From Kyoto to Hokkaido: Radically Re-thinking Climate Policy

Date March 11, 2008
Speaker Gwyn PRINS(Director, the Mackinder Programme for the Study of Long Wave Events, London School of Economics and Political Science)
Moderator TAKETANI Atsushi(Director for Climate Change, Global Environmental Affairs Office, Industrial Science and Technology Policy and Environment Bureau, METI)

Summary

We are now at the decisive tipping point in climate policy. Now, more than in any time in the past 25 years, there seems a higher likelihood of actually beginning to have climate policies that will truly have an effect. The reason for this is that it has become clear that the Kyoto Protocol approach has failed; in fact, it has made no difference at all to the human impact on the environment. Arguably, it has made things rather worse. The European Union considers that it is offering global leadership in the realm of climate change policy, but will not even meet its own Kyoto targets, except by tricky "offset" deals under the widely criticized "Clean Development Mechanism," discussed below. The model that Europe offers the rest of the world - the EU Emissions Trading Scheme - is fundamentally flawed. It has collapsed once already, in May 2006, and, for different reasons, is in the process of failing a second time.

Since the end of World War II, Japan has rarely exercised open global leadership on an issue. But for the next five months, Japan can lead the world on climate change issues. Given that the Kyoto Protocol is broken and that European leadership has proved ineffective, and given that Japan is chairing the G8 Summit Meeting in Hokkaido, Japan has the opportunity to shape a global climate policy that might actually reduce humanity's environmental footprint.

Almost 30 years ago, Professor Anthony Downs wrote a significant article about ecology. He analyzed it not as a technical but as a political issue. He explained that an issue like that of the environment has a typical trajectory through politics. The "issue-attention" cycle has five stages. The first is a stage of pre-publicity, which takes place in the expert community: these issues tend to be technically complicated, so they are not immediately obvious to the general public. The second stage is the moment when the issue becomes a political one: there is a moment of discovery, when the media becomes extremely excited. At this stage, in democratic countries, political leaders realize that they have to start paying attention to the subject. The third stage is that of euphoric reaction, when political leaders announce that they have found a means to resolve the issue. The fourth step is like a hangover: it is the time when the cost of previous euphoria has to be counted. The fifth stage is when the issue goes to sleep again. In regard of the climate change issue, we are now going around this cycle for the second time and are at the zenith of the euphoric reaction, just as the next counting of the cost sets in.

The Kyoto Protocol was negotiated with huge difficulty, and was saved in 1997 only through the intervention of Al Gore, then Vice President of the United States. Today, looking back, we may see that there was no political difference between the Bush administration's attitude and that which had been the position of the Clinton administration, or, it can be predicted, with the position of any future U.S. president. No U.S. president will ever be able to get the Kyoto Protocol ratified by Congress, because there are fatal flaws. From the very beginning, there were voices of concern related to whether or not the Kyoto Protocol actually made sense. It turns out that those who thought it was the wrong sort of model for this type of issue have been proved right.

Between 2001 and 2004, the issue of the environment went off the global political agenda. In 2004-2005, the issue was rediscovered. This is interesting, because on the fundamental science of climate change, there is no great difference between the situation 15 years ago and today, with one exception. The results of the great deal of research that has been conducted between then and now have led us to be less confident about our knowledge of the relationship between the different human and other agencies that may be producing the rise in global temperature and, more importantly, the increase of CO2 in the atmosphere, than we were 15 years ago. Such a decline in certainty is absolutely what one would expect to happen as research progresses on a complicated, open system like the climate. But that is not the position that is represented politically. The media tends to declare that the scientific debate is over, and that human activity is unequivocally and overwhelmingly the primary cause of such temperature rise, as has been observed, and certainly of the increase in atmospheric CO2 concentrations: in short, that we have a catastrophe upon us. They frame the issue as "orthodoxy" versus "skepticism" which disables rather than enlivens understanding. There is no debate among the activist community about this overwhelming importance of human action, yet in the science this remains an open question. It would be astonishing if it did not do so. We simply do not know precisely how important the role of humanity has been in comparison to other factors that have contributed to climate change or whether reduction of CO2 is indeed the single most important action to take, as Kyoto prescribes. However, we know that it is prudent in any event to reduce the weight of humanity's footprint on the Earth. A "no regrets" strategy is wise for a problem and at a time like this.

