Ideally, a menu and some cash. Let me explain. When President Obama travels next month to receive his Nobel Prize, he will stop first in Copenhagen at the international climate change meetings. This article in The New York Times on Wednesday and yesterday’s discussion on its Room for Debate blog prompted two reactions.
First, the House but not the Senate has signed off on emission targets that enable the President “tell the delegates that the United States intends to reduce its greenhouse gas emissions ‘in the range of’ 17 percent below 2005 levels by 2020 and 83 percent by 2050.” This leaves the President in a weak position in Copenhagen, having to essentially charm the other nations that he can get the Senate on board when he returns, despite any credible evidence that the Senate will do so.
When I think about how a country that aspires to be world leader should send its President into international diplomacy, I have something very different in mind. The Congress should have already passed into legislation a set of targets that condition the U.S. emission reductions to what the rest of the world is willing to do. The President should be able to offer the other countries a menu of options. The targets noted above are what we will do without an agreement, say, but if other countries agree to more stringent reductions, the legislation should specify what additional reductions the U.S. will also do. Effective diplomacy would have the Senate standing behind the President, not in his way. So I do not have high hopes for anything to be accomplished next month.
Second, the sticking point with these international climate meetings is the relative burdens placed on developed versus developing countries. I think that China and other developing countries have a valid point when they claim that it is unreasonable for developed countries to constrain them during their period of rapid development with high taxes on carbon emissions that the developed countries did not face and which have already polluted and warmed the environment. The point needs to be addressed, and the best way to address it is with cash. Developing countries should face the same high tax on carbon emissions on the margin as the developed countries do, so that heavy emitters don’t simply relocate to the developing world to avoid the higher prices or tighter caps in the developed world. The developing countries should be compensated on average for agreeing to this, in the form of cash in a carbon tax regime or a disproportionate share of the initial emission permits in a global cap-and-trade regime. I haven’t seen any discussion of this issue going into the meetings, so I am again not optimistic that it will be resolved.
But I am an economist, which means that I am happy to be right, but usually happier to be wrong.