Why a Global Climate Deal Will Remain Challenging

For quarter of a century, global climate change talks have suffered from a stalemate between major advanced nations and large emerging economies. Since Lima’s climate conference could not resolve it, it deferred the divide to Paris 2015.

Recently, world’s leading nations gathered in Lima, Peru, for the 2014 U.N. Climate talks. The procedural objective was to develop the foundation for a new climate agreement that could be signed in Paris in December 2015 and that would take effect by the 2020s.

The substantial objective was to have a significant effect on global emissions.

Toward more inclusive global climate talks

During the past two decades, global climate talks have evolved through three phases: the UN Earth Summit (1992), the Kyoto Protocol (1997), and the Copenhagen Accord (2009).

In Rio and Kyoto, the process and outcome of the talks was paced largely by the major advanced economies which used to account for the bulk of the accumulated emissions. That era faded away in Copenhagen conference.

After an all-night session in Copenhagen, the leaders of a small number of mainly large emerging economies – Chinese Premier Wen Jiabao, Indian Prime Minister Manmohan Singh, Brazilian President Luiz Inacio Lula da Silva, and South African President Jacob Zuma, as well as President Obama – agreed on a politically feasible path forward. While Washington and Brussels had been most vocal about climate change, no EU leader participated in the final talks.

A comprehensive and legally-binding protocol was simply not viable. However, in the Copenhagen Accord’s first article, the signatories agreed to “urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capabilities.” They also acknowledged that deep cuts in global emissions were required to hold global temperature increases to 2C degrees.

Despite criticism of the Copenhagen Accord in advanced economies, it did establish a platform to surpass the Kyoto Protocol’s shortcomings, by expanding the coalition and by extending the time-frame of action. For the first time, the large emerging economies played a critical role in the final decision-making.

In the past few weeks, there has been a rising optimism that in Peru the negotiators might be able to secure a deal that will commit all countries to take action against climate change. The US-China deal changed the atmosphere surrounding the talks.

US-China deal: game-changer?

The United States, which remains the world’s largest historical emitter of greenhouse gases, has now agreed to cut emissions by 26-28 percent by 2025 relative to 2005 levels. In turn, China, currently the biggest emitter in aggregate terms, has pledged to peak its emissions by no later than 2030.

In China, the proposed target reflects the determination of the Xi Jinping and Li Keqiang leadership to contain climate change, and the difficult challenges and tradeoffs posed by high levels of domestic air pollution, due to rapid industrialization, urbanization and the reliance on fossil fuels.

However, the new targets are in line with China’s transition from extensive growth, based on investment and net exports, to intensive growth, as defined by consumption and innovation.

In the United States, the proposed target reflects popular opinion, as defined by surveys and polls. In terms of aspirations, it is significantly more ambitious than President Obama’s previous “US Climate Action Plan,” which he announced in Copenhagen half a decade ago.

Politically, it is leading to a showdown with the newly-Republican controlled Congress. The bilateral pact signaled that the president “has no intention of moving towards the middle,” Senate Republican Leader Mitch McConnell said after the deal.

On Capitol Hill, things will only get more heated as Republican Senator James Inhofe, one of Congress’s most prominent climate change skeptics, will succeed Democratic Senator Barbara Boxer as chair of the Environment and Public Works Committee in the Republican-led Senate next year. Inhofe has called the deal a “nonbinding charade” while promising to “do everything in my power to rein in and shed light on the Environmental Protection Agency’s unchecked regulations.”

But what will the US-China deal mean in the mainland?

Green growth – an opportunity, not a liability

The global climate crisis is one of the most daunting of the crises precipitated by traditional economic growth. In Britain and the United States, industrialization took place a century or two ago when there was much less knowledge about the adverse spillovers associated with early capitalism, and few efforts to contain it.

With its rapid-growth track record, China is one of the countries most affected by climate change. In the Global Climate Risk Index, which tracks who suffers most from extreme weather events and is based on the recorded data of the past two decades, China, along with the United States, ranks 26th worldwide; well behind India (17th), even Russia (23rd), but far ahead of South Africa (74th) and Brazil (78th). Due to the mainland’s massive population base, that translates to extraordinary numbers in terms of death toll, total economic losses and number of extreme weather events.