What is worrying to those who are concerned about the stability of the science on climate change is that it is a fact that the major scientific report by the Intergovernmental Panel on Climate Change (IPCC) - Assessment report 4 - that was published last July was changed in order to conform to the politically negotiated Summary for Policymakers that had been previously published. This is a dangerous position for scientists to put themselves in. It risks fracturing public trust in their pronouncements.

We are now moving away from the diplomatic framework within which we have negotiated responses to climate change for the last 20 years. But the more difficult switch is going to be the one that entails intellectual content: how we move from a failed economic and political strategy that attempts to deal with climate change by demand management (which is what Kyoto attempts) to supply-side measures.

In many ways, the issue of climate change is even more than political because for some activists participating in the debate the issue is actually religious: for these "climate puritans" there is a sort of God-shaped hole in their lives, and they are looking to believe that humankind has done huge damage to the environment. It is impossible to negotiate politically with people who hold views quasi-religiously. Now, not only does the word "Kyoto" describe a diplomatic process; it also has a huge symbolic resonance. When one declares support for the Kyoto Protocol it means, too, that one cares about the poor and loves the planet (and by implication, conversely if one doesn't that one is conversely callous and destructive). Kyoto has moved from being policy to dogma.

The attractions of Kyoto as dogma are not in doubt. But as policy, there were two flawed assumptions. The first was the assumption that reducing CO2 would solve the problem. The second was assuming that the way to do this was through an imposed top-down carbon trading scheme. The second assumption has been comprehensively disproved. But the first suggestion, that we are going to make a decisive change to global climate by reducing human output of CO2 alone, or as the leading action to take, is deeply open to question. We must keep in mind the social construction of scientific information.

Let us be precise and clear about what I am stating. The Kyoto Protocol did not fail because there is no problem of anthropogenic climate change. There is a problem, and there is recent evidence that the "free-rider" of automatic decarbonization from the improvement of energy efficiency in capitalist economies may not be as generous as all the IPCC scenarios assume. That suggests that the need for robust climate policy may be even more urgent than the IPCC has presented.

Secondly, the problem is simply not usefully engaged as a surrogate for religion, or as a restorative for the loss of public trust in politicians. The EU as a political project is in some considerable trouble, and the European Commission faces great difficulty in reestablishing contact with the peoples of Europe who are increasingly disenchanted with the project of ever closer union. Last year, the United Kingdom Foreign Secretary spelt out this line. He wrote that the environment is an issue that is looking for a champion, and the EU is a champion that is looking for an issue. Were the EU to lead the world in addressing climate change, then the peoples of Europe who are worried about the environment would feel grateful to the EU and would again feel affection for the EU. So, and this is an essential difference from what I understand to be the situation in Japan, the issue of climate change is high on the political agenda in Europe not simply because Europeans are concerned about climate change. There is concrete evidence that suggests that the issue is relatively uninteresting to a lot of European politicians; it only becomes interesting to them when they consider the benefits that could accrue to their European project.

Third, the Kyoto Protocol did not fail because the Americans or (until Bali) the Australians refused to sign it, as the demonology of some climate activists would have it. It was not undermined by a conspiracy of oil companies. Most importantly, it was not a flawed but useful first step, as the remaining defenders of Kyoto assert. It was not a useful first step, because it was going in the wrong direction.

Nor can the failure of the Kyoto Protocol be accounted for by a lack of political will, as repeatedly claimed by former vice president Gore. Actually, the problem in the Western world is that we have too much political will at the moment. The issue has returned to the third stage of "issue-attention" cycle; that of euphoric reaction. Currently we have political will driving defective policy instruments. The danger that we have (and this is the framework for Japan's opportunity in 2008) is that a breaking of public trust seems likely in the Western world. The proposed bigger and better Kyoto is not the solution, and people are going to become disillusioned when they discover as much.

