Breaking the deadlock on climate policy – a path forward?

Everybody knows that the Copenhagen summit in December 2009 was a disaster. Everybody knows that Cancun's follow-up, due shortly, will be, too. Global governance doesn't work. Even the Group of 20 is finding it hard to agree on urgent matters, like how to regulate the banking sector. How could we expect 190-odd countries to agree on sharing the burden of carbon reduction when there's nothing much to gain before the next election? We can't.

Try a different tack: When the winds are against you, you change direction. That's what a Stockholm-based think-tank is proposing that the world – no, some of the world – should do to address the issues of climate change. The Global Utmaning report, "An International Climate Investment Community – breaking the deadlock," suggests that the top-down approach we been trying, under guidance of the United Nations, cannot work, but a different, bottom-up one can. To be fair, it's not entirely bottom-up. The report, co-authored by Allan Larsson, a former Swedish finance minister who instigated that country's carbon tax system, suggests that governments and not the people they govern are the place to start. Given that European countries have something of an advantage in green technology development, there's even an economic incentive to start there. Not all European countries will go along with it, and under European Union rules that might be enough to damn his initiative as a non-starter. But Larsson thinks he has a way around it. Develop a "coalition of the willing" – not quite the phrase he uses, but close – and plough ahead. The much-disputed Lisbon Treaty, which now provides the EU's operating framework, contains a little-discussed provision to allow any nine member states to take action together towards common goals without having to bring everyone else on board, too. So Larsson and his co-authors reckon there's critical mass in a group that might include the Nordic EU members, Germany, France, the Benelux states and the UK. These governments all profess an interest in taking the lead on mitigating climate change. Their innovative capacities might benefit from measures that shared the climate opportunities and not just the climate burdens. They could club together to form an international investment community that would stimulate private-sector demand in investing in climate-friendly technologies. These states would need to do something to kick start the process, like enacting carbon taxes. These are likely to be unpopular measures, but so too are a lot of the other taxes that governments are raising now to fund their budget deficits. And carbon taxes, the authors argue, can be justified in that they counteract the "subsidy" in place in carbon-intensive industries, given that their damage isn't included in their cost.

Will it work? There are issues. When Larsson presented the report in London, among the objections was that the UK would never go along with ceding power to the European Union, or even to a subset of it, without a fight within the Conservative Party, which leads the coalition government. Perhaps. Importantly, Germany would resist any carbon tax, given that all parties, including the Greens now serving in coalition in the state of North Rhine-Westphalia, seem to be trying to squirm out of an agreement to end subsidies for the coal industry. Without Germany, the plan won't work.

What about a different coalition? Why not get a European grouping but add India, South Africa and Brazil? That notion comes from Michael Grubb, a Cambridge economist, who argued that the politics of climate change is more important now than the economics. Anthony Giddens, former director of the London School of Economics, worried about the Jevons Paradox: Any gains made in efficiency in one place will just lead for more consumption in another. Look at Spain: The wealth benefits of its strides in solar power were spent on increased use of cars and long-distance travel. The Jevons Paradox suggests that successful efforts on resource savings perversely increase the rate of resource depletion.

Climate change is a complex problem. And as Mike Hulme has written, complex problems often require messy solutions. The starting point of this report – that the simple answer is a global regime is wrong – seems right. What's less than clear is whether a portfolio of initiatives – like this and the others that will compete with it, should it show signs of being a success – will add up to the savings that climate science suggests we need.

Source document: The manifesto from Global Utmaning – or Global Challenge in English – is a 22-page pdf file.