Tuesday, January 03, 2012

Kyoto extended: China, India & USA get on board

“The Durban summit marked the start of a new era, when all nations - from the richest to the poorest, the profligate as well as the thrifty - finally committed to curbs on their greenhouse gas emissions. The participants agreed that by 2015 they would finalise binding targets that will, for the first time, cover the majority of the world's emissions,” says New Scientist.

The latest Conference of the Parties (COP) in Durban agreed to work towards an agreement that legally binds all 194 nations – including China and India – instead of just the ‘rich’ countries. It was both “hard won and significant,” says ABCTV’s in-house economist Alan Kohler. There were 194 countries represented in Durban. This is good news for Australian farmers because it brings the linking of the Carbon Farming Initiative to global markets that much closer.

Why has it taken so long for the nations to agree to agree, even if they basically agreed to put off action until 2020? Twenty years ago the nations of the world made a very bad deal. “The basic problem is that 20 years ago the world was a very different place,” says Kohler. “Tiananmen Square had just happened and China was 10 years away from joining the World Trade Organisation. It was clearly a poor, developing country, as was India.” The original 1992 treaty excluded China from the “economies in transition” included in Annex 1 (mainly countries emerging from the USSR).

The bad deal? It was agreed that developing countries did not have to reduce greenhouse gas emissions unless they were paid to do so by Annex 2 countries. (Annex 2 is a sub-set of Annex 1, made up of what were the 23 richest countries, including the recently impoverished states Greece, Italy, Spain, Portugal, Ireland and Iceland.)

The 1997 Kyoto Protocol was the legally binding agreement between the 41 Annex 1 countries to reduce emissions by 6-8 per cent of 1990 levels between the years 2008 and 2012. President Clinton signed but Congress refused to ratify.

Negotiations staggered on from COP to COP. And the world changed: China “became the greatest manufacturing exporter the world has ever known. Within 10 years it had more or less bankrupted the United States and Europe by maintaining an undervalued currency and helping to keep their interest rates down,” says Kohler. “The result is that China is now rich and Europe and the US are poor. Some European nations are destitute and should definitely not be in Annex 2, and probably not even Annex 1.”

China is now the world’s largest greenhouse gas emitter (23% of emissions in 2008 – USA 18%, Europe 14%). The breakthrough at Durban is that the next climate change treaty will bind all nations, not just the ‘developed’ and the ‘rich’. But the deal includes a new fund, called the Green Climate Fund: $US100 billion to be paid out by the developed to the developing countries. Meanwhile the Kyoto Protocol has been extended to 2020. “But at least a ‘road map’ was agreed,” says Kohler.

It leaves Australia out front with the EU, NZ and several states of America. And there is every likelihood even a 2015 deadline will be difficult to meet, because the ‘rich’ countries will be much poorer and the developing countries – including China, Brazil and India – much richer. “As time goes on, the idea that Europe, America and Japan can, or should, pay the others $US100 billion a year to help them deal with climate change will seem more and more preposterous,” says Alan Kohler.

What stung the former refuseniks to change their attitude to signing a binding agreement? Canada.

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