Neither China nor other large emerging economies have the luxury of replicating the experience of advanced countries that became rich first and cleaned up later.

China’s new growth plan, which was developed together with the World Bank, supports the mainland’s effort to “grow green.” Much will depend on how effectively government policies make firms internalize negative externalities and motivate firms to innovate and seek technological breakthroughs.

As China will make real gains in low-carbon development, the correlation between growth and carbon emissions will be significantly weakened, and carbon emissions will peak. Such decoupling is already in horizon, whereas the emissions peak is likely to ensue in 2020s.

“Common but differentiated responsibilities”

Today, all parties of the global climate talks support the principle of “common but differentiated responsibilities” (CBDR). On the one hand, all countries have a shared responsibility to protect the climate. On the other hand, each country’s level of responsibility varies with its historical contribution to global warming and its current capacity to address it.

The resolution of the CBDR challenge in Paris December 2015 remains unsettled.

In 1992, the UN distinguished between countries that were then industrialized or developing. In turn, Paris must determine whether a comparable sorting mechanism will be used and how different types of obligations will apply on mitigation, adaptation or finance to different groups of countries. Lima has given us a general idea which scenarios are more likely in the issue that divides advanced and emerging economies – and partly emerging nations themselves.

Prior to Lima, Todd Stern, the U.S. special envoy for climate change, warned against sorting mechanisms, arguing that all countries must take responsibility. Conveniently, such a solution would force emerging and developing countries to take responsibility for the historical pollution that was caused by the current advanced economies.

Understandably, many parties continue to insist using sorting mechanisms, including the members of the Least Developed Countries Group, the Africa Group, and the Like-Minded Developing Countries, which includes China, India, Indonesia and Venezuela.

A viable solution requires taking into account both the advanced nations’ concerns about aggregate pollution and the emerging economies’ concerns about per capita pollution.

The US-China climate change deal suggests that pragmatic compromises may loom in the horizon. But as Lima showed, neither those compromises nor their enforcement will be easy.

Divides deferred

As the UN climate change talks got deadlocked in Lima, Todd Stern warned of a “major breakdown” in the process without an agreement. Unsurprisingly, the deadlock stemmed from the steep gap over the scale and scope of plans to fight global warming between advanced and emerging economies.

On per capita terms, the United States and Europe remain the greatest emitters after almost two centuries of unsustainable growth. Consequently, the two prefer to focus on aggregate terms and thus want any deal to include emerging economies, particularly China and India.

From the standpoint of the emerging world, such demands are absurd. Thanks to colonialism and its legacies, industrial takeoff is occurring much, much later in the emerging world. So why should emerging nations pay the bill for the carbon emissions that have been expanding ever since the British industrialization in, by, and for the advanced economies?

Though the final text of Lima is diluted, it expects an “ambitious agreement” in 2015 that reflects “differentiated responsibilities and respective capabilities” of each nation. Developed economies do pledge financial support to “vulnerable” developing nations. National pledges are to be submitted by early 2015 by those economies that are “ready to do so.” Countries should set targets that go beyond their “current undertaking.”

The Lima document is a diplomatic compromise that makes it possible to move further in the climate change talks. But unable to bridge the divide between the prosperous and emerging economies, it is a timeout. As a result, environmental groups will criticize it severely as a weak, diluted and ineffective tradeoff.

In Washington and Brussels, it is seen as the best possible deal under challenging circumstances. In Beijing and New Delhi, it phrased emerging economies’ demands moderately – but did not conceal the divide between rich and poor nations and the principle of “common but differentiated responsibilities.”

Time is working against concessions by the advanced economies. As U.S. recovery remains fragile, Europe and Japan will continue to struggle amid economic stagnation and rising political division. When the talks begin in Paris in December 2015, divisions between rich and poor countries may prove even more challenging than today.

However, time is also working for emerging economies. Despite the deceleration of growth in all BRICS economies, the leading emerging economies continue to grow significantly faster than advanced economies.  In the future, they will increasingly drive global growth prospects. And that means greater bargaining power in the climate talks.

Except for the epilogue, the original version was published by China.org on May 10, 2014