The two regions of the world that have most enthusiastically financed the Kyoto process are Europe and Japan. The money that has been spent on carbon offset credits through the Clean Development Mechanism, principally, has not made Kyoto work because the Protocol is the wrong sort of instrument. It is an attempt to produce a universal intergovernmental treaty. It relies on state and inter-state bodies using the wrong sort of power: there is too much meddling, and too much in the way of an attempt to drive a fabricated carbon market, which is actually corrupt.

The Clean Development Mechanism (CDM), as it has been practiced through the deeply flawed European Emissions Trading Scheme, has not had any effect on reducing the human impact on the environment; what it has done is make a lot of people extremely rich, especially lawyers in California and Oxford, and capitalists in China. This is because the commodity that has been principally traded in the first era, two-thirds by value, has been HFC-23, which is a byproduct of manufacturing HCFC refrigerants. The problem with creating a top-down market is always that it creates a false market, it distorts value. Today, in China, the profitable part of manufacturing refrigerant is the pollution that comes out of the chimney which is destroyed by simply burning it. The permit for having destroyed it is then sold to the Japanese or the Europeans. That profit is actually 100% greater than the profitability of the refrigerant itself. The result is that some factories are now being built in Asia for the simple purpose of manufacturing pollution in order to destroy it, so as to be able to profit from the sale of the permits. The EU and the UN claim that this "loophole" has been stopped up. But if it isn't this one it will be another. This is madness, and morally obnoxious.

The main political reason why, correctly, the U.S. has refused to ratify, the Kyoto Protocol, is that the Kyoto mechanism always excluded the demographic rising superpowers of India and China. But the environment does not distinguish the sources from which the pressures come, so whatever mechanism we have in the future has to include China and India. Kyoto did not take China's increasing coal-burning into account. Recent calculations show Chinese CO2 emissions as a by-product of its scorching rate of industrialization since 2001, rising at a rate of 13% per year between 2000 and 2010.

It is time to ditch Kyoto. A top-down output target approach has failed. Nobody intended that the CDM, which is supposed to benefit the poor in Africa, would result in the Chinese government reaping $1.3 billion in tax revenues. In the process of following the Protocol, which stipulates that, above all, CO2 emissions must be reduced, a number of taboos have arisen. They have been extremely costly. The first taboo, on adapting to climate change, has cost many lives. By not providing flood defenses or storm surge protection to the people of Bangladesh, many hundreds of thousands of lives have been unnecessarily lost in the past decade.

There is also a taboo about geo-engineering on the grounds that if we have a technical solution which could help us avoid problems of anthropogenic emissions, then this might lessen people's will to reduce emissions. Al Gore made this case explicitly in his book Earth in the Balance in 1992. It is important that we break this taboo soon, because if we are to do anything that will help the planet to escape the effects of increasing carbon emissions from coal burnt in China, it will involve offset arrangements; genuine ones, like technologies for capturing of free carbon in the air and sequestering it underground.

Another fashionable taboo is also damaging the poor: the notion that it is always socially responsible to buy your food from as close to where you eat it as possible. But Dutch-grown winter hothouse roses given last Valentine's Day in England were six times as carbon lead-footed as those flown in from sunny, summertime Kenya. There is a grave danger that the poorer countries in the tropics will lose their markets for soft-headed and sloppy reasons.

So what happens now? The most important event that we recently went through was the Conference of the Parties meeting in Bali. What happened there was straightforward. The policy proposed by the United Nations Secretariat and the EU was to obtain a bigger and better Kyoto, meaning a global commitment to higher percentages of CO2 reduction by earlier dates. But that position was defeated. Japan insisted that an agreement be based on different principles. It was supported by other pacific powers. That was the decisive moment at Bali. Geopolitically, leadership on climate policy moved from Europe to the Pacific region. That became doubly clear at the Major Economies Meeting that took place at the end of this January, where there was broad agreement among the 20 countries that are responsible for 80% of emissions that an alternative strategy should be designed. We are now moving out of the United Nations Framework Convention on Climate Change negotiating framework, and the driving framework will be the Major Economies Meeting. That is the reality. Within those countries, there is leadership.

