoided'' will exist as accounting artifacts with little impact on our overheated atmosphere.

Most European and developing countries are angered by the Clinton administration's insistence on achieving virtually all cuts through trading - with no meaningful reductions at home.

The recognition is growing, moreover, that trading is simply inadequate to the climate crisis. ''International carbon trading is a scam that is going to give emissions trading a bad name,'' said John Henry, a Washington-based entrepreneur who made sizable profits brokering trades for the domestic US sulfur dioxide trading program.

Henry explained the domestic sulfur dioxide trading program worked because virtually all those emissions came from 2,000 smokestacks - a manageable number to monitor. Moreover, the program operated under an enforceable national regulatory system. By contrast, carbon is emitted from millions of sources all over the world - far too many to monitor. And there is no international regulatory system to enforce emission limits.

The reliance on permit trading, moreover, is inflaming North-South relations. In assigning quotas, the wealthy nations adopted a 1990 baseline to ensure continuity of their economies. But developing countries want allocations based on a more democratic per capita formula. Since an average American uses 20 times the carbon fuel of his Indian counterpart, a per capita system would scuttle the US economy.

A leading Indian environmentalist points out that the Kyoto Protocol allows wealthy countries to buy limitless amounts of cheap reductions in poor countries. That means that when developing nations must cut their own emissions under the next phase of the Protocol, they will be left with only the most expensive options, said Anil Agarwal, of the Centre for Science and Environment in New Delhi.

Trading appeals to the prevailing antiregulatory, free-market mentality. But that mentality ignores the physical realities of the planet. The laws of supply and demand do not supercede the laws of nature. We can't buy off the climate with derivatives.

The climate crisis requires binding international regulation. One possible approach involves changing subsidy policies, removing barriers to energy competition, adopting progressively higher efficiency rates, and paying for the transfer of clean energy to developing nations.

The United States spends $20 billion a year subsidizing fossil fuels; globally the figure is about $300 billion. If those subsidies were diverted to renewable energy (with a portion set aside to retrain coal miners), it would create a big incentive for oil companies to develop solar, wind and hydrogen technologies.

A meaningful regulatory response would remove barriers to free energy competition, especially protections for dirty, utility coal-burning plants. It would also establish a progressively more stringent fossil fuel efficiency standard.

In the United States, that would increase the efficiency of electrical generation from its current 35 percent efficiency rate to the 70-to-90 percent available with cogeneration technology. It would increase the dismally low gasoline mileage of cars by phasing in more efficient and alternative-fuel vehicles. And it would create the mass market renewable energy needs to become economically competitive with fossil fuels. Internationally, if each country began at its current baseline to increase its efficiency by specified amounts at designated intervals, it would eliminate the North-South impasse over the inequities of carbon trading.

Finally, since emissions from countries like India, China, Mexico, and Brazil will soon exceed our own, a fund is needed to transfer climate-friendly energy to poor nations. A tax on international currency transactions seems the most equitable, broad-based, and invisible mechanism.

With $1.5 trillion a day in currency transactions, a tiny tax of a quarter of a penny on a dollar would generate $200 billion to $300 billion a year for wind farms in India, cogeneration plants in South Africa, and solar assemblies in El Salvador. The tax, conceived by James Tobin, the Nobel laureate in economics, would help stabilize the destructive volatility of capital flows at the same time.

This kind of plan would do more than help return the global climate to the relative stability it has enjoyed since the end of the last Ice Age. It would create millions of jobs all over the world and allow poor nations to raise living standards without compromising economic achievements in the North.

Schemes like ''emissions trading'' look neat on paper. Unfortunately, they will not slow the melting of the earth's glaciers, the breakup of Antarctic ice shelves, rising sea levels, warming-driven migrations of disease, the intensification of El Ninos, and the relentless increase in floods, droughts, and severe storms.

To do that we must restore the 10,000-year-old balance of our atmosphere that we are destroying with the 6 billion tons of carbon we emit every year.

Ross Gelbspan is the author of '' The Heat Is On '' ( Perseus Books).

This story ran on page E02 of the Boston Globe on 05/16/99.

Copyright 1999 Globe Newspaper Company.

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