Three things can be predicted with confidence. The political proposition that says there is no alternative to the Kyoto model is going to break and the electorates of Europe will be very distressed. There will be a loss of confidence in the political class. Much more worryingly, there are going to be difficulties over the science. The IPCC is not an authoritative, unanimous statement on the science of climate change; in many ways, most importantly via the politically negotiated Summary for Policymakers and through overheated media caricature, it has become compromised. Al Gore does science no service at all by overemphasizing the IPCC in a dramatic way. Lastly, there are going to be major problems with the EU Emissions Trading Scheme. It certainly will not be adopted as a worldwide system, and the EU's threats of trade sanctions have been badly received in Japan and elsewhere. Does the EU really want a trade war? Its own industries are now lining up to say that they will move out of the EU if these draconian measures are imposed.

Effectively tackling climate change entails respecting a number of principles. The first is that there is no single measure that can make the difference: instead of a silver bullet, we need silver buckshot. Secondly, universalism must be abandoned. Given that a productive outcome to negotiations is sought, 150 countries should not be involved in discussions. These countries contribute nothing in terms of output; they merely get in the way. Thirdly, we need to move to bottom-up solutions. Fake markets imposed from the top inevitably either break or lead to corruption in the way that the European Emissions Trading Scheme and the CDM have done. Instead, state power should be used where it can really make a difference; to direct fundamental research, development and demonstration. Japan is well known for this. We need to put new technologies into orbit quickly. That cannot be done simply as a response to market signals. Also, we need to increase spending on adaptation. Finally, it is not a paradox to say that climate policy is best addressed not through climate policy. It should be done obliquely, through changing behavior in all sectors of society.

Now is Japan's moment. The main event in 2008 is going to be the G8 Summit in Hokkaido this July. At Hokkaido, Japan has the chance to move the world community away from the failed track of the past 15 years toward something that might well be productive: from Kyoto to Hokkaido. The Europeans will not ally themselves with the Japanese position, because of their emotional commitments. What will happen is that the European approach will break. The principle, as we move to the supply side, is a metric that deals with energy intensity defined by sectors. This must involve technology transfer to the rising demographic superpowers. This it the right way to go, and the agenda for Japan to secure for the whole world by the time we get to Hokkaido. The reason why the sectoral approach is necessary is that changing the main power-drivers of a society does not involve all sectors equally.

We must have the humility and the courage to face up to the fact that the inconvenient truths are not actually those that Mr. Gore put in his film, but rather the ones outlined here.

Questions and Answers

Q: What kind of combination of tools do you think would be most effective, in concrete terms?

A: That is a very pertinent question. What we should do is what common sense suggests. We should look for instruments in which we can have confidence that they will be effective in regard to the specific type of problem we are trying to solve. The problem about Kyoto is that while it has become a quasi-religious dogma, or in the case of the EU a device for pursuing other political objectives, the fact it that it was not a stupid thing to do in 1992. The mistake is that people cling to it, despite evidence of its failure.

The market is the most efficient tool for the harnessing of human ingenuity that we have ever invented. The market should be left as unconstrained as possible, yet in this area, guided by government through research and development. But the difficulty is that governments are tempted to interfere too much. It is clear that there could be a market in carbon, as an explicit activity. But it will grow from the bottom up, like the Chicago Climate Exchange. It will be small, it will be regional. Of course, there is already a market in carbon; it is built into the prices we pay for carbon fuels. So when we pay $110 per barrel for oil, one of the things we are paying for is a $500/ton registered carbon price. And we see huge inelasticity of demand under even such huge price signals. That tells us that we need to use other instruments.

The Japanese government should refuse the invitation of the EU to believe that it is appropriate or sensible at the top level to try to frame the terms within which any market operates. We know that that does not work. They do not know that in Brussels, but the rest of history shows this.

What we need are measures that will produce a decisive change in primary research and development. The power of the government should be used proactively to drive research and development in primary areas, in the same way that the Japanese government has done in so many areas in the past. This is absolutely in line with the Japanese approach, and is where Japan can lead the world. Recall only that Japan leads the world - well ahead of the U.S. even - in energy R&D funding and activity.

We must recognize that we must shift from attempting to do demand management to the supply side. The move is, therefore, from believing that the correct metric is something to do with CO2 output (if indeed you can measure it, which is difficult enough in itself) to changing the fundamental energy inputs that drive society. The linking together of energy-intensity as the driving metric with a sectoral approach, coupled with finding ways of making technology transfer work, will be effective. This last element is vital, because by 2050, three-quarters of the human impact on the climate will come from China and India.

The most difficult single aspect of all this is to do with intellectual property: specifically, it has to do with guaranteeing that the Chinese government does not steal intellectual property as soon as it has a chance to do it, which it has a track record of doing. The Americans have found a way of dealing with this problem, which is by doing some of their primary information technology development in China in restricted zones, which are run by Chinese Americans, so they have double loyalties.

For the leaders of Europe to admit that their Kyoto-based strategy is broken will involve a great loss of face in front their own electorates. It will involve the EU again having to admit to the European public that they have sold them something that was actually false. That is always difficult for politicians to do. Thus Japan has great responsibility at this time. If Japan can take this lead, there is little doubt that there is an enthusiastic nexus that includes obviously the U.S., China, and India, but also Canada, which has made its position very clear, and hopefully Australia as well. Europe should have the good sense and humility to follow Japan's lead and I hope that in good Zen fashion, Japan and others can fashion a golden bridge across which the Europeans may retreat with dignity.

Q: Can you please elaborate on why you put emphasis on adaptation?

A: Adaptation has two strong attractions. The first is a straightforward argument of human morality. If you have people who are at risk because they are poor and therefore defenseless, then it is correct that the strong and the powerful use their strength and power to defend the weak and the poor. This is classically an area in which this has not been done in the way that it could have been done.

Adaptation does have a further obvious attraction in the short term, which is that by taking these steps early, it can be a very valuable stimulant to the types of research and development that you are going to want to be doing anyway in the medium to long term. It is a virtuous circle. It means you take actions in the short term that will actually protect people living here and now, and at the same time you will begin to fund research, development and deployment in areas of the economies that you would want to do anyway for the purposes of responding to potential climate change in the long term. This is often described as a "no regrets" strategy. No regrets strategies are essential here because if we can take these steps so that they are justified in their own terms, if it turns out that actually there is not the problem with global climate change that is predicted in the worst case scenarios, then we will not have any regrets about taking those actions in any case, because they were things that we would have wanted to do. Those are the powerful arguments for adaptation.

Looking at government-controlled funding that is available for mitigation compared to adaptation, you discover that by orders of magnitude, adaptation is under-funded. But in the past year, the taboo about adaptation has been breaking. In the Bali Roadmap, there is recognition that adaptation measures should be taken.

Q: What is your counter-argument to those who argue that the energy intensity or research and development approach does not truly guarantee the result of emission reductions?

A: Sir David King, the former Chief Scientific Advisor to the UK government, is scornfully dismissive of the strategy I have been advocating precisely on these grounds. He claims not to be able to see the outputs in terms of reducing CO2. His condemnation is rather unworthy of a distinguished scientist because he says that this is a policy that is supported by President Bush, so therefore it must be wrong. This is childish, and incorrect.

Why are we interested in CO2, above all, as the single silver bullet that is apparently going to solve this problem? If we have learned anything in the past two decades, it is that this is only one among the many of the silver buckshot. Obsessing over this notion of CO2 targets is based on a fallacious proposition. Just reducing CO2 from human societies is not going to have the decisive, reliable effect that many suggest. But what is clear from history is that humankind has, through the application of ingenuity in markets, a remarkable and consistent record of making richer societies that use fewer resources. It is clear that we are going to have to lighten our individual carbon footprints in developed countries, and we have a moral imperative to help China; and with good sense, calmness, and clear-sighted eyes we have good chances to do so.

*This summary was compiled by RIETI Editorial staff.